Blockchain in Europe’s energy sector – policy and regulation
Challenges remain for the deployment of blockchain in the energy sector, the EU’s Enerchain project has found.
The project, undertaken by the European Commission’s Joint Research Centre under an agreement with DG-Ener, was aimed to investigate the applicability and potential of blockchain technologies in the energy sector.
In the first phase, five use cases were identified as the most promising, i.e. smart metering, energy communities including peer to peer and peer to grid, flexibility service provision, certification of origin and electric vehicle grid integration.
Analysis showed in all the cases the potential for a working and viable blockchain implementation, but ultimately an implementation goes beyond the setting up of the blockchain and smart contracts. In addition to issues such as permissions and transaction rates impact on the ease of implementation, others identified included access to data, e.g. from meters, and integration with legacy systems.
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The project policy report states blockchain challenges to include security, scalability, privacy and identity, liability and markets, data access, interoperability and standards, sustainability and fairness and acceptance.
It continues that a main motivation for regulation is the need for a balance of technical innovation with the scalability of solutions to ensure the adoption of approaches fit for purpose and future proof.
Another is to define and allocate decentralised responsibilities of electricity supply and distribution to limit confusion in terms of responsibilities and liability, reflecting a need to establish clear roles, roles and duties in the blockchain paradigm.
The report recommends that consumers should be incentivised to invest in flexibility technologies and a balance should be found between consumer empowerment and protection.
The adoption of cybersecurity certification schemes also should be boosted, both in the domain of blockchain core infrastructure and in the domain of end user applications and devices to ensure the full coverage of the energy digitalisation value chain.
The report notes that recently issued regulation proposals in the digital finance/crypto-asset sectors contain interesting approaches and solutions, which could be applicable to or of inspiration for the energy sector.
It remains to be seen also the extent to which blockchain can support or subvert business models in the transitioning electricity systems and markets. Blockchain represents only one of the enabling technologies of power system innovation and others – including artificial intelligence, big data and IoT – will probably need to be combined to achieve the climate neutrality and sustainability targets, the report concludes.
