In Europe today, I received a guided tour: the blockchain unit of the European Commission took me through new technologies it is funding and creating. I was stunned because I did not know that EC has many technical PhDs warehoused in some labs, pushing and researching for the future of Europe. Yes, I know of the PhD Economics but blockchain and AI experts? Not really.
Blockchain has been heralded as one of the most exciting new technologies with capabilities to redesign industrial sectors over the next few years. It is “a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.” Wikipedia explains it as “a continuously growing list of records, called blocks, which are linked and secured using cryptography”.
As we went through the tour, one of the items got my brain firing. They have built this hand hair dryer that could buy the cheapest electricity using blockchain. In the dryer is a blockchain node via Internet connection which links it into an ecosystem. As you use the dryer, it would be combing the world, looking for the cheapest electricity. Once it finds, an AI bargains, and closes the deal. You would not even know. Yes, you would continue to dry your hair while the agents of bits and bytes do their jobs!
The thinking is this: in the near future, electricity would be truly unbundled with the amalgam of renewal & alternative energy (solar, wind, geothermal, etc) entrepreneurs participating in big ways. Out of nowhere would be energy aggregators who would become brokers of electric power. They would acquire distribution lines and then push energy producers to compete for access into homes and offices. Think of Google AdWord where advertisers bid for the opportunities for Google to show their adverts on AdSense-supported websites. The bidders play with amount they are ready to pay. If the price is very low, Google would not show the ads even though the person is running an ad campaign. Yes, it is possible if your bidding is low, you would be on a campaign and none of your ads would show.
So, for electricity, the energy producers have to set their prices. They have incentives to make them low to win the bids. The distributors would pay based on the amount consumed through their networks. The implication is that every energy producer would be forced to have very competitive price since without a good price, the users, through blockchain, would likely not use power from that firm,
For this hand dryer, the local Belgium utilities company has a base price but there are brokers who have bought power at scale to resale at small margins. Even though the local utilities company is physically piping the electricity to the dryer, the money matters are being handled by other companies (energy traders, futures and speculators). And there are many of such companies that before a woman finishes drying her hair, the dryer had bought electricity from three companies, autonomously, with no help from the user.
Nigerian Disco Scenario
The Nigerian Disco (distribution companies) issue is unique because our problem is that we have not gotten the electricity to homes. Also, there are issues with smart metering and payments. But looking at what they are doing in the EC, it seems the problems we are trying to solve are already stale! Simply, you do not need any meter because blockchain can do the metering [of course we do not have decent Internet access, but that would change]. The payment issue is handled automatically as the bidding, buying, payment, and settlement are done autonomously meaning that the issue of non-payment is not a possibility.
Of course, besides a reliable Internet access, we need to have a credible way to execute the payment. According to the EC, they are working on something. Because it was shared in confidence, I will not discuss it here as it could be misinterpreted.
Nigeria would need a digital currency tied to the Nigerian naira to enable efficient conversion on what is happening in the blockchain and the real world. This is imperative as blockchain has many applications for Africa as I noted in my book. We cannot just wait without dealing with that currency conversion paralysis with an indigenous solution.
Virtual Energy Operators
With blockchain, this is where we are going on electricity: Virtual Energy Operators. These entities would be similar to Mobile Virtual Network Operators. Simply, the technical company that provides the electric line to your house, is not necessarily going to be the company you would be paying.
A mobile virtual network operator (MVNO), virtual network operator (VNO), or mobile other licensed operator (MOLO), is a wireless communications services provider that does not own the wireless network infrastructure over which it provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently. An MVNO may use its own customer service, billing support systems, marketing, and sales personnel, or it could employ the services of a mobile virtual network enabler (MVNE).
This implies that if a distributor connects a line to your house or office, using blockchain, three or more energy producers may be competing and bidding for you to use energy from them. And depending on the prices, the blockchain AI in your device would take the best offer, and while you are still in the middle of the activity, it could still switch to another producer to take advantage of the current best offer.
Inhale and exhale, we are still far from this, in Nigeria. But this is the future Europe is planning for. They do believe that with renewal and alternative energies, it would not be long for this new redesign to become the norm.