The role of blockchain in decentralising renewable energy

Introduction

With climate concerns on the rise, the trend has been that of a gradual shift towards renewable energy. While welcoming ecological innovations, it is important to retire certain features of the old paradigm such as complete reliance on centrally controlled energy generation assets, hence the need for decentralised energy.

Decentralised energy would entail the devolution of electricity production and distribution responsibilities to non-centralised parties or institutions. This would bring energy production closer to the people and as well reduce single-point-of-failure occurrences. In this design, private owners of renewable energy assets can provide electricity to neighbours and get compensated. For such a design to work seamlessly, there is a need for an immutable reporting mechanism to track and measure the exchanges that occur between relevant parties such as energy producers and end users. This is where blockchain technology comes into play. This article explores the relevance of blockchain technology in decentralised energy.

What is blockchain?

Blockchain is a technology that features the use of encryption to store and secure identical data along connected computers. These computers are said to be in consensus. That means that all computers must be in agreement as to the validity of any new data before it is stored. To understand the concept of blockchain, it is helpful to refer to the practice of keeping ledgers. Ledgers are used to store transactions in a company. Blockchain, therefore, is a ledger that is stored on a number of connected computers such that whatever transaction is stored in one computer is simultaneously stored in other connected computers. The connection design of a blockchain is in such a way that whoever wants to falsely alter the records in one computer would have to effect the same alteration in every single computer involved in the blockchain. This is really difficult. In other words, blockchain brings with it perks like immutability, transparency and decentralisation. This makes blockchain the option of first resort for businesses that rely on transactions and data management.

Blockchain technology was popularised by the cryptocurrency_bitcoin in 2009. It operated at its crudest level and hence supported only the exchange of the cryptocurrency bitcoin. Today, blockchains like Ethereum support smart contracts. With smart contracts, software programs could be added to blockchain ledgers thereby increasing the use case of blockchain. 

Today, blockchain technology has proliferated the gaming space, and digital art space through non-fungible tokens, cloud storage, real estate, media distribution and even artificial intelligence. Most importantly, it has permeated the energy space through the enablement of what we call peer-to-peer trading. It involves the autonomous selling of energy and energy property certificates to those who need them. For example, someone who uses solar panels could sell the excess stored electricity to neighbours. For such a system to be robust, there is a need for proper and unalterable record-keeping of such transactions. In other words, unscrupulous elements should not be able to trick the system and get unjust gains. This is why blockchain is the go-to technology for peer to peer sale of electricity

Notable blockchain projects focusing on decentralised energy

Energy Web

Energy Web is a non-profit organisation that runs an open-source Blockchain-based software that can be leveraged by businesses dealing or intending to deal in distributed energy resources. There are SDKs offered on the side to help developers build renewable energy solutions on the blockchain. It was founded in 2017 by Rocky Mountain Institute (RMI) and Grid Singularity (GS_y).

Energy Web offers three major blockchain-based solutions under the following headings: 

3. Energy Web Asset Management: This is a customizable asset management solution native to the Energy Web blockchain. It helps enterprises to keep track of Distributed Energy Resources (DERs) resources. DERs refer to energy infrastructure like wind turbines, solar panels, etcetera. EW blockchain provides a harmonizing network that interconnects renewable energy assets involved. Energy Web Asset Management enables secure monitoring of energy produced by connected distributed energy resources. Energy Web Asset Management is also used to track ownership, installation and registration of all types of energy assets.  
4. Data exchange: Managing Energy grids is no simple task. Given the many market participants involved(such as energy producers and distributors), there is a need for a coherent one-stop shop where data can be exchanged between these participants. EW data exchange is put in place to enable renewable energy resource operators to seamlessly share data on renewable energy resource use. With thousands of people connected to the grid, there is a need for a harmonising one-stop shop that processes the data exchange that occurs. What better way to do this than through a blockchain that stores these exchange data in an immutable fashion? Furthermore, there is a need for coordinated use of the grid by market participants. This is only possible when these market participants can seamlessly exchange data. That is the purpose of the Energy Web data exchange. 
5. Green proofs: The idea behind green proofs is to enable enterprises to produce verifiable reports on renewable energy production or use. This would prove useful in fulfilling decarbonisation pledges. With green proofs, we do not just have to trust the ESG and sustainability claims of these enterprises, we can verify them by consulting energy data securely stored on the blockchain. For energy production clams, Smart meters connected to energy generation assets collect energy generation data every 15 minutes. This is input into the blockchain which is immutably stored. As for renewable energy use claims, users of green proof can track the viability of renewable energy certificates presented by enterprises that use the energy web blockchain. Green proofs offer enterprises a solution to submit accurate proof of renewable energy use and production. These proofs can be tokenised and sold as Energy Attribute Certificates. However, these Energy Attribute Certificates are yet to be integrated into any energy attribute certifying systems. 

Power Ledger

Power Ledger is a blockchain-based energy trading platform. It was founded by Jemma Green and John Bulich in 2016 with the goal of democratizing the energy market. By democratizing, we mean that people can participate in the energy market within less restrictive confines. For example, people should have the option of choosing where the energy they use come from. Unsurprisingly, the Power Ledger hosts decentralised applications which facilitate p2p trading. In other words, private individuals can sell energy amongst themselves. There are also carbon credit trading apps with the perks of transparency and auditability typical with blockchain technology. Power Ledger is currently hosted on the Solana blockchain.

Power Ledger’s offerings can be grouped under the following three headings:

1. Energy trading and traceability: This simply references the p2p functionality of the platform. Not only can customers trade electricity amongst themselves, but customers can also trace the source of the electricity. A customer who prefers to use renewably sourced electricity can opt to purchase electricity from fellow customers who offer renewable-backed electricity. 
2. Flexibility trading: Integrating distributed energy resources to central grids can prove daunting. A good alternative would be to pool these distributed energy resources so as to offer grid services. Under flexibility trading, there is a consolidation of distributed energy resources into different grid service providers. This way, the DER owners can monetise their assets. A key heading here is the MODE or Marketplace for Optimisation of Distributed Energy which is native to the power ledger platform. Through flexibility trading, the operators of these distributed energy resources can trade energy amongst themselves. This is done with the Local Energy Market.
3. Environmental commodities trading: A major heading here is the Trace X platform. This PowerLedger native platform facilitates trade in environmental commodities such as carbon credits, Renewable energy certificates, etc. In essence, anyone can sell or buy environmental commodities.

Summary

The application of Blockchain in decentralising renewable energy distribution has long gone past the ideation stage. The technology is in full motion in certain jurisdictions. For instance, the largest P2P trading project in India is powered by Power Ledger (in cooperation with Calcutta Electricity Supply Corporation). In Vietnam as well, the first P2P electricity project is powered by Power Ledger (in partnership with the Central Power Corporation in Vietnam).

As for EnergyWeb, the popular blockchain network, XRP announced in 2020 that it would be decarbonising its blockchain through renewable energy certificates gotten from the Energy Web platform, specifically Energy Web Zero. The message is clear: if accurate reporting, transparency and decentralisation are worthwhile objectives in the energy sector, then blockchain is the way to go.