Various types of technologies have emerged in recent times with the aim of transforming operations in the energy sector.
Some of them include smart meters and rooftop solar installation. The newest form of emerging technology is blockchain, which is poised as the next big thing to revolutionize energy sector operations through system interoperability and smart contracts.
With the complexity of operations in the energy sector and the rapid growth in commercialization, transportation and industrialization, the sector needs structural and operational changes through technology.
In 2019, Deloitte made a prediction that blockchain will serve as the central processing unit of the energy industry in the years to come. The blockchain will also serve as a network ensuring independence of operations and end-to-end data transfer without any interference from third parties. The system will eliminate the concept of third-party operations by default.
What is blockchain technology?
Simply put, it is an autonomous network designed to deliver and store information more securely. Blockchain technology eliminates third-party commitments during operations.
Benefits of adopting blockchain technology
Transparency: Each set of data that is entered into the blockchain network is recorded sequentially, making it easily accessible to users.
Decentralization: With blockchain technology, the ability to control the system is not held by a central body, but rather distributed across the various nodes in the network. This democratizes accessibility and automatically eliminates third-party influence. Each node in the network has the freedom to operate freely without interference.
Data security: Blockchain technology provides cybersecurity frameworks, assurance services and best practices against fraud. Before a transaction takes place, the parties to the transaction are allowed to verify it, after which it is processed in the next step. In addition, the data is cryptographically secured in blockchain technology.
Immutability of information: Once the data is entered into the system, it leaves no room for further manipulation, modification or deletion. It secures data in its original form.
How blockchain seeks to revolutionize operations in the energy sector.
Blockchain-powered smart contracts: The basis of any business relationship is a contract. A contract exists when two or more parties come together to make an agreement by word of mouth or in a written form, which is enforceable by law.
Invalid commercial contracts, one party called the offeror offers to perform a service for another party called the recipient, which is accepted for reasonable consideration.
The inherent lack of trust between offerer and receiver introduces significant complexity into commercial contracts, which blockchain technology seeks to address through the introduction of Blockchain-powered smart contracts. Blockchain-powered smart contracts organize existing contract terms between parties more securely by capturing contract terms in real time.
This is mutually agreed to avoid the circumstances of late payments, disputes and complicated reconciliations, thereby significantly reducing transaction costs.
This is the transactional side of the E&R chain, which requires digital ledger technology to amplify its operations. Digital ledger technology provides an independent, reliable and secure space to record transactions without the influence of third parties, as all parties involved in the transaction use the same platform.
The interesting part of this technology is that contract terms can be represented by executable computer codes that validate contracts without human intervention.
World energy supply
Before gasoline and diesel are refined into usable states, the various processes involved, from extraction to conversion and transportation to the end user, are disjointed, due to a lack of technological advancement within the information support system.
This makes it difficult for business owners and stakeholders to clearly understand what is going on and further compounds the complexity of their business.
With these existing gaps, Deloitte seized the opportunity to develop a platform (which is in its developmental stages) to help fill these systematic gaps. The feasibility of this platform requires digital ledger technology to complement it, which will help address issues of transparency, real-time information, and tamper-proof reliability.
Regulatory reporting and compliance
Energy regulators require industry players to provide them with data and information for inspection to enable them to conduct their due diligence and verify compliance with their regulations.
After collecting this data for inspection, the data cleaning process becomes difficult and hectic. Worse still, sensitive information could be exposed to the wrong people, putting business operations at risk.
Blockchain technology is well positioned to address these challenges by allowing industry regulators to access information at the point of source. This technology also gives companies the exclusive right to control what information is disseminated and who should have access to it.
Blockchain-based smart contracts
A contract exists when two or more parties enter into an agreement either by word of mouth or in a written form enforceable by law. Invalid commercial contracts, one party called the offeror offers to perform a service for another party called the recipient, which is accepted for reasonable consideration.
The inherent lack of trust between offerer and receiver introduces significant complexity into commercial contracts, which blockchain technology seeks to address through the introduction of Blockchain-powered smart contracts.
Blockchain-powered smart contracts organize existing contract terms between parties more securely by capturing contract terms in real time. This is mutually agreed to avoid the circumstances of late payments, disputes and complicated reconciliations, thereby significantly reducing transaction costs.
Blockchain technology is a revolutionary mechanism that can help eliminate costly intermediaries, while facilitating unprecedented levels of transparency, coordination, and data sharing in the industry – at the same time granting companies the exclusive right of ownership information, giving them a competitive edge. on the market.
However, for the energy sector to reap the full benefits of this emerging technology, concerted efforts by governments around the world, private investment firms and other stakeholders are needed.
Ibrahim Adle Muhammad
Research Intern, Institute for Energy Security (IES)
Host, Market Place on Joy News
Linked to: https://www.linkedin.com/in/charles-ayitey-79984883/