Report: Blockchain – U.S. and European Utility Insights Market Intelligence Briefing Report
Indigo authored a report for the Electric Power Research Institute (EPRI) that features results and insights from a survey we conducted of 15 utilities and one regional transmission operator (RTO) across the US and Europe. Although 70% of respondents believe the utility blockchain market is still emerging, there is a great deal of activity in the space with several utilities conducting pilots, developing proof of concepts, and encouraging internal research. As we enter a more mature phase of understanding of the technology in the energy and utilities sector this report serves as a “temperature gauge” of adoption.
Utilities surveyed included: Burlington Electric Department, Centrica, Con Edison, DTE Energy, EDF, Enel, EON Climate and Renewables, Exelon, Hawaiian Electric, National Grid Partners, New York Power Authority, Pacific Gas & Electric, Southern Company, Tennessee Valley Authority and Tuscon Electric Power.
Blockchain, often referred to as distributed ledger technology, offers transformative potential for making, managing, and monitoring secure transactions across the electric utility sector and broader energy industry. Many utilities around the world have made an effort to understand and test blockchain, but the technology may need to mature before real-world applications become common.
The white paper reviews the current state of utility blockchain exploration and use in the United States and Europe, it can be downloaded here and features results from international market research. The survey focused on how these organizations are approaching blockchain technologies, the current landscape of blockchain activities and initiatives, and areas and applications in which value-added potential exists. Findings indicate that blockchain is gaining traction across the utility sector, but much remains to be defined from both technical and business application perspectives. Many utilities still are in the early stages of familiarizing themselves with the technology and investigating relevant applications. Time and resources invested to date include building internal teams to lead blockchain efforts, developing technical acumen in research and development and information technology departments, and identifying business requirements suitable for blockchain applications. While some utilities are venturing into business case development, most report that technical and financial uncertainties—including a lack of standardization and challenges in valuation—pose barriers. Nonetheless, common trends are emerging, notably a movement from exploration to proof-of-concept and live production of energy related blockchain applications. This is largely due to considerable collaboration among industry stakeholders in exploring and defining common solutions, including through EPRI’s Utility Blockchain Interest Group.
“Blockchain is sociological as well as technological; it is a movement. Simply put, blockchain is a shared database with which we can trust the value proposition. Customers want more choice, transparency, and control.” –European Utility
U.S. and European Activity
Regarding the current level of investigation and activity in blockchain at the corporate level, there is not a “one size fits all” categorization across the industry. The Figure below displays activity levels reported in the survey. Generally, utilities are further along in Europe, but many survey respondents continue to act with caution as they gather data, case studies, and other market intelligence to gauge if, how, and when they will test and deploy the technology.
Duration of Notable Blockchain Activity in the United States and Europe
Some industry players have deferred active R&D in favor of monitoring the technology and scanning potential utility applications. Others have progressed to POC and even production. Only one respondent ranked current blockchain activity as “live,” despite three participating utilities reporting live projects. This may be a reflection of the technology’s immaturity: Advancing individual use cases is not necessarily indicative of overall status as organizations evaluate blockchain to determine how the solution fits in the corporate technology stack and drives benefits across the business.
“Blockchain will not be the end of utilities and regional transmission operators—we are not a believer in disintermediation. The human element and physical parameters of the network show us it is not just about technological elements.” – U.S. Regional Transmission Operator
Across survey respondents, the level of investment in and approach to staffing varies. Reported full-time equivalent (FTE) employees devoted to blockchain technology ranged from zero up to 28, with an average of 2.2 FTEs. Most utilities reported developing internal blockchain capability through cross-organizational teams rather than by dedicating individuals. These teams typically draw on staff across the value chain—most commonly in IT, R&D, strategy, and operations—and are tasked to explore new business models, uses cases, and partnership opportunities.
Survey Results - Level of Activity by Respondent
Because many blockchain projects are in the R&D phase, robust business cases typically have not been required. However, leading utilities are beginning to identify the core structure required to justify future investments. Regulated returns and customer engagement—specifically, the value of P2P applications and reliability improvements—are reported as the most difficult benefits to quantify. Determining the cost of integration and the savings related to transparency of data and reporting can also prove challenging. In addition, as utilities continue to research and test blockchain applications, consensus is forming around the top barriers and advantages associated with blockchain investment. The three most commonly cited challenges include business model uncertainty, internal culture or organizational issues, and lack of standardization or interoperability. The three most commonly cited advantages include efficiency and speed, improved traceability, and greater transparency, followed closely by reduced costs and enhanced security.
Use Case Activity
Utilities in the United States and Europe report varying degrees of investigation and development activity relating to the eight emerging use cases shown in the Figure below.
Survey Results - Utility Activity by Use Case
“It is the notion of being able to build customer-related processes that are cross-organizational, cross-jurisdictional that makes blockchain compelling. It is about the longer-term application—the infrastructure, data, process, and how this benefits the customer at the end of the day.” – U.S. Utility
Download the report here. AI, blockchain and robotics are part of Indigo's, emerging technology offering for utilities, for more, see our practice areas. In addition, see the dedicated Blockchain in Energy and Utilities resource center here.