Can Blockchain Boost Energy Communities?

Brent Lee

December 22, 2020

A new blockchain platform called E.E.R.G.Y. is specifically targeted at the energy sector, and the ultimate goal is to build a “blockchain platform for energy systems” that can be applied to all types of transactions on the network. Empowering consumers to buy electricity has been surrounded by debates about breakthroughs in blockchain technology and its use in energy markets. ^{Sources: 2, 8, 13}

Blockchains and the Internet of Things (IoT) devices are used to manage energy exchanges by connecting producers, consumers, prosumers and P2P trading. E.E.R.G.Y. “s vision of a decentralized, open source, shared infrastructure for energy and blockchain communities to build and operate their solutions meets the needs of the energy industry and its stakeholders. ^{Sources: 4}

Blockchain is the key to a common energy network and a decentralised energy system. In this context, E.E.R.G.Y. “s blockchain technology will enable decentralized prosumers to securely buy and sell electricity at negligible marginal costs. ^{Sources: 3, 15}

Blockchain could also be used to make investment in solar projects more accessible, thereby helping to increase solar capacity. A similar application has already been developed: Robotina, a blockchain-based cryptocurrency created to incentivize greater investment in solar energy. This is an application – a special token built on the existing Ethereum blockchain, which allows the creation of a “robotina” that returns the value of the cooperative network to the community. ^{Sources: 3, 10}

Blockchains can be used for peer-to-peer energy trading, where credit-based payment systems can improve the energy and trading process. Because blockchain networks can cross international borders, transactions on the blockchain are efficient and eliminate the need for currency exchange and transaction fees. Blockchain adoption in the energy sector has also been opened up by the fact that P2P trading on blockchain is continuously interrupted by intermediaries and their excessive fees, which is an important advantage for the development of a more efficient and efficient energy system. ^{Sources: 6, 8, 12}

Note, however, that there is no consensus mechanism for Bitcoin or Bitcoin blockchain to validate transactions, which could work well on a local network with much lower power consumption. ^{Sources: 16}

Unlike other innovations in the energy sector, blockchain will take years to enter energy markets. Blockchain technology will facilitate the transition from energy to the Internet, because the technology is irreversible, incorruptible, and decentralized. But decentralized ledgers and blockchain technology, as they will be introduced, will eventually take much longer to distribute and decentralize their ledger technology outside the West. ^{Sources: 2, 4, 9}

There are also potential applications of blockchain technology that could help drive solar energy, such as peer-to-peer energy exchange, linking solar projects with interested investors, and creating a mechanism to compensate solar energy producers. Moreover, blockchain use cases have the potential to build the entire ecosystem needed to facilitate and accelerate the transition from fossil fuels to renewable energy, and ultimately achieve zero-carbon emissions. ^{Sources: 4, 10}

One of the use cases proposed by blockchain startups in the energy industry is the use of tokens to track power generation facilities. By integrating blockchain into traditional energy transactions, consumers will be able to use cryptocurrencies and energy tokens to facilitate transactions and payment methods on blockchain. ^{Sources: 12, 14}

While we want to further expand the benefits of owning renewable resources and equipment, this process is supported by a blockchain-based energy trading system. While it is useful to separate blockchain from cryptocurrencies to find new and creative applications for the technology, cryptocurrencies are an important asset of the present and probably of the future, which can also be used to pay for energy. If we see blockchain as hype and a long-term perspective, then energy players should look more closely at the potential of blockchain in the energy industry. ^{Sources: 0, 2, 12}

In addition to energy intensity, scalability and speed remain key challenges that can hamper energy projects that want to use blockchain technology. Currently, blockchain applications in the energy sector are still a young technology and are subject to competition from energy companies, which could exploit them for financial benefits in their energy sectors. Blockchain technology must compete with the above aspects – to achieve greater benefits and acceptance. ^{Sources: 4, 8}

Currently, the majority of players in the blockchain energy market are trying to introduce a form of peer-to-peer trading. In Australia, Power Ledger also predicts that legislative changes will be needed to pave the way for the adoption of blockchain technology in the Australian energy sector. Blockchain is a clear solution because it is done with peer-to-peer transactions in mind, and there is no doubt that this type of transaction would make it easier for new prosumers to benefit from exceeding the energy generated. ^{Sources: 0, 5, 11}

Based on various research studies that examine the potential of P2P infrastructure for energy trading via blockchain, it has been shown that the use of blockchain technology in the energy sector could bring significant economic benefits. PwC believes blockchain could potentially transform existing processes by breaking up energy banks. We are following the path that network technology has taken in business, and expect blockchain innovation to build single-use applications by creating a local, private network of multiple organizations connected by a distributed register. ^{Sources: 1,7, 8}

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Can Blockchain Boost Energy Communities?

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