Applying Blockchain in Business Models; Advantages of Blockchain in Energy Industry
Blockchain has the potentiality to make positive changes in supplying and transferring energy. Energy industries always attempt to correctly use different energy types via creative solution like applying solar roofs, electronic devices, etc. Now it is Blockchain’s turn to alter the world of energy and its related industries with capacities and facilities such as smart contracts. Among different business plans and projects which address the field of energy and Blockchain, the issue of energy sustainability has been attended to less than the others; however, there are still business models in the field of energy which work based on Blockchain and try to make sustainable energy and protect the environment through new technologies. In fact, some businesses have been defined in the world which are active in the field of energy and attempt to use Blockchain with new business models, change the energy market and link the concepts such as recyclable energy to Blockchain and its technologies. You will be familiar with different parts of the market and energy industry and a business model to link these parts via Blockchain.
Energy Business Models and Blockchain
The technology of distributed ledger in Blockchain is able to improve the status of related business to energy and its supply. This increase of productivity and better management of energy are possible with Blockchain through energy traceability in a network and its different spots. In addition to the traceability of the energy consumption process with Blockchain network, this technology has some capabilities in renewable energy distribution.
The controversial areas of energy industry such as oil and gas benefit from Blockchain application in their business models. Complex systems with numerous actors in these markets will enjoy Blockchain in these markets. For example, oil is one of the important goods which are traded and exchanged all around the world. For better management of the businesses related to it, a network is required where different actors, trades laws and issues related to oil barrels are able to be managed and communicated with each other. Big oil companies are seeking for investing in Blockchain, since the technologies related to the Blockchain can positively influence the charges decrease and environment sustainability increase. [1]
Oil and gas companies are much sensitive in subjects like the privacy and trading mysteries in defining their business models. Therefore, they can manage their affairs through employing private Blockchain networks. The followings are the main advantages of using Blockchain in energy section:
• Charges decrease
• Help in environment sustainability
• Increase of transparency for the market stakeholders of the energy market without disturbing their privacy
The Cases of Using Blockchain in the Energy Market and its Business Models
Blockchain can be used in different business modeling in the area as extensive as below:
• Electricity distribution in the major scale
• P2P energy trades
• Energy data management
• Good trades and exchanges in the market of energy
• Energy supply
• Discovering oil and gas resources
• Storage and transferring oil and gas resources
• Management and sale of refined oil resources
Blockchain in Electricity Distribution in the Major Scale
The companies which seek for using Blockchain in their business models follow it through linking the final consumers and Blockchain network. Combining Blockchain technologies with Internet of Things (IoT) technology helps the final customers and consumers to receive their needed energy directly from the distribution network and there will be no need to the retailers in supplying energy.
For instance, Grid+ is an energy company which uses Blockchain in its business model and its focus is on major energy distribution. It knows retailers intervening and useless in the energy market. The retailers have a very limited role in the infrastructures in this company and they are only used in consumption degree assessment and issuing the bills. Through directly connecting final consumers to the energy network, Ethereum allows them to buy energy with their suitable price. As a result, the energy productivity increases more and the distribution charges decrease. [1]
Blockchain in P2P Energy Trades
Active companies in the field of energy which use Blockchain in their business model are not solely limited to distribution companies. They use Blockchain in P2P trades and contracts too. The P2P energy market is a shared network wherein the people are present and address buying and selling excess energy. The lack of overseers and central cores in Blockchain-based networks simplifies the people’s activity in the energy markets.
Most of the companies use Ethereum. With Ethereum and the technologies belonging to Blockchain, the individuals who work in the field of energy are able to buy and sell too. For example, the Australian company Power Ledger, links the energy micro-producers to each other in a Blockchain network. [1]
The Effects of Blockchain in the Management of Energy Data
Blockchain can give the consumers the ability to better control energy resources. A general ledger in which there is the possibility to change the information and data manages energy consumption data securely and in a real time manner. Different data about energy include market price, marginal charges, the price of fuel and the information in the legal field. In the April of 2018, CNE company announced that it had started a Blockchain-based project and would use Ethereum to record, store and follow up the energy-related data.
The data in the field of energy are sometimes changed intentionally and sometimes unintentionally. Blockchain is again used for the transparency and resolving the problems which can be created in the way of managing the data related to the energy. When the energy-related trades are transferred to the Blockchain network, exploitation from energy buying and selling is minimized due to being public the information distribution; that is, being distributed at public level and the possibility of observing transaction in the infrastructure of Blockchain. [1]
Blockchain in the Goods Trades and Exchanges in Energy
Buying, selling and trading energy such as oil and gas suing Blockchain will be handled much efficiently. Hefty charges are spent on energy trades. Using Blockchain technology to manage and exchange energy causes raising trades speed and increase in the systems security and productivity. [1]
Blockchain and Energy Supply
Energy supply companies are big ones producing and supplying energy from the plants and energy resources. They are not in competition from the perspective of financial services and banking industries. Cooperation and interaction of these companies are more than their competition. So, using Blockchain in their business models can be profitable. The Green Tech Media company is active in analyzing clean energy and it has attempted in designing business model with Blockchain in the field of energy. Ethereum can receive the information from various resources and devices and process them. The energy suppliers can use Blockchain to create a system wherein the data can be exchanged. The distributed ledger technology and its related technologies greatly help information exchange among different energy supply companies. [1]
Blockchain and Energy Supply
Using Blockchain in supplying oil and gas energies can lead to the decrease in the charges. The management of the data, staff and many other communicative cases are simplified and accelerated through this technology. BTL group is a company which uses Blockchain in its business model. This company has announced that using Blockchain to equip and follow up energy trades has caused a 30-40% decrease in its charges. With the help of Blockchain technology, different contracts and trades as well as various processes will further with less charges and faster and albeit more clearly. [1]
Blockchain and Discovering Oil and Gas Resources
There are four main stakeholders in the part of discovering and utilizing oil and gas resources; national and state companies, big independent companies, small dependent companies and the companies which offer resource discovery services. The relationship between the stakeholders with each other causes creating a complex route; therefore, there is the need to the technologies to simplify and quicken the relationship and transfer of the data among stakeholders. Blockchain technology causes data optimization in similar multiple relationships in energy industries.
It is not just discovering oil and gas resources which need extensive communication of the stakeholders. Storing and transferring energy are followed up with complex communications. In this part of the activities related to the energy, sharing the data and following up the assets are a requirement and a safe and extensive network like Blockchain can lead to the accuracy and speed in following up the affairs.
In the next part, oil and gas energies industry are accounted consistent with sale and management of different products from oil and gas manufactures. The platform which employs legal smart contracts in this field saves time, money and energy.
Using Blockchain-based Automation for Oil Trades and Exchanges
Using Blockchain in business models of energy is very much beneficial. Ondiflo is among businesses which have addressed creating automation for oil trades and exchanges through Blockchain. Concomitant with IoT, Blockchain has been able to straighten out the automation of trades and exchanges. Ondiflo is an American business which works according to Blockchain and is active in the industry of gas and oil transfer. This company has automated the payment process for the fluids transportation. In fact, this company has developed a platform in the oil and gas industries where all companies related to offering oil and gas services can address exchanging financial affairs and different data. This data sharing and communications among different section of energy market is conducted in the platform of Ondiflo company via Blockchain and because of that the existing data in the network are safe and sound and there is no possibility of change and tempering with in them. [2]
Ondiflo Business Model to Be Used in Energy Transportation and Exchanges
To meticulously elaborate Ondiflo business model in the field of energy and using Blockchain, we need to point out its private Blockchain. Ondiflo has provided a security level through a private Blockchain in the infrastructure of Ethereum for the manufacturers and energy supply companies through which all oil and gas ecosystems can communicate with each other and start doing transparent trades and exchanges which can be followed up on. Ondiflo is an immutable ledger which is active in a Blockchain-based infrastructure.
About 12.5 million oil barrels are daily manufactured. The transfer of oil barrels needs support and logistic operations. According to the rules and regulations regarding transportation and different affairs related to energy, traceability is considered a matter of high importance. But following up the energy is very difficult without extensive networks like Blockchain which are able to handle a large volume of data through computer codes and various human errors are created in them. As a result, transactions, communications, P2P trades proceed slowly in energy industry. But with the help of Ondiflo the process of communications becomes fast and simple in the section of energy transportation and exchange.
The History of Ondiflo
Ondiflo has started its activity since February 2018. This business concentrates on “developing an infrastructure to make communication among different parts of the energy industry”. High volumes of data which are exchanged among different sections of energy industry require a serious organization. Blockchain network with a high capacity it owns in this field; i.e. ability to make links among different sections of the energy market and organizing voluminous data related to them, have the potential to optimize different performances in the industries related to energy especially oil and gas.
Platform of Using Blockchain in Energy Industries
Communications among market stakeholders and oil and gas energy industries encounter many defects and limitations in the world. Financial affairs, information transfers in the energy exchanges market and other issues have caused the topics of oil and gas energies to have strange industries the management of its different sections is sometimes difficult. Ondiflo’s use of Blockchain has led to simplification of the communication of the data in different sections of the energy market and the related industries to it such as energy manufacturers, energy refinery section, information transportation and distribution among different sections. Optimizing information exchange in the infrastructure of Blockchain will be followed by many advantages in different sections and stakeholders.
Through Blockchain all the information related to payment processes among energy manufacturers, transportation forces, supply chain of financial affairs and IoT data which make different sections of energy supply chain traceable is placed on the Blockchain network. Quality, quantity and tracing energy and its transportation are controlled by IoT technology too. Smart contracts allow different parts of the market and energy industry to exchange and interact.
IoT and placing data and information on Blockchain are used in different sections of the energy industry. Since many market stakeholders of the energy market are not yet familiar exactly with Blockchain, Ondiflo defines a consortium for the stakeholders who have a role in energy industry. Consortium means forming a group of different stakeholders of an industry and market which plays a significant role in the profitability of different sections of the market through sharing resources, decreasing financial charges and using a common network. Ondiflo is also attempting to form a consortium wherein all the energy market sections such as suppliers, banks, financial institutes, oil and gas refinery companies, transportation companies and all the other stakeholders jointly enjoy advantages and a kind of interaction is made among them to attract different energy market sections. [3]
The Advantage of Using Blockchain in the Business Model of Energy Industries
The agreement of different stakeholders in the energy market to join Blockchain causes determining standards and criteria which make the data management and making communications among different parts of the industry simple and fast. A consortium model generates standards all the energy industry actors should observe them. Considering these standards, each section of the energy market knows well what data and information it should share; hence, disagreements and exploitations from the data and information minimize to the least level possible.
Ondiflo is to get together the oil and gas extractors, the companies offering oil and gas extraction and refinery services, transportation companies, companies of energy transfer through pipelines, financial banks and institutes and any other actor which is busy in the field of oil and gas energies. [3]
Ondiflo’s New Business Model and Energy Industry
Suppose that it is set that 130 oil or water barrels be transferred from one place to another in the gas and oil industries. Connection between these two places needs the exchange of different and complex data. The information such as the distance and the passed route, measuring the content of the tankers and barrels, locating and positioning every transported cargo and such information exist in this process. Now, if all the data and information are registered through Blockchain network, the possibility of processing and analysis increases fast. Moreover, there is no more need to the manpower and their errors will not occur in the calculations and information analyses.
With the help of Blockchain technology, all the sections present in the market and energy industries which have been mentioned in the first part of this article are communicated. Of course startups such as Ondiflo, like its peers in any other industry and market, don’t need absorbing capital. One of the ways of absorbing the capital for such startups is to negotiate with stakeholder companies which participate in the cycle of energy industry. Convincing them to join such a plan is possible through mapping the plan outlook in sharing data and information and as a result decreasing charges for each one of the stakeholders, transparency in different operations and speeding up the affairs. [4]
The Unique Point about Applying Blockchain in Energy Business Models
One of the most important aspects and applications which are recognized by the public are the cryptocurrencies which have drawn the attentions in the sections of economy and commerce. But there are major applications in this new technology the data management and information communications between some stakeholders are among the most important ones. With the help of Blockchain in different industries such as the market of energies like oil and gas, there is the possibility of forming relationship between devices, tools, systems and people and since this relationship is formed in the infrastructure of Blockchain, there is no way to do fraudulent acts and making changes in the information and communicative system. [4]
The Process of Ondiflo Activity in Using Blockchain in Its Business Model
The purpose of Ondiflo in applying Blockchain in its business model is to make communication between the biggest actors of oil and gas market with the smallest stakeholders in this market such as tiny transportation companies. In the first experimental plan of this company there has been some cooperation with big, medium-sized and small companies in the field of transportation and each one’s working needs and necessities have been investigated in different aspects. Fund raising to proceed the company purposes to complete software and hardware programs in the route of growing the business and linking different parts of the market to each other is difficult, the link which needs satisfying different companies and stakeholders of the oil and gas market to share their data. Ondiflo, too, has requested its stakeholders to announce which information to share with others and involvement in which fields in sharing information is taboo and impossible for them in its first steps to form a consortium of stakeholders. It is obvious that in the beginning stages, the response of different businesses to this question has not been anything more than continuous silence. But with passing time and explaining to the stakeholders about the profitability of the company in Blockchain-based communication, gradually some of them are reconciled to disclose the public, insensitive and nonstrategic data and information. By insensitive and nonstrategic data, we mean the data and information that through disclosing them the foundations of decision making are not disclosed.
The Outlook Ahead of Blockchain Presence in Energy Industries
Ondiflo and every other company which attempt to develop a Blockchain-based model in the energy industries and markets should use their power to satisfy the stakeholders. Offering privileges through Blockchain network to the stakeholders who have a suitable performance can be one of their intriguing factors to the presence and the continuity of the activity in the Blockchain infrastructure. Similar businesses to Ondiflo should know that the ideal plans they develop on the paper do not proceed simply and with their desirable speed, but exercise and stability in applying new technologies such as Blockchain will have dramatic benefit for all the stakeholders who somehow accompanied them in the long run. [4]
References
[1] Consensys, “How will Blockchain Benefit the Energy Industry?”, 2019
[2] Ondiflo, Information from the official website
[3] Consensys, “Ondiflo: Blockchain for Oil and Gas”, October, 2018
[4] Amazon, “Ondiflo is Using Blockchain to Revolutionize the Oil and Gas Industry”, August, 2019