It will allow the exchange of energy and grid services without limits or friction

Since the second industrial revolution, when industry, cities and territories in general were electrified, the model of the electrical system has not fundamentally changed. New technologies such as storage, microgrids, and distributed energy, have favoured an unprecedented disruption in the sector that will allow us to re-write the electrical system model and get an efficiency that was unthinkable until now. The management of these systems made up of small distributed generators and consumers is complex and, which is where new technologies such as Blockchain come into play.

Blockchain is a software innovation that allows the safe storage of encrypted information so that, valuable transactions can be carried out autonomously without a central intermediate to verify and approve such an exchange. The first energy transaction using Blockchain was carried out in New York in April 2016. Two years later, 122 organizations are involved in this technology worldwide and around 40 projects; such as Grid Singularity, have been deployed up to now.


In further detail, Blockchain works as a “ledger” where transactions such as energy, currency or information transactions, are registered. This chain of blocks is distributed and synchronised among all nodes of the grid, which check and register such transactions. Any change of the blockchain needs the agreement of all the participating nodes. This aspect represents a great innovation as no central intermediates, such as energy distributors, market operators or banks, are necessary to identify and certify the information. These transactions are transparent and, thanks to their distributed nature, Blockchain reduces transaction costs and time and increases the security protection against hackers. Besides the absence of an entity to operate an energy market or other services that are necessary for the electrical grid, the blockchain technology allows the implementation of smart contracts to carry out transactions where no third party knows the identity or the details of the agreement.

Blockchain illustrates an inconvenient truth for traditional energy supply companies, which is that at some point, to get clean, reliable and cheap energy from self-supply or directly from your neighbours would be cheaper and more effective than trust the conventional electrical grid. The emergence of Blockchain technology could be compared to the development of the Internet in the 90’s. It will be a system that will change the way we perceive business and society. However, this state-of-the-art technology still has its challenges ahead as it must improve its scalability and the efficiency of the transactions, and, of course, suitable regulations to exploit the whole potential of the technology are also necessary.