Over the last few months, there has been a lot of hype about blockchain technology, particularly in the financial sector, where it is becoming somewhat of a game changer. The technology is showing great potential to add efficiency and security to, and even completely disrupt, the whole sector.
According to a survey of 800 executives, 58% estimate that in the future, up to 10% of the global GDP will be stored using blockchain technology. And as the trend grows, interest for blockchain technology is also growing in the utility sector. Utilities are centralised, highly regulated, and have complex processes — which makes them particularly suited for the use of blockchain technology. In this article, we explain why.
Energy saving certificates
In France and several other European countries, Energy Saving Certificates or White Certificates are one of the main policy tools for the reduction of energy consumption.
These certificates are an instrument supposed to ensure that a specified amount of energy emission, savings, or renewable energy consumption has been achieved. Every certificate has to be unique and traceable, guaranteeing that the impact of the related action has not been accounted for elsewhere. Therefore, authorities have to track the evolution of these certificates in their records, which burdens governments with excess bureaucracy and paperwork.
Using L3COS, records could be managed via the blockchain, requiring little action from the authorities whilst being accessible to all players in the energy sector (the government, the public, producers, consumers), guaranteeing the uniqueness and traceability of certificates, and even managing the trading of certificates (on certificates markets).
Today, when a renewable-energy plant produces one unit of electricity, a meter spits out data, which is then recorded in a spreadsheet. The spreadsheet is sent to a registry provider, where the data is entered into a new system and a certificate is created. This second group of intermediaries acts as a broker between the buyers and sellers of these certificates, and a third party verifies the certificates after they are purchased.
Such a system increases transaction costs while leaving ample room for accounting errors that can range from honest mistakes to outright fraud. The lack of transparency also scares off many potential buyers.
L3COS provides a record of the data issued by the meters on its blockchain and eliminates manual work that is prone to error or falsification. The L3COS ledger is secure and therefore unhackable, and it allows the authorities to check compliance with rules of operations. Best of all, L3COS automates all transactions, saving you time and eliminating third parties, which ultimately saves you money.
The energy industry will have to become increasingly digital in the production, refining and transportation of oil. Currently, the industry is reliant on manual processes. The introduction of blockchain will enable transfers of titles from the buyer to the shipper and the seller without going through the massive bills of lading paperwork.
Accounting and management of joint ventures
Accounting and management involve multiple parties, especially operators of generation assets, non-operator joint-venture partners, banks and governments. At the organisational level, this process is automated via joint venture management solutions. However, as data must be shared among other entities, blockchain’s secure ledger is a better solution, enabling users to interact faster and with more transparency.
The current joint venture process presents some challenges:
L3COS’ distributed ledger can be used to digitise the production, distribution and invoicing processes of joint ventures with electronic tracking of the Authorisation of Consent to Expenditure (ACE) between operators and non-operators. Operators can upload transaction details, which are regulated by contractual rules, to non-operators. Using the platform, they can extract transaction details and receive notifications of payment, which they can then approve, resulting in automated payment to the operator.
Trade and quality management
Petroleum products, crude oil, natural gas and petrochemicals are traded through many different parties, such as surveyors, shipping agents and others. As a process, trade entails many manual operations to validate quality control, payment, and so on.
As the various stages of the process need approval by all the stakeholders, L3COS provides transparency through its distributed ledger, where data points, transaction details and information can be stored for verification by all entities. L3COS’ smart contract would then allow all parties to engage with each other automatically without legal hustles, as the blockchain is regulated by the government.
Experts predict that blockchain will change the majority of industries, including the utility sector. But an industry that’s as process oriented and complex as this one needs more than simple unregulated blockchain. It requires a technology that does not expose transactions to risk, where people can be held accountable for their actions, and that gives confidence and assurance to all players in the industry. And that technology is offered by L3COS.