Rocky Mountain Institute, a nonprofit research and educational foundation, announced that energy companies have collaborated to support Energy Web Foundation (EWF) that aims to foster the commercial deployment of blockchain technology in the energy sector.

The companies that have joined hands in the blockchain initiative includes Centrica plc, Elia, Engie, Royal Dutch Shell plc, Sempra Energy, SP Group, Statoil ASA, Stedin, TWL (Technical Works Ludwigshafen AG), and Tokyo Electric Power Co (Tepco).

With the support of these companies, EWF has secured the first round of funding that is amounting to $2.5 million.

“The main challenge of the electricity sector in the 21st Century is to integrate more renewable energy into the grid in a cost-effective fashion in a context of largely flat or diminishing demand. The only way we know how to do this is by automating the demand side—by allowing many more participants in the grid,” Hervé Touati, a managing director at RMI and president of EWF, said. “We are excited by the potential of blockchain technology as an enabler to realize that vision. Blockchain will not be the only building block of the 21st Century grid, but it will most likely be a key building block. It also provides much higher levels of cybersecurity essentially for free—which addresses, as a by-product, one of the key concerns of utility executives when it comes to distributed energy resources.”

Nonprofit organization EWF is a partnership between Rocky Mountain Institute and Grid Singularity, a blockchain technology developer specializing in energy sector applications.

Blockchain technology has a tremendous potential to play a significant and potentially game-changing role in the energy sector. It can allow millions of energy devices including HVAC systems, water heaters, electric vehicles, batteries, solar PV installations, among others to transact with each other at the distribution edge. At the same time, it offers support to utilities and grid operators to integrate more utility-scale variable renewable energy capacity at much lower cost.

Grid Singularity, along with its partner firm Parity Technologies, will bring advanced blockchain technology, thus addressing the limitations with respect to speed and transaction costs of current blockchains as well as enabling features that are aimed in supporting energy applications.

“The current test-network ‘Kovan,’ which is a proof-of-concept for the new consensus algorithm, has the ability to perform up to 1,000 transactions per second (tps) and is already used by many blockchain start-ups. By embedding further state channel technology, we intend for our architecture to facilitate scaling to 1 million tps over the next several years,” Ewald Hesse, chief executive of Grid Singularity and vice-president of EWF, stated. “With the ‘Polkadot’ design conceived by Parity Technologies, we are also introducing the concept of interoperability among multiple blockchain architectures, which should free users from technology lock-in.”

EWF is also actively soliciting partnerships with other technology service providers with an aim to support the open-source approach of eliminating barriers in the energy market.