Blockchain technology has been around for over a decade. One can attribute its popularity to the rise in the use of cryptocurrencies, NFTs, and gaming. Nonetheless, blockchain technology has proven to be a transformative catalyst in various industries. Its uses and potential to reshape the energy sector across the world.
Saudi Arabia Energy Sector
The energy sector in Saudi Arabia is a very important sector. The Saudi economy relies heavily on the energy sector. It is not farfetched to see this sector as the economy’s backbone.
The kingdom is widely known for its vast oil reserves. Also, the government and private sector is recognizing the importance of sustainable energy solutions to reduce carbon emissions. According to Statista, the global market for carbon offsets and credits reached a staggering $331.8 billion in 2022, with projections indicating exponential growth to $1.6 trillion by 2028 at an average annual rate of 31%.
Blockchain Potentials in the Energy Sector in Saudi Arabia
With how critical Saudi Arabia’s energy sector is to the nation’s economy, the key stakeholders must always be on the lookout for how to improve the sector’s processes. The sector can benefit immensely from blockchain incorporation. Blockchain technology has numerous advantages and benefits.
Electricity Data Management
Blockchain technology gives end users enhanced efficiency and autonomy over their energy sources. Moreover, the immutable ledger feature of the technology provides secure and real-time updates of energy usage data. Users can easily access data such as the different types of information such as market prices, marginal costs, energy law compliance, and fuel prices.
In the long run, it will reduce any deliberate manipulation or unintentional misreporting and omissions. This will help reduce or eliminate financial costs human error businesses and governments would have recorded.
Wholesale Electricity Distribution
Blockchain can change the wholesale electricity distribution for companies. These companies will divert focus to setting up direct connections between end-users and the grid. The technology makes it possible for users to procure energy directly from the grid. With this development, there will be no need for middlemen like retailers. This makes energy cheaper as here will be no party adding extra cost. It can potentially reduce energy costs by up to 40%.
Smart Contracts for Energy Agreements
Blockchain-powered smart contracts promote an environment where both parties automate and enforce energy-related agreements. When certain requirements are satisfied, such as energy supply, payment, and REC certification, these contracts have the ability to carry out transactions automatically. This can prevent conflicts and cut down on administrative expenses.
Renewable Energy Certificate (REC) Tracking
In Saudi Arabia, renewable energy usage is constantly on the rise. Blockchain can enhance the transparency of renewable energy generation and consumption through Renewable Energy Certificate (REC) tracking.Â
Renewable energy units and their attributes can be recorded on a blockchain. Hence, stakeholders in Saudi Arabia’s energy sector can easily verify the origin and impact of renewable energy.
Final Words
Blockchain technology adoption comes with a lot of advantages that sectors like the energy sector can benefit from. We looked at some of these benefits above.
