Mitsubishi Electric Developing Blockchain Energy Technology
25-01-2021 | By Robin Mitchell
Recently, Mitsubishi Electric announced that it is developing a renewable energy blockchain-based trading system to improve renewable energy sources' efficiency. What is P2P trading, what is Mitsubishi Electric planning to do, and why is blockchain technology becoming popular?
What is P2P?
The term P2P is often seen when talking about cryptocurrencies, file sharing, and decentralized systems. P2P is an acronym for Peer-to-Peer and means that two peers form a direct connection with each other instead of connecting via a server. A central server can be used in a P2P system to provide IPs of each party, but besides this, a server never handles the direct link between the two peers.
P2P is often referred to as decentralized as it does not use a central system to handle requests, and it is because of this fact that P2P is increasing in popularity. Unlike a centralized system, no authority or overlord can decide to deny users to the service, shut the service down, or manipulate the service. However, P2P leaves each peer responsible for their own security, and P2P systems can provide attackers with potential entry points.
Mitsubishi Electric Announces P2P Energy Plan
One of the biggest issues with renewable energy is that it is unreliable and sometimes unpredictable. Furthermore, the energy generated cannot be matched to demand meaning that there are times when the energy generated by renewable sources goes to waste.
Japan (like many other countries), has a scheme written into law that says users with renewable energy sources (such as solar panels), can sell their energy back to the electrical grid. However, fixed rates do not incentivize others on the electrical grid to make the most of such sources when energy is of abundance.
To combat this, Mitsubishi Electric has announced an energy P2P system that aims to solve this issue. Simply put, Mitsubishi Electric is designing a live energy market system similar to Bitcoin that allows customers to buy and sell electricity at their own price. Using a P2P network, users are matched up with other users who meet their energy criteria, which can increase demand during times of excess energy while providing energy users live prices of energy.
The four-step trading process starts with buyers and sellers starting their buy/sell rates. The second step uses a computer to match orders on the network with each other. Once matched, the third step involves the computer sharing the match's details to the rest of the network. The final step is the energy transaction itself, and a blockchain is written to prove that the transaction occurred.
Why are P2P and blockchain becoming popular?
Such a system, if functional, brings two major advantages to customers. The first is that the use of proven blockchain technology allows everyday computational devices to operate the network. This removes the need for large powerful servers to maintain and monitor the service. Secondly, using a P2P buy/sell network allows customers to pay exactly what they want, or better, get a lower energy rate.
Furthermore, energy trading incentivizes customers to use electricity at key times when it is plentiful. Instead of being given a day/night tariff, live trackers can allow electric cars and other systems to use power only when their energy price is met. This, in turn, can be caused when renewable energy sources suddenly find themselves generating excess energy.
The first blockchain instances were related to Bitcoin, but since then the technology has grown and expanded to many areas of life. The ability to have ledgers that cannot be changed on a decentralized network creates an environment of absolute trust. This will become important to various technologies including IoT, smart devices, and security.