Blockchain's Role in the Energy Industry
Eighteen years ago, a hurricane left my family without power for three days.
At the time, we were living in North Carolina, a state as famous for its hurricanes as its equally deafening flocks of cicadas.
Since we were used to it, the power going out didn’t signal the end of the world.
My parents gathered batteries and candles, while my three-year-old brother and I gathered our toys. For us, it was a great time. My mother did not follow our line of thinking. Eating cold beans out of cans was not her idea of feeding a growing family.
The first two days of this energy outage were fun, but on the third day my mother tripped in the dark while coming to get us from our playroom.
What followed was a disjointed trip to the hospital, two hysterical children, and calm assurances from a neighborhood doctor that everything was fine.
My mom had just fractured her tailbone.
Of course, when I look back on that night and collect details from my parents, I realize things could have been much worse. My mom could have been seriously injured. It could have been winter and we could have had no heat.
It’s this event that made me realize how much we rely on the light in our homes.
But we don't notice our total reliance until it’s too late. The energy has already disappeared, and bringing it back is often outside our control.
I wanted to tell you this story because, to some degree, it's a story you may have experienced yourself.
Power outages are on the rise. Natural disasters leave communities without power for days.
And the situation really isn’t getting much better. As things stand, communities all over the country could be left crippled by a natural disaster.
But that is all about to change.
When Blockchain Meets Big Energy
When it comes to technology, the energy industry is a bit out of the loop.
One of the oldest industries in the world, the energy industry is ruled by giants whose grip on the space is suffocating and absolute.
As other industries have turned and embraced technological change, the energy industry has stayed in the past.
Don't believe me? Your mind may be blown to learn that parts of our energy system are now over 100 years old.
And its age is starting to show.
That is where blockchain comes in. The blockchain space is occupied by a few tech giants, but mainly it’s been created by hundreds of nimble startups, many who target specific industries like energy.
Incorporating blockchain technology into our existing energy grids could not only save our antiquated systems but also improve the consumer and utility experience.
Currently, there are two major ways blockchain technology can be applied: peer-to-peer energy trading and energy-based cryptocurrencies.
For the purpose of this research piece, we're going to focus on peer-to-peer energy trading.
Just like Bitcoin allows people to exchange funds without a central party, so too can blockchain allow individuals to exchange energy. In recent years, more and more individuals have embraced distributed energy resources like solar panels. This has fostered more energy independence, giving individuals the freedom to generate electricity outside of the grasp of a central utility.
In these cases, blockchain could be used to allow individuals to trade energy they generate among themselves, producing a new stream of income as well as a hedge against disaster.
And this new kind of system is already being used in small microcosms around the world. Here is an example.
Blockchain Is Already Making Waves
I've met a lot of innovators during my time in the blockchain space, and of those innovators, a few stand out.
One such individual is Scott Kessler, the Business Development Director at LO3 Energy. I saw Kessler speak at the 2018 Consumer Electronics Show and instantly became interested in learning more about blockchain in the energy space.
LO3 Energy is a bit of an outlier in the blockchain space.
Unlike many blockchain companies, it stays away from the hype that often surrounds the tech. LO3 Energy bills itself as an energy company that uses blockchain technologies to combat the issues of the ailing energy industry.
Through that mission, it's been able to bring multiple blockchain-based technologies to communities around the globe.
The first of those blockchain communities is the Brooklyn Microgrid, which allows individuals to use a blockchain-based system to trade energy among themselves. This has many clear advantages.
After Hurricane Sandy hit New York, many neighborhoods were left without power. If the Brooklyn Microgrid had been in place at the time, those individuals would have been able to generate and trade power outside of the utility, decreasing the amount of time without power.
Recently, I had the pleasure of sitting down with Scott Kessler to talk about LO3 Energy and the future of blockchain in the energy space. You can check out this conversation in our latest podcast.
If you listen to this podcast, you can get a better gauge of exactly how big blockchain is going to be in the energy space.
In fact, the energy industry is rapidly emerging as one of the biggest customers of the blockchain space.
One of the Biggest Investment Opportunities in Blockchain?
While we are still in the early days of blockchain application, the energy industry is quickly emerging as one of blockchain's biggest potential customers.
It's estimated that over $934 billion will be spent in the next 10 years repairing America's damaged electrical infrastructure. And that is just within the States.
Outside of the United States, other countries are also embracing blockchain technology. Overseas, blockchain is being used in multiple countries to improve anything from electrical grids to electric vehicle charging.
Today, investors have the freedom to get involved with the space through initial coin offerings and public company space. We will cover more of these opportunities as they emerge.
For now, investors interested in blockchain should keep an eye on the energy space.
There is nothing but growth from here.
@AlexandraPerryC on Twitter
Alexandra Perry is the managing editor of Token Authority and the associate editor of Technology and Opportunity. She also contributes weekly content to Wealth Daily, a free investment research newsletter that addresses a range of market topics. She has multiple years of experience working with startup companies, primarily focusing on artificial intelligence, cybersecurity, alternative energy, and biotech. Her take on investing is simple: a new age of investor can make monumental returns by investing in emerging industries and foundational startup ventures.