Blockchain in Energy Market

Market Overview

The global blockchain in energy market size was valued at USD 7.05 billion in 2023. It is estimated to reach USD 1,285.25 billion by 2032, growing at a CAGR of 78.32% during the forecast period (2024–2032). The growing adoption of decentralized and renewable energy sources, like solar panels, wind turbines, and microgrids, is anticipated to augment the global blockchain in the energy market. Moreover, the growing investment in blockchain and several projects integrating blockchain into the energy sector are estimated to boost the global market. 

Blockchain is a decentralized network that utilizes distributed ledger technology to facilitate safe, transparent, and efficient transactions and data management. The energy sector can benefit from blockchain technology in several ways, including optimizing smart grid operations, facilitating peer-to-peer energy trading, enabling secure transactions for renewable energy, and enhancing energy supply chain management. 
Blockchain enables the exchange of information among decentralized energy resources, automates energy transactions using smart contracts, and ensures transparency in tracking green energy certificates and carbon credits. Blockchain technology can mitigate the danger of fraudulent activities, optimize the efficiency of energy trade and billing procedures, and foster a decentralized and sustainable energy ecosystem.

Highlights
• Private blockchain dominates the type segment 
• Services dominate the component segment
• Power sector dominates the end-user segment
• Europe is the highest shareholder in the global market

Market Dynamics

Global Blockchain in Energy Market Drivers:

Growing Adoption of Decentralized and Renewable Energy Sources 

The increasing utilization of decentralized and renewable energy sources, such as wind turbines, solar panels, and microgrids, is a significant catalyst for the growth of the blockchain in the energy sector. These sources can produce surplus energy that may be traded with other customers or grid operators using blockchain platforms. Blockchain technology facilitates decentralized energy trading, allowing consumers to transact directly without intermediaries. This fosters a more efficient and democratic energy economy.

Blockchain technology can verify d track the authenticity of renewable energy certificates and carbon credits, thereby encouraging the expansion of sustainable energy sources and mitigating the release of greenhouse gases. According to an IEEE assessment, blockchain technology has the potential to raise the proportion of renewable energy in the worldwide energy composition from 25% in 2023 to 40% in 2030.

Increasing Investment and Innovation in Blockchain Technology

The energy sector is witnessing substantial interest and investment in blockchain technology from various stakeholders, including utilities, energy firms, start-ups, investors, and governments. According to a report by BNEF, worldwide investment in blockchain technology in the energy industry surged to USD 322 million in 2023, marking a significant increase from the USD 156 million recorded in 2022. Moreover, other pilot projects and initiatives are underway to assess and showcase the capabilities and viability of blockchain technology in the energy industry.

Notable examples include the Brooklyn Microgrid in New York, the Power Ledger platform in Australia, and the Enerchain project in Europe. These projects and initiatives examine several scenarios and applications of blockchain technology in the energy sector. These include direct energy trade between individuals, certification of renewable energy sources, control of power grids, and oversight of energy supply chains. These projects and efforts promote innovation and collaboration among many stakeholders in the energy sector, leading to the development of novel business models and value propositions using blockchain technology in the energy industry.

Global Blockchain in Energy Market Restraint:

Lack of Regulatory Clarity and Standardization

Blockchain is an emerging and revolutionary technology that presents regulatory and legal obstacles for the energy industry. The existing energy legislation and policies are specifically tailored for centralized and traditional energy systems. They may not be appropriate or compatible with the decentralized and innovative energy solutions facilitated by blockchain technology.
Furthermore, the absence of uniformity and compatibility among various blockchain platforms and protocols could impede the scalability and acceptance of blockchain technology in the energy industry. Hence, it is imperative to establish unambiguous and uniform rules and standards that promote and expedite the advancement and use of blockchain technology in the energy industry while safeguarding consumer rights, data privacy, and cybersecurity.

Global Blockchain in Energy Market Opportunities:

Growth in Strategic Initiatives

Various stakeholders, including large enterprises, institutes, and government entities, are increasingly implementing strategic measures to improve the utilization of blockchain technology in the energy sector. For instance, in June 2023, Energy Web, the largest network of firms utilizing open source and decentralized technology to expedite the transition to renewable energy, will integrate with Polkadot. This cutting-edge blockchain network supports advancing a more efficient internet. By making this move, Energy Web will establish the infrastructure for a novel technology called Energy Web X. This will aid its partners, including prominent entities such as Shell, Vodafone, Volkswagen, and RMI, in expediting their efforts to reduce carbon emissions. 

Additionally, an Abu Dhabi government-affiliated research center named Technology Innovation Institute's (TII) Cryptographic Research Center has announced the introduction of a new carbon tracking and trading platform powered by blockchain technology. This initiative aligns with the United Arab Emirates government's endeavors to reduce emissions and achieve net-zero targets. The latest iteration of blockchain technology was introduced during the December 2023 United Nations Climate Change Conference (COP28). This advanced system would facilitate the global exchange of carbon tokens, directly tied to investments in environmentally friendly initiatives like afforestation and carbon capture. Such initiatives are anticipated to create opportunities for market expansion.

Regional Analysis

Europe Dominates the Global Market

Based on region, the global blockchain in energy market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Europe is the most significant global blockchain in energy market shareholder and is expected to expand substantially during the forecast period. The European region's dominance can be ascribed to the growing investment and collaboration in blockchain technology within the energy sector and the favorable legislative and policy framework. The EU plays a crucial role in stimulating the market in this region by implementing various initiatives and programs that actively encourage and facilitate the advancement and implementation of blockchain technology in the energy sector. Notable examples include the European Blockchain Partnership, the European Blockchain Observatory and Forum, and the Horizon 2020 program. The market in this region is primarily dominated by Germany, France, and the UK, which are leading in exploring and implementing blockchain technology in the energy sector. These countries have multiple projects and platforms, such as the Enerchain project, the Electron platform, and the Powerpeers platform, that are actively involved in testing and applying various use cases and applications of blockchain.
Moreover, the market participants are actively engaged in the development of blockchain technology to facilitate its integration with the energy industry, enabling decentralized energy production. For instance, in May 2020, IBM established a blockchain consortium in collaboration with three European electricity grid operators. This partnership aims to facilitate the transition to renewable energy sources. This is a crucial measure towards decentralizing and democratizing electricity use, which is vital for governments to achieve their carbon reduction targets by 2050. The Equigy platform is supported by TenneT, a grid provider in the Netherlands and part of Germany; Terna, which operates in Italy; and Swissgrid, which operates in Switzerland. As a result, these factors contribute to the expansion of the regional market.

Asia-Pacific is anticipated to witness the highest growth rate in the global market. This is attributed to the rapid growth of the energy sector, the growing need for decentralized and efficient energy systems, and the escalating urbanization. In addition, several pilot projects and initiatives are underway to assess and showcase the capabilities and viability of blockchain technology in the energy industry. Notable examples include the Power Ledger platform in Australia, the Energo project in China, and the Electrify project in Singapore. 
Furthermore, there has been an increase in government efforts to promote blockchain technology, which has the potential to transform the energy industry. For instance, the Indian government strongly supports blockchain-based peer-to-peer (P2P) local energy markets in Uttar Pradesh and Delhi. These projects facilitate the direct power exchange between energy producers and consumers, promoting the efficient exploitation of renewable energy resources. Moreover, the Indian Ministry of Electronics and Information Technology (MeitY) has formulated a National Strategy to deploy a National Blockchain Platform. This method aims to improve security, instill trust, and enable the creation of transactions that cannot be tampered with in the energy sector. These factors accelerate the growth of the regional market.

Segmental Analysis

The global blockchain in energy market is segmented by type, component, application, and end-user. 

Based on type, the global market is divided into public and private blockchain. 

The private blockchain segment is estimated to hold the most significant market share. A private blockchain is a form of blockchain limited and regulated by a particular business or group. Private blockchain provides enhanced scalability, efficiency, and personalization while entailing more reliance and centralization. Private blockchains are typically tailored for specific purposes within enterprises, enabling expedited transaction processing and increased throughput compared to certain public blockchains. This is due to fewer nodes, which mutually trusting organizations potentially control. Moreover, private blockchains promote confidentiality by restricting access to sensitive information to authorized members only. This renders them appropriate for corporate applications that prioritize data confidentiality.

Based on components, the global market is bifurcated into platforms and services. 

The services segment dominates the global market. Service is a blockchain type offering consultation, integration, and support services for implementing and managing energy applications in the energy industry. The service segment is anticipated to see accelerated growth by facilitating the adoption and diffusion of blockchain technology in the energy industry by providing essential expertise, guidance, and assistance. Moreover, influential players from different regions employ diverse growth strategies, including forming alliances with multiple blockchain start-ups to implement blockchain operations like supply chain management, energy trading, and grid management. This is anticipated to stimulate the expansion of the services segment further.

Based on application, the global market is divided into grid management, peer-to-peer trading, payment schemes, and supply chain management.

Peer-to-peer energy trading is a utilization of blockchain technology that facilitates the direct transfer of excess electricity between two participants on a connected power network without intermediaries. This promotes a more efficient and democratic energy market. Blockchain functions on a decentralized network, indicating the absence of a singular point of control. This prevents the necessity of a central authority, such as a utility company, to supervise transactions. 
Participants can have confidence in the system's integrity, as each transaction is documented on an immutable ledger. Every transaction is carefully tracked on a blockchain, establishing a clear and unchangeable record. Users can obtain a complete and permanent record of transactions, which promotes trust among participants. This level of transparency effectively mitigates concerns about fraudulent activities and disagreements.

Based on the end-users, the global market is segmented into power and oil and gas sector. 

The power sector is the largest contributor to the market share. Blockchain technology is essential for managing distributed energy resources in power generation. It allows major players to process and record transactional data cost-effectively and efficiently. Blockchain technology can also be employed to monitor and oversee assets in the energy industry, including power plants, transformers, and other equipment. The decentralized ledger guarantees the accuracy, timeliness, and accessibility of asset information, hence enabling maintenance and minimizing downtime for relevant parties.

Recent Developments

•  August 2023- Gitcoin partnered with Shell to incentivize the adoption of renewable energy through the utilization of blockchain technology. The agreement entails financial support for Climate Solutions rounds and a hackathon in the fourth quarter.
•  August 2023- Powerledger introduced a public blockchain specifically designed for applications in the energy sector. The primary purpose of the Powerledger Chain is to facilitate the creation of innovative solutions that address the obstacles associated with the integration of renewable energies into the power grid.