The Potential of Blockchain Technology and Smart Contracts in the Energy Sector: A Review

Abstract

The energy sector is undergoing a period of technological transformation, driven by the emergence of blockchain and smart contracts. These technologies have the potential to revolutionize energy markets and significantly reduce transaction costs, improve efficiency, and increase transparency. The rising energy prices in recent years have been a cause for global concern. As the EU recorded historically high energy prices in 2022, according to the EU Council, this price rise is linked to increased energy demand following the COVID-19 pandemic, the war in Ukraine, and the acceleration of climate change. This paper aims to critically examine the current state of blockchain and smart contracts technology in the energy sector, focusing on use cases, key challenges, and potential solutions. It further explores the impact of these technologies on energy markets and their potential to contribute to a sustainable, low-carbon energy future. Finally, it examines the prospects of blockchain and smart contract technologies to transform the energy industry and the policy implications for governments and regulators.