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The German Power Company Pioneering Blockchain Car Charging

09 March

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Blockchain technology could revolutionise the world economy. A decentralised ledger that holds details of all transactions in a network, blockchain allows participants a definitive and instant timeline of all dealings, without involving a third-party intermediary. Or, as Don Tapscott, CEO of Tapscott Group explains, blockchain offers “an immutable, un-hackable distributed database of digital assets, a platform for truth and a platform for trust.” He believes the implications of blockchain are staggering, not just for the financial-services industry in as the building blocks of cryptocurrencies, but across virtually every aspect of society.

The potential of blockchain technology is causing an increasing number of organisations to consider how it might work for them. One such organisation is RWE, a German power company with more than 20 million customers worldwide. The utility company operates both coal and nuclear energy infrastructure across Germany generating $52bn, in revenue annually yet, similar to other utility firms in Germany, RWE is being forced to consider how it will respond to upcoming regulatory challenges to its primary modes of energy production. In 2011, Germany’s coalition government announced a policy to phase out the country’s nuclear power plants by 2022 in response to the unresolved nuclear disaster in Fukushima, Japan. The announcement resulted in a shift in how Germany produces its power, forcing utility companies to innovate or risk being left behind in a changing marketplace. RWE chose to adapt and evolve, and as part of those efforts, the firm began to evaluate how blockchain technology could help trim costs by lowering expenses related to energy transmission. In identifying the potential of this idea, RWE partnered with Ethereum-based blockchain startup Slock.it, to develop proofs-of-concepts (POCs) for delivering new forms of power to its customers, based on blockchain technology. 

 

The partners have since developed a number of potential blockchain-based projects, one of which is a network of car charging stations that use blockchain-based smart contracts to authenticate users and manage the billing process. The project operates an Ethereum blockchain, whereby the charging station acts as a point at which both customer authentication and the processing of payments takes place. The user of the charging station agrees to a smart contract that is programmed on Ethereum by making a deposit on the network before charging, which is released after the transaction is complete. In doing so, the RWE prototype bills its users differently purchasing the amount of electricity consumed during the charging process, instead of charging for the amount of time spent connected to the charging station. This allows customers at the charging stations to save money by using microtransactions for what they use instead of being charged for the time it takes to charge their car. It also allows electricity to be deployed more efficiently. In an interview, RWE blockchain team lead Carsten Stöcker explained: “We want to really push electric vehicle deployment forward by looking into establishing a seamless and affordable electrical charging infrastructure.” 

 

The project showcased a working prototype in Geneva, Switzerland in 2016 and since then, has been testing the blockchain-based prototype with real electric vehicles and charging stations. This is such a new concept that current German regulations do not cover this approach and therefore RWE are currently working with German regulators to design fit for purpose requirements. Once these have been agreed, the framework can be applied by international regulators to roll the idea out further. As well as saving costs and electricity, this new approach to delivering energy could redefine the company’s customer relationships. As Stöcker explains: “What’s really exciting here is that people are going to be able to use smart contracts to contract with a machine directly, rather than contracting with a human being or a corporation.” This blockchain-based project is just one RWE are developing as the organisation is also considering how this idea could influence their approach to autonomous vehicle operation. “We are looking into the combination of blockchain and energy delivery, and we think that this can change many industries around energy, mobility and supply chain,” he said. RWE are not the only utilities company to consider how blockchain technology could transform their supply chains. For instance, GTM Research has identified 122 blockchain start-ups operating in the energy space worldwide and over 70 energy-related blockchain demonstration projects deployed or planned globally. 

 

Indeed, the IDC spending guide estimates that global blockchain spending will reach $9.7 billion by 2021. Such an example just goes to show how wide the potential applications of blockchain could reach, changing how we use and purchase energy, for good.

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