A U.K. startup called Electron is proposing a blockchain-based electricity and gas meter registration system to help consumers switch between utilities more easily.
“Blockchain technology enables reliable coordination between multiple parties without the need for a central coordinating entity,” said Electron in a press release. “The company sees this platform as a first step in harnessing blockchain technology to transform the virtual infrastructure of the energy industry.”
Registering meter details on a blockchain could help U.K. utilities comply with upcoming regulation that is expected to allow consumers to change from one energy provider to another in a single day, said Electron chief operating officer Joanna Hubbard. Currently, because there is no central register of all electricity and gas meters, it can take between 17 and 20 days to change utilities in the U.K. A blockchain could cut this time to “mere minutes,” Electron believes.
The U.K. energy regulator, Ofgem, launched the next-day switching proposal in February 2015. The consultation period for the proposal has now closed and utilities are awaiting a final decision. “We propose to lead a program of work to deliver these policy proposals for consumers by 2019,” Ofgem says on its website.
Ofgem believes the measure can be achieved “by replacing the existing network-run gas and electricity switching services with a new centralized switching service.” If created in a traditional manner, though, the switching service would need to build and maintain a massive database of meter information, which Hubbard says would be costly and unwieldy. Using a blockchain would be “millions cheaper,” she said.
With the advent of blockchain technology, “a central database sounds very inefficient now,” she commented. Furthermore, she said, the blockchain approach would make it easier to integrate the meter data into applications such as demand response or peer-to-peer energy trading. This is where the real interest lies as far as Electron is concerned.
The company intends to offer the meter registration blockchain as a free platform to utilities, and then create value-added services around it. “We’re not looking to commercialize this,” Hubbard said. “We’re looking to deliver it to the industry; then we are well placed to build on it.”
For now, however, Electron still has a long way to go before making this plan a reality. The company has shown its concept could work in theory, by creating an Ethereum blockchain and filling it with simulated data from 53 million metering points and 60 energy suppliers. However, the company needs to get the U.K. electricity sector on board, starting with utilities, and “we’d have to get buy-in from Ofgem,” said Hubbard.
She said Electron was already in talks with potential utility partners and “the reception has been very warm,” although none had yet signed up for the concept.
Smaller energy providers were interested because faster switching might allow them to pick up new customers more quickly, she noted. For larger energy companies, the interest was more around the development of blockchain-based applications such as demand response.
With the right partnerships in place, Hubbard said Electron, which is backed by £500,000 ($617,000) from private investors and £150,000 ($185,000) from two Innovate U.K. grants, could roll out the blockchain registry within 18 to 24 months.
Electron’s proposal comes amid growing interest in the use of blockchains across the energy sector. Siemens recently announced it would be collaborating with a U.S. company called LO3 Energy on a peer-to-peer energy trading blockchain project in New York.
And in a February 2016 forum moderated by GTM CEO Scott Clavenna, Joi Ito, the director of Massachusetts Institute of Technology's media lab, declared: “It would be a waste to use the blockchain to just do meter billing.” Hubbard acknowledges that blockchain’s potential goes far beyond meter data, but said someone needs to provide the infrastructure to aggregate metering information in the first place. “We’re the only people doing this top-down approach,” she said.
The idea is that other blockchains (for example for tokens or peer-to-peer trading) will be interoperable with Electron’s platform, and that all told this could have a transformational effect.
For now, in the U.K, “This industry still takes 14 months to settle financial transactions,” said Hubbard. “There’s a lot that has to change.”