Blockchain in energy

Energy is the fundamental currency of the universe. This of course includes the ‘Pale Blue Dot’ that so graciously hosts humankind. In fact, the entire history of human civilization can be accurately described as a never-ending pursuit to satisfy humanity’s growing energy needs. Every big technological leap we’ve made throughout history has been in some way linked to the discovery of new energy sources or the better utilization of existing ones. Meanwhile, our ability to utilize energy sources has always hinged on building, maintaining and managing infrastructure.

This is where blockchain could have its biggest impact on the sector, especially in combination with other innovative technologies that are already changing power generation, energy distribution and consumption. Blockchain is perfect for laying the foundation of the energy grid of the future. Here’s why.

Energy problems today

The energy sector is a multifaceted industry that supports a diverse range of companies working on multiple levels. Exploration and extraction of fossil fuels, power generation and energy distribution are just some of the sub sectors of the broader energy industry. Such complexity requires reliable solutions for coordinating operations and supporting complex, multilevel supply chains. The energy industry is also heavily regulated, so industry players need to ensure compliance with regulation on a regional and global level. Another challenge stems from the growing need to support clean energy and sustainability.

Fortunately, blockchain technology is perfectly equipped to address many of the industry’s problem areas.

Advantages of blockchain in energy sector

Cost reduction

The energy sector typically relies on complex networks and supply chains involving numerous participants. Oil production and distribution, for example, involves a number of stages, including exploration, extraction, refining, transportation and marketing. Blockchain technology can help organize the different parties involved in those activities, thus ensuring frictionless communication, speeding up processes and eliminating inefficiencies across the supply chain. Such optimizations can lead to considerable cost savings for an organization.

Improved transparency

Another valuable feature of blockchain technology is its ability to improve transparency across a network of multiple parties. Since every member in a given blockchain network has their own copy of the blockchain ledger, the information recorded on that ledger is easily verifiable. What’s more, blockchain’s immutability guarantees that the records already stored on the ledger cannot be changed. This can also improve regulatory compliance across the industry.

All this can be achieved without companies having to give up control over their sensitive data. This is very important in an industry that relies heavily on trade secrets.

Decentralization and programmability

Blockchain’s decentralized nature means that peer-to-peer networks powered by the technology can run without the need for oversight from a central authority. Additionally, transactions between network participants can be regulated programmatically, via smart contracts. This hints at the level of security that could be achieved in such systems, but it also gives an idea of how blockchain can support innovation across the energy sector.
Blockchain can help speed up the adoption of smart meters and smart grids to enable more efficient energy use. The technology can also help connect end users directly with the grid.


Another interesting property of blockchain technology is its ability to digitize physical assets. With the help of smart contracts, any asset can be digitized and stored on a blockchain in the form of tokens. This has the potential to transform energy commodity trading, as well as create new ways for people to trade excess energy, carbon credits and others.

How can blockchain be implemented in the energy sector?

Given the potential benefits of blockchain for the energy industry, it is not surprising that companies are showing keen interest in the technology. Here are some of the most promising use cases for blockchain in energy.

Wholesale energy distribution

Blockchain technology could change the way end users receive electricity. Blockchain-based systems could eliminate the need for retailers by connecting users directly to the grid. This way, users would be able to get electricity at wholesale prices, which would reduce their utility bills considerably.

One company that’s working to solve this problem is Grid+. Branched out from the ConsenSys team, Grid+ is a blockchain energy company that seeks to utilize blockchain-based systems to manage services such as billing and metering, which are typically performed by retailers.

Peer-to-peer energy trading

With energy storage capabilities expected to grow significantly in the next few years, the landscape of electricity distribution could see even bigger transformations. Households and condominiums relying on autonomous power supply systems already have the option to sell their excess energy to the grid. Blockchain could take this concept a step further by powering peer-to-peer networks of individual electricity suppliers and buyers. Blockchain-based platforms could be used to track energy stores, as well as handle transactions between energy consumers and suppliers with the help of smart contracts.

Together with continued advancements in batteries, the development of such platforms could be key to achieving widespread adoption of renewable energy.

Tokenization of energy

This possible shift to a new supply-and-demand dynamic could be made even more likely with the help of tokenization. ‘Digitizing’ excess energy as tokens that could be easily traded or converted back into energy supply could revolutionize the way consumers access, receive and use energy. It could enable convenient pay-as-you-go schemes and prompt the emergence of new types of marketplaces where ‘energy tokens’ would be exchanged as commodities.

Tokenization could also help track and reduce carbon emissions by simplifying the issuance, distribution and exchange of carbon offset credits.

Electric vehicles

The aforementioned concepts can be applied to build the foundation of a future electric vehicle ecosystem. Blockchain technology could be used to power networks of charging stations and connected vehicles participating in a shared economy. In such an economy, transactions would be conducted in energy tokens that could be spent at charging stations or exchanged by drivers and autonomous vehicles.

Rewarding the use of renewable energy

The use of clean, renewable energy needs to be incentivized in order for renewables to achieve commercial viability. Subsidies and tax breaks are some of the measures governments traditionally employ when they aim to spur commercial activity in a particular sector. Meanwhile, blockchain technology could offer a way to incentivize adoption at the consumer level. Specifically, companies could implement reward programs rewarding customers with energy tokens for choosing clean energy sources


If we consider the millennia of human history, for example, the validity of the statement at the beginning becomes undeniable. Energy is, indeed, the fundamental currency of the universe. This realization can come as a surprise given our tendency to make up our own rules to govern human society. Not only do we have our own currencies – USD, GBP, etc. – we’ve also created artificial borders, time zones, daylight savings, scales and measurements, Santa… We are so good at making up things to organize our lives that it’s often tempting to consider that perhaps our made up rules can be more valid than the laws of nature.

Of course, nothing can further from the truth. However, this doesn’t mean that thought experiments and purely theoretical concepts are without merit. Sometimes such constructs reveal fundamental truths about our reality. Sometimes they spark a revolution.

In the 19th century, Charles Babbage invented purely on paper his famous Difference Engine – the grandfather of all computers. Some 160 years later, a person more enigmatic than Santa used some peculiar mathematical properties to devise a way to propel the computer revolution even further. Their white paper and subsequent work laid the foundations for an informational technology that one day might change the way we handle the fundamental currency of the universe.

Revolutions are born from big, bold ideas that often seem too fantastical to be achievable. At LimeChain, we believe that with hard work, decisive leadership and a clear vision anything can be achieved. We would love to help bring your ideas to fruition. Let’s start the next blockchain revolution at [email protected].


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