Utility Week

22 | 25TH - 31ST MAY 2018 | UTILITY WEEK Operations & Assets "And when I look at those characteristics of where blockchain can help, I see many instances within the energy industry where that is true," he says. Paul Massara, who was a former chief executive at Npower and is now chief execu- tive at Electron, which has developed its own flexible trading platform, says blockchain is also a way of speeding up the energy sup- plier switching process for customers. "Instead of switching in 23 days and you have issues around data reconciliation, bill numbers and addresses, it can all be encoded in a blockchain, which can allow you to switch in 21 seconds," Massara tells Utility Week. "That clearly removes a lot of hassle around switching and opens up new busi- ness models. And once you have that chain of information, you can add specific data. It might be that a customer is on the prior- "In energy systems, you need to handle thousands of transactions a second. The Energy Web Foundation's best simulation is around 750 transactions. Visa can do 2,000 transactions a second and they do it at almost no cost and that's the metrics you are competing against." Morris agrees that scalability is an issue blockchain developers have to address. "The big question of the past year has been scala- bility, scalability and scalability," he admits. "[But] transactions-per-second is actually the wrong way to think about how blockchain should work in energy, because not every transaction is equal. A blockchain is oen talked about as a decentralised ledger, but really it's a decentralised virtual machine, capable of doing whatever you tell it to do. "For example, if I sell you a certificate representing the green energy from my Normally, a problem emerges and someone tries to create a technology to fix it, but at the moment, blockchain is a technology looking for a problem… It's the Wild West in terms of experimenting about where it can work. Richard Dowling, chief economist, Faraday Grid More than 90 per cent said they were confident blockchain would disrupt the industry in some shape or form… The interesting thing for me is that over 80 per cent of people said they think it will happen in the next five years. Steve Batt, UK energy blockchain lead, PwC ity services register and therefore you can switch that as well, so it's a seamless trans- fer of information, which is all encoded and encrypted." Reality check But there are those who question whether blockchain can deliver on all the hype that surrounds it. The chief economist at Faraday Grid, Richard Dowling describes it as a "hammer looking for nails to hit". "Normally, a problem emerges and some- one tries to create a technology to fix it, but at the moment blockchain is a technology looking for a problem," Dowling comments. "It's the Wild West in terms of experi- menting about where it can work." Dowling says there are three big issues with implementing blockchain in energy sys- tems: cost, scalability, and governance. In particular, he says, the cost of an energy transaction on most blockchain sys- tems is currently around three to five US dollars and getting that cost down will be a "huge challenge". Dowling says: "Blockchain makes a lot of sense if you are dealing with a high value commodity, like money. If I am doing mil- lions of dollars' worth of transactions, then I am prepared to spend half of one per cent to know the transactions are really secure. But if I am only trading a few electrons, which is a low-value commodity, why would I want to have a huge transactional cost?" "The original blockchain could only handle three to five transactions per second," adds Dowling. "Most of the blockchain community have moved to the Ethereum public blockchain, which can handle 16 to 30 transactions a second, but that's still nowhere near enough.

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