Smart contracts in the Energy Industry
Several startup companies are already looking at using the Blockchain and Smart contracts to streamline the distribution of electricity to consumers. The idea is to use solar panels that are spread across rooftops that generate electricity and get them to sell-off excess electricity from their systems to buyers in the group, which could be consumers or people living next door. This would be an energy trading system using Smart contracts built on the blockchain. Users would bypass the conventional energy grid, build a micro grid which would include storage components and even be used during power failures. This would take the traditional power supplier out of the equation and putting more control in the hands of consumers. This technology can be used in new housing developments to work in tandem with the current electricity grid. Cellphone technology can be used so that consumers and businesses could buy the excess electricity. The ideal power system would be one that combines large power grids with clusters of small scaled power producers.
Uses of Smart contracts in the Energy industry
• Smart contracts can be used to balance supply and demand
• Automatically ensure that excess energy is delivered into storage
• Secured record keeping for individuals and businesses to monitor consumption
• Cryptocurrencies could be used to pay for the energy supplied or used
Smart contracts are a powerful modern technology that is challenging the way traditional contracts have been done. The benefits are accuracy, speed, security, trust and most of all the cost saving benefits. Organizations and individuals are still very skeptical about Smart contracts because they don’t understand the underlying technology that underpins Smart contracts i.e. Blockchain technology. With all these benefits Smart contracts they are still not accessible to all because it requires individuals with a specialized set of programming skills and knowledge to design/write a Smart contract. The other obstacle is that not every company out there accepts virtual currencies or bitcoins as payment. The development of Smart contracts could also introduce security flaws because “not all developers are created equally” – the weakest link is still a human who has to develop the code to be used in the Smart contracts.
Smart contracts have several benefits and could allow organizations to gain a competitive edge over its rivals. Each organization needs to assess their business needs and decide if Smart contracts will be beneficial for them.