A version of this article originally appeared on Law360 on November 7, 2018.
Blockchain technology and smart contracts have the potential to become major disrupters in the energy industry. For example, these technologies may accelerate the automation of some or all aspects of the electricity delivery transaction chain and allow for more decentralized, efficient electricity markets. Further, these technologies may allow end users (such as homeowners) to play a more active role in the electricity markets beyond simply relying on their local utility company to supply their electricity demand. Thus, blockchain technology could fundamentally change the way electricity is supplied and consumed in wholesale (i.e., the sale of electricity for resale) and retail (i.e., the sale of electricity to an end user) markets in the coming decade.
As these technologies advance and become more widespread (i) users of such technologies must be cognizant of the various regulatory requirements that could apply to them, (ii) state and federal regulators need to update regulatory practices that are obsolete or impede the use of these technologies in the electricity industry, and (iii) traditional incumbent utilities should consider ways in which they can leverage these technologies.