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Energy Business and Blockchain #5 (final) – Notable areas in the future based on analysis of areas of applicaiton

The previous article focused on ICO in the energy sector. The conclusion was that strengthening financial regulation is an irreversible global trend and that regulation-compliant security tokens and utility tokens for decentralized protocols are future possibilities. This article, the final article of the series, wraps up blockchain application in the energy sector as of June 2019. What business can take advantage of blockchain technology? I will try to analyze the area of application of blockchain technology in the energy sector. Setting aside whether it is good or not, many applications are seed oriented. In other words, it is not that solutions are developed out of social issues to solve, but that applications developed out of functionalities and characteristics of blockchain technology are proposed. A short description of characteristics of blockchain technology, or distributed ledger technology to be exact, is that multiple participants that are connected in a peer-to-peer fashion in computer network approve transactions by following defined protocol and maintain record of transaction records. Cases of applications that take advantage of the characteristics of the technology can be organized as follows: Many existing cases use the characteristic of “decentralized transactions” that trade energy (or ancillary objects to electricity such as attribute values associated with electricity and flexibility [1]). Those include cases that makes measured electricity digital assets, ones that performs settlements (financial transactions), and ones that combine the both. [1] Ability to respond to variations of demand and supply, not the value of electricity per-se Energy transaction applications include peer-to-peer energy trading that is the most popular application in the energy sector, trading in wholesale market, grid management applications such as flexibility trading and virtual power plant (VPP), and disintermediation model that proposes means for consumers to access directly to wholesale market. Financial transaction applications include fundraising…

15th, August, 2019

Energy Business and Blockchain #2 Financing in the era of infrastructure democratization

In my previous article, I reviewed the trend of deregulation and liberalization of the utility sector and explained that transactions that used to be self-contained internally are now being externalized, that customers’ DERs (Distributed Energy Resources) are being utilized for grid management upon increase in variable renewable energy such as solar PV and wind, and that platforms are being developed to realize the new concept of peer-to-peer (P2P) energy trading. In this article, I will discuss how blockchain technology and ICO (Initial Coin Offering) can be utilized for democratization of energy infrastructure. Still halfway on democratization of infrastructure Power generation plants, positioned on the upstream of energy infrastructure, used to be large scale, centralized, and built by state-run corporations or corporations with large capital. However, building power generation plants has become much less difficult because of cost reduction of solar PV and wind power technology in the past decade. A small-scale plant can be built on the rooftop of a house, unused land, or in a factory. Energy is being decentralized, and a foundation is being built for the democratization of infrastructure. In Japan, solar PV has been booming since 2012, the year feed-in-tariff (FIT) started until around 2015. “Mega solar, ” megawatt-class (1MW=1,000kW, a 1MW plant can power approx. 200 houses) solar PV plants have been built all over Japan mainly for investment purpose. Solar PV plants of this scale require capital of 100s million yen (millions US dollars), and only corporations that have capitals in addition to capabilities of land procurement and development can built mega solar PV plants. Under the current policy, owners of generation plants receive sales of energy that is funded by “renewable energy generation promotion levy” paid by organizations and households on top of electricity charges. If a owner of generation plants…

26th, November, 2018

Energy Business and Blockchain #1 Utility System Reform and Uber/Airbnb

From the editor: Industries undergoing major reform tend to see aggressive implementation of new technologies and methods. This series looks at the electric utility/energy industry which, amid system reform, is producing numerous cases of blockchain applications and ICOs. Yasuhiko Ogushi, an expert in this field, will guide us through the topic. This first article gives a bird’s eye view of the changes occurring in the energy industry, while subsequent articles will go deeper into individual themes and case studies. New models emerging amid Around the world, blockchain application to the energy sector is increasing. There are over 80 organizations and consortiums leading development, and over 100 organizations implementing blockchain in the energy sector if companies participating as consortium members are included (writer’s own research; see writer’s blog covering the topic). I believe this increase in application of blockchain to the energy sector is founded on changes over the past decades. In other words, if not for the changes in the electric utility industry in the last 20 years, experimental blockchain applications would not have penetrated the electric utility/energy industry to this extent. What are these foundational changes? One is the liberalization of retail and generation as well as the unbundling of generation and transmission. Countries and regions have implemented this in different ways and at different times, but in Japan this is part of its Utility System Reform from 2015 to 2020. Traditionally, power companies have been vertically integrated, with generation, transmission, distribution, and retail carried out within the same organization. Japan was divided into ten regions, each having a vertically-integrated power company with a regional monopoly. However, after liberalization and unbundling, while transmission and distribution remained part of the regulated domain that provides and manages public infrastructure, generation and retail became competitive domains into which diverse businesses…

5th, November, 2018

The tide of decentralized business: Crowd Realty attempting to establish a P2P capital market – Takeshi Kito (Part 2)

Crowd Realty is a platform that matches fundraisers and investors like a peer-to-peer (P2P) investment bank. Could Crowd Realty represent a new fundraising model for the coming decentralized society? In Part 2, we ask Crowd Realty CEO Takeshi Kito about past projects and his goals.

19th, October, 2018

The tide of decentralized business: Crowd Realty attempting to establish a P2P capital market – Takeshi Kito (Part 1)

Crowd Realty is a platform that matches fundraisers and investors like a peer-to-peer (P2P) investment bank. Offering a service combining real estate securitization and crowdfunding, it is unique in that it breaks with the received wisdom of high-entry-barrier public offering fundraising and allows organizations and even individuals to become project proposers and raise amounts ranging from small to comparable to J-REITs (Japanese real estate investment trusts). Could Crowd Realty represent a new fundraising model for the coming decentralized society? In Part 1, we ask Crowd Realty CEO Takeshi Kito about the company’s founding and business model.

16th, October, 2018