Is blockchain relevant in ASEAN energy systems?

Is blockchain relevant in ASEAN energy systems?

Blockchain has been featured in discussions across the energy value chain for some time now. Two experts on the subject from Siemens Energy express confidence on the role of this technology to open new business models in ASEAN.

Imagine a mirror shattering into a thousand pieces yet each piece still contains the same image from the whole mirror. This is how Maria Rossbander, Strategic Marketing, Innovation, and Blockchain Expert at Siemens Energy, describes what blockchain or distributed ledger technology (DLT) is in layman’s term. Her colleague, Prof Dr Monika Sturm, Principal Key Expert in Digitalisation, explains blockchain as a “new internet protocol offering a controlled data exchange within the partners in the ecosystem.”

Confident on the indispensability of this new technology, Rossbander and Sturm share their expertise on the topic and their perspective on how the power and electricity sectors in Southeast Asia can benefit from DLT.

Blockchain has already undergone several versions, explains Sturm; Blockchain 1.0 is mainly about cryptocurrency, Blockchain 2.0 is about smart contracts used to enable autonomous interaction between devices, Blockchain 3.0 started decentralised application, and where we are currently at, and Blockchain 4.0, which experts are anticipating, is about industrialising this technology.

DLT is secure, immutable, and transparent. According to Sturm, “there is no central control in blockchain and what it offers is the single truth; hence, there is data integrity in the shared ledger between all parties.” This aspect of blockchain is vital because it is the basis of any trusted automation.

Despite its apparent benefits on current processes, we have seen a slow uptake in blockchain, particularly in Southeast Asia, surrounded as it is by an array of technical, social, regulatory, and market challenges. Technical challenges, Sturm shares, include management, scalability, performance, and interoperability. Added to these are social challenges, in particular, the lack of understanding and even scepticism about blockchain by stakeholders. Sturm also mentions how “we don’t really have set regulatory topics” and they are “still missing standards.” Siemens likewise finds market and business challenges like market adoption. There is still a lack of qualified professionals who can implement this new technology; more comprehensive cost-benefit analyses still have to be done, too.

Confidence is still high, nonetheless, that new types of collaboration will help blockchain establish its potential within the Southeast Asian market, through the increasing work done by universities, companies, and research institutes. Sturm believes that working together to release all of DLT’s potential is the best way to push this technology, as we have already witnessed from the successful adoption of blockchain in the mobile finance and logistics industries.

The energy sector has already tested blockchain’s potential, as showcased by Siemens’ #connect2evolve and Automated Pay-Per-Use business models. #connect2evolve, Rossbander explains, is a new financing method that allows for different ways of investing in projects. Siemens has successfully completed a project in Senegal where this novel financing solution was utilised to power an entire village and connect 3,000 villagers to a mini-grid and storage solution. Siemens started crowdfunding, which enabled different kinds of investors to donate any amount of money. Blockchain plays a role in the tracking of these investments, where they come from and where the capital will be deployed. “This is a new business model Siemens envisions with DLT, empowering everyone to contribute to the sector through donations and impact investments,” says Rossbander.

The Automated Pay-Per-Use, on another note, is essentially about CAPEX being shifted to OPEX. A revolutionary model, it allows utilities to pay for upgraded services as they are used: “In other words, this is when you can now buy products without paying the full amount but only pay a fee based upon the usage, and then share the rest with the customer and share the revenue.”

In Southeast Asia, things are looking up for blockchain as well, particularly with peer-to-peer (P2P) energy trading. Rossbander takes Indonesia as an example where there is a system in place that allows excess solar energy to be transferred and sold to other users through a secure platform, which is then regulated by blockchain technology so it’s efficient and transparent trading even without a middle man.

Rossbander also finds opportunities for DLT in the region, thanks to its traceability and transparency. In terms of its traceability, the origin certification aspect of DLT, which allows companies to prove they have green energy, enables a company to trade carbon certificates to the wholesale market, both locally and across the world, thereby allowing them to develop alternative revenue streams. These are but a few of the uses for the technology in the region, but there are certainly more, emphasises Rossbander.

Key to further exploring these opportunities in blockchain is “coopetition”, a term referring to a new form of cooperation that allows for competition at the same time. Sturm explains this concept as “a way of working in a collaborative way to design the IT infrastructure, the network, and the governance … to define how we can access data in that network and make use of such data; and it opens another layer of competition from this collaboration, so every partner can offer their own service.”

In essence, blockchain can open several opportunities for Southeast Asia’s energy systems. While the move may be slow and technical understanding of this technology still needs more dedicated effort, there’s no doubt that blockchain can contribute to the region’s electrification, decarbonisation, and digitalisation endeavours.

Visit Enlit Asia’s Expert Insights Series, Episode 4 to hear the full recording of this interview.

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