The ability of blockchains to allow peer-to-peer energy transactions could significantly change the renewable energy sector, in particular by encouraging decentralisation.
The increasing use of small renewable energy installations, such as solar panels on roofs, can create tension on power grids designed for large centralised power plants. By allowing peer-to-peer energy trade and stimulating local consumption at the time of production, the blockchain could stabilise the grid, favouring decentralisation.
It is estimated that the value of blockchain investments in the energy market was more than $220 million in 2018 alone and that it could achieve a compound annual growth rate, CAGR, of 50% for the period 2019-2025.
An example of this can be found in SP Group, the main operator and distributor of electricity and gas in Singapore: in October 2018 it set up a digital market for green energy certificates (REC, Renewable Energy Certificate) based on blockchain technology.
By taking advantage of the key features of blockchain technology such as integrity, security and traceability, the renewable energy marketplace is able to ensure that RECs can be traded regardless of the size and type of activity of the counterparties involved, whether they are local or international.
As a result, all sellers and buyers are able to find rapid, traceable and certified coverage, with a view to increasing the integration of the electricity grid and renewable energy sources.
There are already a number of pilot projects for energy cooperatives and peer-to-peer cooperatives in this respect, which have already been successfully implemented by Microgrid in Brooklyn, New York, Power Ledger in Australia, Conjoule in Germany and many others.
In Europe, however, these experiments are limited to pilot projects under regulatory exemptions, or private microgrids – peer-to-peer remains far from being universally widespread.
The blockchain could also be used for electricity tracking with at least two purposes: premiums for the generation of renewable energy (such as the SolarCoin cryptocurrency born in 2015 precisely for this purpose) and renewable energy certificates or carbon credits.
For those who want to invest in renewable energy but do not have the funds, blockchain technology could allow collective investments, ensuring a fair and transparent sharing of income.
It could also solve in a safe, transparent and immediate way the problem of on-site exchange of unused energy, with a peer-to-peer transfer, without the need to go through intermediaries, thus avoiding waste and higher costs. As is well known, in fact, electricity, gas and fossil energy is produced and distributed by the companies and must be used instantly, otherwise, it is wasted and could even be thrown away because of the very high storage costs. It is also known that the demand for energy varies according to the time of day and the season.
For the production of renewable energy, the issue becomes even more complicated, as it also depends on weather conditions. Clean and renewable energy is not used but is compensated for by the energy supplied by the company.
Thanks to blockchain technology, grid-connected digital devices are introduced that measure energy production at home. These meters are connected to smart contracts that automatically store and distribute the data in the network, certifying its value.
In this way, a transparent system is created to enhance the value of consumption and the real energy production of the community. This system encourages the private individual, the company and the accommodation facility to adopt systems of in-house production of renewable energy since production is not only intended as a system to reduce pollution or safeguard our planet but also as an effective way of saving and reducing energy costs.