Today’s world – we can agree – is filled with as many opportunities as there are challenges. This holds especially true with respect to the wide applications available for data monetization in the energy space. One of the solutions being explored is centered on decentralized energy systems in a sharing economy. Decentralized energy systems are an area with the focus on creating sustainable ways to generate and consume energy in a sharing economy. Here, consumers and businesses that provide services in the energy space, mutually benefit from each other through their energy consumption habits.
As we’re reminded over and over again, the current practices in centralized energy systems are non-renewable. Prominent practices involve the burning of fossil fuels, oil and coal exploration. According to Greenpeace, the global economic losses from air pollution caused by burning fossil fuels stands at $2.9 trillion each year, and that’s approximately 3.3% of the global GDP. To put this into perspective, we’re heavily invested in using non-renewable energy resources that threaten the environment we share with the adverse effects of climate change and the depletion of natural resources. However, employing ways to build efficient energy systems at the grassroots level can help change the circumstances. For starters, service providers in the energy sector can explore the creation of micro grids to enable a sharing economy.
From this perspective, a service provider in the energy industry will have to find viable ways to involve their consumers, giving them a stake in the generation and consumption of energy, adding value to the process. Service providers in the energy sector can work together with their customers – not only to practice renewable energy consumption but also to secure a sustainable business-to-customer relationship. This is where emerging technologies can play a role in enabling a peer-to-peer sharing economy to create decentralized energy grids and enable incentivization like data monetization.
The role of Blockchains & Data
Data monetization can create inclusion at the grassroots level by incentivizing a sharing economy within localized energy grids. This can be accomplished by adding blockchain tech to the technology stack. Energy grids can gather large amounts of data with several parties actively generating and consuming energy within the grid. These points of data can be monetized or tokenized. That is to say, these blockchains can incentivize customers to share user data with the service providers and receive incentives for being gatekeepers of the data they generate.
Blockchains also provide an efficient way to manage and allocate units of energy generated, mapping it down to a specific point of consumption. Additionally, it would even be possible to create a hierarchy of priorities based on the sources of energy being consumed. This enables accelerated, automated renewable energy certification processes, increasing the degree of traceability.
In addition to creating a decentralized energy grid, blockchains can also ensure that the energy sources being used within a grid are renewable and green. Smart contracts will enforce these regulations to make sure that the energy grid is a safe and sustainable source. Therefore, the incentivization will be regulated based on the energy source being a renewable one. This can also be a scalable solution for larger corporations that can generate or invest in this type of energy. Moreover, this cuts out the need for intermediaries, saving costs and time, and increasing privacy.
Blockchain also allows all parties in a grid to audit results as it assures transparency and security of transaction data which is immutably recorded in the platform, allowing all parties to audit the results.
A future with value-driven relationships
Among other emerging technologies like artificial intelligence and machine learning, decentralized ledgers or blockchains have an applicable way to enable data monetization in the energy space. Simply put, blockchains can create data unions to set up a mutual give and take between energy service providers and consumers. With this application at the grassroots, consumers will become the gatekeepers of the data that they generate and can be incentivized for sharing their data with their service providers. In turn, service providers can use this data to get deeper insights into consumer behavior. Such user behavior recorded in a structured manner can be the first-hand information that businesses need to create better customer experiences and build better offerings.
With these challenges met through decentralized sharing economies and data monetization, the energy space has the scope to build efficient, sustainable systems for energy management. With a blockchain layer added to this use case, consumers can trade and purchase energy directly from the grid rather than from retailers. Therefore, with a culmination of data monetization and blockchains, energy management can effectively improve sufficient lifestyles and create a better future for the generations to come.
(The author is Head of Developer Relations, Streamr and the views expressed in this article are his own)