Digitalisation by blockchain and smart contracts
ENERGY TRANSITION 4.0
The Energy Transition has reached the digital age. The internet of things, Industry 4.0 and especially the blockchain and smart contracts will join forces to make our energy systems more efficient, flexible and decentralised. First applications of the blockchain are micro-grids, bonus systems based on green energy, load-based electricity rates and new e-mobility concepts. In the future, it will also be used in virtual power plants, smart meters, billing and clearing.
The Act on the Digitalisation of the Energy Transition („Gesetz zur Digitalisierung der Energiewende”) marked the first step towards a fundamental transformation of the energy system. Blockchain systems (of which the digital currency Bitcoin is best known) will play a key role in the future. The blockchain is a precondition for smart grid systems, as it has the potential to significantly reduce micro-transactions, to replace intermediaries like energy suppliers and to improve ancillary services at the macro level at the same time.
In simple Terms, a blockchain is a ledger which records transactions. New transactions are grouped in a block and chained together in a cryptographically protected manner. This digital ledger creates trust because it is saved and updated on multiple decentral servers. This produces a digital and public verification that connects the digital and analog world without depending on a central administrator or supervisory entity.
Blockchain and smart contracts automate the energy system.
However, the Blockchain will only tap its full potential if it integrates smart contracts. Smart contracts are algorithms which translate contractual rights and duties into a digital and self-executing protocol; the smarter the algorithms are, the more complex agreements can be automated.
It seems reasonable to use the blockchain and smart contracts in energy supply contracts that are variable with regard to the electrical load and electricity prices. But also, decentralised energy supply systems can be made more flexible and connected if consumer devices are sufficiently digitalised and automated. And finally, in the e-mobility sector the technology will simplify the billing and metering processes.
The Energy Transition 4.0 will open up the energy market even further to innovative companies. Many different areas of energy law will be affected, such as private law and the law on general terms and conditions as well as the contract law and the rights and duties of “Prosumers” under the Energy Industry Act (“Energiewirtschaftsgesetz”). The data protection law, the IT-Safety Act, the law on legal metrology and the Metering Act (“Messstellenbetriebsgesetz”) will also be playing a role. Therefore new business models require a farsighted legal implementation.
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