When considering the inefficiencies of Europe’s existing retail energy market, it is important to consider alternative solutions provided through the emerging blockchain integrated products. Climate change has added to the need to move forward with blockchain, as carbon prices have risen from 8 €/tCO2e to 13 €/tCO2e during 2018. The negative effect of emissions has caused the cost of traditional energy production to continuously rise.
Although water scarcity is an equally serious issue in Spain as in Croatia, the Spanish made greater efforts to be prepared with their hydropower facilities. According to a study by the Instituto Nacional de Estadistica conducted in 2010, Spain is the fifth country in the world in terms of its number of large dams, 1200, after China, the USA, India, and Japan.
Even so, Spain has failed to achieve EU targets, leading the Minister of Energy to heavily pursue renewable alternatives. With climate change drying up many densely populated areas of Spain, renewable energy efforts must go beyond hydro reserves and nuclear generation and look to blockchain framework for a more rewarding response.
Geopolitics has also caused economic strain for countries dependent on cross-border energy efforts as experienced in Ukraine and other neighboring nation-states to Russia. Germany has been more successful in managing energy demand with steady growth in export since 2011, due to early efforts to develop wind and solar production. However, despite efforts from Germany to embrace renewable energy alternatives, there has been a drop in demand from Nordic countries impacting an ability to reach energy targets for 2020. Such failure has a strong impact on diplomacy with Russia as NATO leaders continue to struggle to the fight to defend the territorial and economic sovereignty of Ukraine.
Mediterranean countries have similarly struggled to meet these EU energy targets for next year. Considering the refugee humanitarian crisis and high unemployment rate throughout the Mediterranean region, residents are urgently in need of a more affordable alternative provided with the blockchain retail energy market. The economic instability and prolonged unpredictability will only bring on more public discontent demonstrated in increasingly violent protests. An openness to accepting blockchain in fixing the brokenness of the existing wholesale electricity efforts will benefit corporations, consumers and government.
European Union member states have shown openness to legalizing digital currencies and adopting blockchain energy solutions. Moving from a futures market to spot market, consumers expect next day delivery viewed as a more risk-averse approach. This shift demonstrates confidence in alternative energy markets that can provide for more cost effective and fuel efficiency with blockchain products. There is an expectation that major regional energy producers will come to adopt blockchain and integrate the option of token payments as regulatory frameworks are enforced across the continent.
Some multinational utility companies interested in adopting blockchain technology to support the more cost-effective smaller transactions include Enel, E.ON and Vattenfall. With smart contracts being embraced by many of these companies there is a win-win for both the consumer and supplier as the third party is no longer a necessity. Nevertheless, the success of such blockchain retail energy market efforts in the EU depends on widespread efforts to reconfigure solutions architecture as seen in Germany and the United Kingdom.
The Renewable Energy Certificate created by SP and EWF provides an open source blockchain framework that works to enforce a standard across borders which will make transference of energy resources much more efficient and decentralized in its control. By offering a record of trade certificates this can help ensure no country can be successful in fabricating an economic dispute over energy received since all transactions remain on record indefinitely. Nevertheless, the struggle EU nations have been confronted with energy market manipulation by the Putin administration, can be made less of a geopolitical concern since the REC can ensure nations that have experienced occupation such as Ukraine have safer resource options.
It is also significant for German state officials and business leaders in the energy sector to view the REC as a response to the crisis many households will when renewable energy subsidies are brought to an end in 2020. With private citizens installing personal power plants in order to keep storage of excess energy, there will be a further strain on the grid.
In London, there has been a strong embrace for the potential of the blockchain energy market. When applied to solar power for homeowners, Verv a local startup has seen much success. Executing a trial in an East London estate, powering the community of flat owners. Despite the traditional energy market dominance in London, Verv has developed a solution, far more proactive than waiting for the day when the few corporations dominating the market have a change of heart. Verv has developed an AI-based IoT hub ensuring the flat only consumes energy at the most affordable rate provided during the day. The peer to peer trading of energy is made possible with the integration of blockchain.
Most important to note, is the rational approach leadership at Verv have taken to work with regulators such as Ofgem, to protect their consumers, company and educate government officials through sandbox trials to feel confident in the benefit to all stakeholders. Although many cryptocurrency believers do not see a need in regulation, it is important to recognize the need for some structure and governance in order to ensure the currency is not exploited for nefarious reasons. To ensure the widespread embrace of blockchain in the energy market, leaders in the startup space must highlight the benefit to all stakeholders by demonstrating the reduced risk ensured in the trustless solution.
Written by Shermineh Esmati
As the CEO and founder of Cyrus BC Inc. Shermineh provides advisory services to promote the interests of her clients through the application of innovative products. One focus of Cyrus BC is to bring deliverable blockchain initiatives to the attention of investors focused on the security and socio-economic benefits of the technology.
With a background in foreign policy and intelligence analysis, Shermineh has been using her grasp of geopolitics to aid blockchain companies to best pursue growth while respecting international cryptocurrency regulations and blockchain policy. To ensure the expedited adoption of fintech products she is working with Blockchain Intelligence Group, New Economies DLT and building collaborative efforts for AI blockchain projects soon to be announced.
Shermineh has experience advising intelligence agencies, political leaders, management consultancies and human rights organizations. In the pursuit of developing an expertise in international security, Shermineh obtained her bachelor’s degree with a Specialist in Political Science at the University of Toronto and is completing her master’s degree in Government at Harvard University. To further Canada’s efforts in emerging technology she is also a member of the Blockchain Association of Canada and an Advisor to the Open Source Data Committee at the Treasury Board Secretariat in Ottawa, Canada.