The market was valued at USD 83.5 million in 2018, and it is expected to reach about USD 1215.6 million by 2024, recording a CAGR of 58.1%
NEW YORK, June 26, 2019 /PRNewswire/ --
Market Overview
The market was valued at USD 83.5 million in 2018, and it is expected to reach about USD 1215.6 million by 2024, recording a CAGR of 58.1%, over the forecast period.
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- The energy sector has certain limitations, including high administration and transmission costs mainly, due to the centralized functioning of the sector. As blockchain addresses these issues and decreases the scope for single point failures and increases transparency across the supply chain, the technology is expected to be a noteworthy digital transformation for the sector.
- The blockchain technology, which has greatly benefitted the financial sector, finds applications in the energy sector predominantly for wholesale energy trading. However, the increasing number of use cases and efforts from the regional blockchain associations are promoting the adoption of the technology for various other applications like smart contracts and digital identification.
- Blockchain enables energy transmission companies to track the movement of excess energy thereby managing the supply-demand bottlenecks. For instance, TenneT, a prominent power transmission company in the Netherlands and other parts of Germany, has partnered with an energy storage systems provider, Sonnen, to implement the usage of green energy from storage systems installed in the region as an alternative to coal or nuclear power for battling transmission bottlenecks. Significant pilot projects are taking place across regions, like the United States (Bovlabs), to test this application.
Scope of the Report
The energy sector has certain limitations, including high administration and transmission costs, mainly due to the centralized functioning of the sector. As blockchain addresses these issues and decreases the scope for single point failures and increases transparency across the supply chain, the technology is expected to be a noteworthy digital transformation for the sector.
The blockchain technology, which has greatly benefitted the financial sector, finds applications in the energy sector predominantly for wholesale energy trading. However, the increasing number of use cases and efforts from the regional blockchain associations are promoting the adoption of the technology for various other applications, like smart contracts and digital identification. Blockchain enables energy transmission companies to track the movement of excess energy, thereby managing the supply-demand bottlenecks.
Key Market Trends
Smart Contract is Expected to Register a Significant Growth
- Smart contract is a computer-aided program that encodes the different conditions and possible outcomes and moves the currency or information across the ledger using blockchain technology. Blockchain, with the use of smart contracts, is anticipated to reduce the number of different administrative processes, which involves the deal of execution.
- The smart contract enables consumers to execute and dispatch various commodities automatically, once the trade is booked. By reducing the involvement of multiple intermediaries, Blockchain will decrease the time and costs involved in executing these transactions.
- For instance, ING and Société Générale SA decided the first oil trade by using a prototype of the blockchain platform (easy trading connect). ING also anticipated that the usage of blockchain would help to reduce its involvement in the transaction from 3 hours to 25 minutes, which results in 30% cost savings per transaction.
- The rising acceptance of electric vehicles (EVs) and the lack of coordination between consumers and charging stations have enabled the adoption of smart contract solution. Smart contracts aid the EVs to charge or discharge based upon the needs of the electric grid, which enables the vehicles to act as mobile batteries and to help stabilize the grid. Furthermore, the high adoption of smart contract solutions is expected to reduce labor costs, manual and semi-automated processes, capital costs through faster settlements, and technology costs by decreasing dependency on redundant systems.
North America is Expected to Hold Major Share
- With blockchain adoption in the energy sector, transactions such as energy trading can be recorded and settled almost instantly, with no need for an intermediary and with little need for reconciliation since all parties are using the same platform. North Americans as early technological adaptors are having significant adoption of blockchain in the energy sector.
- The region is experiencing an increasing number of investments and partnerships, since the first blockchain in energy transaction took place, in 2016, in Brooklyn, New York.
- Companies in the region are partnering with other countries or having high investments to develop products related to energy sector using blockchain technology. For instance, Bovlabs, a startup working to empower clean energy, entered into a partnership with Enchanted Rock, to test blockchain's ability to bid into wholesale markets, with the ERCOT (Electric Reliability Council of Texas), and is expected to enter as a blockchain-based retailer in energy sector.
Competitive Landscape
The blockchain market in the energy sector is highly competitive and consists of several major players. In terms of market share, few of the major players currently dominate the market. These major players with prominent shares in the market are focusing on expanding their customer base across foreign countries. These companies are leveraging on strategic collaborative initiatives to increase their market shares and profitability. The companies operating in the market are also acquiring start-ups working on blockchain in the energy technologies to strengthen their product capabilities.
- July 2018 - Microsoft Corporation announced the launch of the Enterprise Blockchain partnership, in Taiwan. The company has entered the partnership with Digital China and Hot Cool, in the hope that the three companies can use the blockchain technology to enhance financial, e-commerce, entertainment, and other industries.
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