Blockchain – a "spreadsheet" or a really high-tech ledger used to record transactions securely – offers an exciting potential for clean energy. With the rapid rise of distributed energy technologies – such as solar energy on the roof, batteries, smart energy devices and electric vehicles – some analysts believe that the blockchain application market in the energy sector is much larger than that for cryptocurrency in the financial sector.
Blockchain technology could be a great promise for a sustainable future, but first we have to solve some important challenges.
Companies are already experimenting with peer-to-peer energy trading on a microgrid – a small network of electricity users (such as a condominium or campus) with a local power source (such as solar panels and a battery) that can function independently – using blockchain. This would allow "customer A" to buy solar energy from "customer B" while not at home (AirBnB for anyone's energy?). Blockchain can, in real time, determine the amount of energy needed for the amount of energy available on the network and perform a micro-transaction among customers that is automated, verified and secure.
In this same scenario, customers who reduce electricity consumption during peak hours or who own smart appliances that can do it automatically can be compensated for the energy saved and the deferred cost for energy supply in excess from the network (which could come from a fossil-fuel power plant). Cropping third parties as monopolist energy suppliers, brokers and accounting or audit agencies can make all of these activities faster and cheaper.
Other blockchain applications in energy markets include the accounting and validation of renewable energy certificates (RECs), which work similarly to carbon markets because once a credit has been issued, it should never again be credited to avoid market manipulation and maintain environmental integrity. Blockchain could also make charging and payment systems for electric vehicles faster, safer and cheaper by cutting third parties. Imagine an app that tells you instantly where there is an excess of solar energy on the network (making the energy cheap and clean) or where there is an excess demand (causing a shortage) , and a mobile battery arrives to charge or discharge energy. Buyer and seller are compensated safely and efficiently on the blockchain platform without the need for a third party.
However, markets are only accessible to customers with the ability to participate, blocking others without the right technology and systems. This adds to an existing lack of clean energy technologies: tenants, small businesses and low-income customers who can not afford this technology, or can not install it on properties they do not own, can be left behind.
Furthermore, not all electrons are created equal; time and position are important. The solar energy produced and accredited in one part of the network during the day has yet to reach homes and businesses, which might need energy later in the evening. The simple exchange of solar credits is not the same as providing clean energy to the end user and could jeopardize the environmental benefits if the end user continues to discharge energy from their local supplier. Therefore, we still need to continue building local, distributed and clean electricity networks so that the blockchain can really deliver all its benefits.
Blockchain must be much less energetic, coupled with a strong investment in complementary technology such as distributed energy, accessible and accessible to all.
The Energy Web Foundation (EWF) – a global nonprofit organization founded by Rocky Mountain Institute (RMI) and Grid Singularity – is developing an energy-lean "energy-lean" blockchain platform that accelerates decarbonisation of the network. It could standardize information sharing and industry transactions, keeping costs and carbon footprints low.
Investments in basic hardware, such as micro-networks, distributed technology, electric vehicles and universal wireless internet, must also keep up with the imaginary future for blockchain-compatible clean-energy markets. Microgrids are the optimal scenario for sharing clean energy because we can control the creation and distribution of that power in a closed system and it will not be necessary to import additional energy that might not be clean.
Finally, these technologies must be made accessible and accessible to all customers, not just those who can afford to be the first to adopt. In fact, sharing peer-to-peer energy in an affordable residential complex with solar communities, EV recharging and storage would be a good match between blockchain technology and fairness.
Get the right details
You should know that blockchain is not a panacea for all our technology and sustainability needs. Blockchain, in its current form, is the best solution for applications requiring a high level of security, efficiency and reliability, which have traditionally required a costly and inefficient central authority to validate and verify transactions. The technology is still in its infancy, testing and experimentation are still needed.
If this technology hopes to scale sustainably, it must be much cleaner and less expensive in terms of energy. Blockchain could be the key to unlocking a sustainable future of clean energy for all, but one thing is certain: we will not have much future if we do not have the right details.