Proving the Business Case for the Internet of Things

Shanghai Gas and VeChain power energy-as-a-service with blockchain

Steve Rogerson
April 7, 2020



Shanghai Gas is collaborating with VeChain to roll out a blockchain-powered energy-as-a-service platform after a successful test phase.
 
Shanghai Gas, a wholly-owned subsidiary of Shenergy Group that provides energy coverage for greater Shanghai metropolitan area, is working with VeChain to develop and roll out a blockchain-enabled energy project. The partnership aims to optimise business processes, reduce operation costs, improve the supply chain efficiency and build a trust-free energy-as-a-service ecosystem.
 
As one of the leading forces of the global demand for natural gas, China is facing the challenge of effective management of its domestic market. In 2017, the National Development & Reform Commission (NDRC) of China unveiled its 13th Five Year Plan on energy development to facilitate the building of a trusted energy national network, but the lack of information sharing between stakeholders has brought great difficulties.
 
Therefore, a more transparent methods became a must need in the industry, in which blockchain technology has emerged as viable.
 
As a dominant player in the domestic energy industry, Shanghai Gas joined hands with Chinese energy company ENN and VeChain to deploy the pilot blockchain-enabled LNG (liquefied natural gas) system. Based on the success of the pilot project, Shanghai Gas decided to enhance the collaboration to reap more benefits, which led to the decision to kick off the further blockchain-based energy project.
 
In the first phase of this project, the LNG delivery and component information of the storage tank shows the quality of LNG that will be collected and uploaded onto the VeChainThor blockchain by leveraging the one-stop BaaS data platform – VeChain ToolChain. As a result, it eliminates information barriers in the supply chain, contributes to a transparent product process, and provides a reliable database for LNG risk management. The project will involve all stakeholders, both upstream and downstream, in the entire supply chain for the contribution to the creation of a blockchain-based energy ecosystem in the future.
 
The global outbreak of the Covid-19 pandemic has facilitated a dramatic demand for digital transformation. The success of the first phase enabled Shanghai Gas to maintain its business operation online during this period and will serve as a fundamental basis for the fully digital transformation roadmap to come.
 
The collaboration has formulated a long-term strategic plan to incorporate a blockchain-enabled energy-as-a-service business ecosystem that includes logistics management, energy trading and financial products, and involves key stakeholders around the energy industry.
 
With the continued development and reform of the LNG market in China, a huge and vibrant natural gas market potentially brought by the countries along the Belt & Road is being expected. The Belt & Road Initiative is a global development strategy adopted by the Chinese government in 2013 involving infrastructure development and investments in nearly 70 countries and international organisations in Asia, Europe and Africa.
 
According to the BP Statistical Review of World Energy 2019, by the end of 2018, the proven natural gas reserves in the countries along the Belt & Road account for 156.3 trillion cubic metres, occupying 79.4% of the worldwide proven natural gas reserves.
 
The countries along the Belt & Road consumed a total of about 1685 million tonnes of oil equivalent, which is 51% of worldwide natural gas consumption, among which Russia and China ranked as second and the third among all countries.
 
As the Belt & Road initiative progresses, companies that lead the pack in terms of possessing digital infrastructure and technology will play a central role. As the co-founder of the Belt & Road Initiative Blockchain Alliance (BRIBA), VeChain is confident in enabling businesses and benefiting all stakeholders along the Belt & Road with reliable and proven blockchain technology and infrastructure.
 
The business scope of Shanghai Gas covers the investment, construction, operation and sales of natural gas pipeline network, production and marketing of manufactured gas as well as operation of liquefied gas. The company occupies over 90% of the gas market of Shanghai with its customer size, storage and transportation capacity ranking top in China.
 
Launched in 2015, VeChain aims to connect blockchain technology to the real world by providing a governance structure, a robust economic model and IoT integration. VeChain is the pioneer of real-world applications using public blockchain technology, with international operations in Singapore, Luxembourg, Tokyo, Shanghai, Paris, Hong Kong and San Francisco.