China's energy giants are betting on the potential of blockchain technology to decipher the future of the country's energy industry.
Blockchain's increasing appeal to China's leading energy companies came about when the central authorities highlighted the key role of the revolutionary technology in industrial transformation.
State Grid Corp of China, the largest power utility company in China that offers services to over 1.1 billion people across 26 regions, announced earlier in August it was setting up a branch for blockchain research and development, with one of its goals being to build an internet of things system for power transmission.
The grid giant's Qinghai branch also announced it would set up a blockchain-based shared energy storage platform.
The company said the platform will offer solutions for renewable energy distribution, make an effective use of new energy's power generation capacity in Qinghai, and may bring in over 2.35 billion yuan ($334.7 million) in profit to the province.
China's second largest grid company, China Southern Power Grid, announced in October it would step up blockchain technology development with a focus on the renewable energy certificate trading and charging infrastructure for electric vehicles.
Li Jianbiao, a technician at China Southern Power Grid, said the technology can record transactions among various parties in a verifiable and permanent way, which can make renewable energy certificate trading safer, more effective and transparent.
"Blockchain technology opens a new chapter for China's energy industry," said Cao Yin, vice-director, Advanced Research Institute of Blockchain.
"Going forward, blockchain technology will play a significant role in China's energy trading, power supply-demand tracking and management, and green development as the technology can be used to track and record carbon emissions," Cao said.
Daniel Qin, senior analyst at blockchain research and analytics firm TokenInsight, said blockchain technology is also playing an important role in data tracking for electric vehicles.
Despite the great future potential for blockchain in the energy sector, Qin said the new technology is still facing challenges like whether it is well-suited in real-life situations in such a traditional industry and whether it can be applied alongside existing technologies in the energy sector.
"China, like many other countries, is still at an early stage in blockchain adaptations in the energy industry. But the outlook is positive with concentrated efforts from leading companies," Qin said.
Cao noted that in the global energy sector, many countries have started attempts that include building a more efficient and secure peer-to-peer energy trading platform and internet of things systems.
A report by BIS Research said the market for blockchain adaptation in the global energy market is estimated to be $518.6 million in 2019, and is expected to post a 54.09 percent compound annual growth rate from 2019 to 2024.
