Blockchain technology in the future Swedish electricity system : An exploratory study and multi-level perspective analysis of blockchain in the energy transition in Sweden

University essay from KTH/Skolan för industriell teknik och management (ITM); KTH/Skolan för industriell teknik och management (ITM)

Author: Saga Carle; Viktor Vifell Nilsson; [2020]

Keywords: ;

Abstract: Blockchain, a distributed ledger technology, became publicly known when the cryptocurrency Bitcoin was introduced in 2009. As the financial value of cryptocurrencies increased, the interest for blockchain grew, leading other sectors to explore if blockchain could be used in other areas as well. One of these areas was the energy sector where the technology was predicted to transform the market by cutting out intermediaries with the use of peer-to-peer electricity trading. Today there are few successful commercial blockchain projects and the blockchain-hype is seemingly decreasing. It is, however, unclear if this is a natural part of the innovation process that follows the Gartner hype cycle or if the energy sector will reject the technology. This thesis aims to investigate the value characteristics of blockchain in the electricity system, and if these can add value to the future electricity system in Sweden. Firstly, to answer this question, a literature review is conducted to explore how blockchain has been applied in the electricity sector in earlier studies and what value the technology offered. Secondly, an interview study with 28 participants was conducted with the purpose to understand future predictions of how the electricity system in Sweden will be configured, and the energy sector’s understanding of blockchain technology. The literature concluded that blockchain could particularly offer these five value characteristics: 1) transparency 2) decentralisation 3) immutability 4) traceability and 5) P2P interaction. Furthermore, did the interview study result in a multi-level perspective analysis and proposed that the electricity system in Sweden is facing a reconfiguration pathway driven by the landscape pressures, consisting of electrification, digitalisation, decarbonisation and a potential nuclear phaseout. Moreover, this study has found that the electricity system in Sweden is fronting a regime transition from a centralised system with stable generation and consumptionbased production, to a decentralised system with more intermittent generation and productionbased consumption. In this regime shift, new challenges will occur, and the common denominator for these solutions is a more flexible electricity system, i.e. that the demand-side needs to become more flexible in consumption. The thesis has found that blockchain can provide the most value for the electricity system by functioning as a layer of governance on a potential local flexibility market. The flexibility will be decentralised and offered by both consumers and industries. The actors will, consequently, need an authentication process to confirm if flexibility providers can provide flexibility at a given moment. The five value characteristics do consequently have potential to provide a solution to this specific challenge. The thesis does, however, conclude that both the flexibility market, emerging business models and blockchain technology are not mature enough today. Accordingly, it is too early to decide if blockchain is the best-suited technology to serve this purpose, even if the value characteristics indicate potential.

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