A key challenge facing regulators across various sectors is how to deal with blockchain. Currently and not unexpectedly for an emerging technology, it is virtually a free for all with small pilot initiatives from startups pursuing essentially crowdfunded, white-paper promoted so-called ‘initial coin offerings’. But for the technology to become mainstream, regulation will be key to driving its wider implementation but also the way that companies raise their funding.
While governments are starting to develop blockchain initiatives, such as in Dubai with the Dubai Blockchain Strategy as part of its smart city activities, if there is one way for regulators to get to grips with blockchain it is by working with it themselves. And in what is believed to be a first for an energy regulator, Chile’s National Energy Commission (CNE) is doing just that.
Blockchain for data management
The use case that CNE is pursuing with an Ethereum-based blockchain is focussed on publicly available energy data, with the aim of “increasing the levels of security, integrity, traceability and confidence” of that data, according to a statement.
CNE’s proposal is that instead of having a centralised data repository which is open to hacking or manipulation by third parties, data from its ‘Open Energy’ (Energía Abierta) platform is distributed across “hundreds of thousands of servers” in order to enable anyone to have access to authenticated real-time energy information.
“We understand blockchain to be considered as the most disruptive technology of the past decade and could become part of our day to day within the next few years,” says Minister of Energy Susana Jiménez. “We are interested in moving the technology from the conceptual level to a specific use case.”
In the first phase of the project, the platform includes data on the national electric installed generation capacity, average market prices, marginal costs, hydrocarbon prices, compliance with the renewable (ERNC) law, medium scale electricity generation, emission factors and residential generation facilities, among others.
CNE is the first Chilean public institution to move on blockchain and a pioneer in the energy sector in Latin America. Following the implementation, the findings will be documented with lessons learned in order to move the project forward and for the benefit of other institutions.
“Public information is an important input for making investment decisions, designing public policies or creating new service tools for society, which is why many of our users use this information for technical, economic and labour reasons,” Jiménez adds. “In using this technology, we will raise the levels of trust of our stakeholders, investors and citizens in general who use the data."
In a recent survey of energy leaders globally for the World Energy Council, regulation was cited as one of the significant obstacles standing in the path of blockchain, along with technological uncertainty, energy consumption, cyber security and integration with existing systems.
However, many of those surveyed see it as an opportunity to meet regulatory goals, with the potential to deliver greater transparency, improve access to information and simplify regulatory reporting. The regulator could have real-time access to data via blockchain. Immutability of data is one of the key characteristics of blockchain technology and as such is a strong plus for regulators and supervisory bodies.
According to the survey report, in regions such as Europe where regulation varies from country to country, greater coordination between regulators may play an important role if blockchain is to reach its full potential.