No matter where you turn, there seems to be a conversation about blockchain. What is blockchain? It’s a little detailed (our entire content team can attest to this), so here’s a quick overview:
Blockchain, best known as the processing power behind cryptocurrencies like Bitcoin and LiteCoin, is a digital way of transaction record-keeping that can be viewed by anyone in a given network but cannot be edited or deleted by anyone.
A slightly less confusing way of looking at this:
- The blockchain is a decentralized database that..
- Records the trading of all digital assets
- Proves a transaction took place and...
- Proves ownership of the transaction exists but...
- Cannot be edited or deleted
What makes blockchain so powerful is its transparency and how it can be applied to almost anything of value. So how does it fit in with renewable energy?
Example A: Someone Lost Your Panels :(
Let’s say you’re in need of solar panels in Ohio and want to install them on your roof. You purchased the panels from a company in California and want to track the shipment. The blockchain ledger would record the entire transaction, breaking it into 3 blocks:
Block A: Did the solar warehouse in California load the truck with solar panels? Yes
Block B: Did the delivery truck ship panels to your house in Ohio? Yes
Block C: Did you receive a shipment of your solar panels? Yes
Now let’s see this when something goes wrong.
Block A: Did the solar warehouse in California loads truck with solar panels? Yes
Block B: Did the delivery truck ship panels to your house in Ohio? No
Block C: Did you receive a shipment of your solar panels? No
Since blockchain is a public ledger that documents the movement of your solar panels, all parties can inspect the records to make sure the transaction took place. In this case, the transaction records will clearly show that the delivery truck lost your solar panels and you never received them.
Example B: You and Bob
Right now, governments across the world keep track of the renewable energy in electrical grids through tradable certificates. However, this system of tracking is unreliable and poses many verification and record-keeping problems. Applying Blockchain to energy trading can turn buildings into microgrids by enabling users to share/sell energy to other users without sending it to the grid.
Let’s say you have a solar panel system installed on your house that produces excess energy:
- The excess energy produced by your solar panel system will be fed into the smart electrical grid
- Bob, who happens to occupy the same grid as you, will consume your excess energy
- The smart grid will record this transaction over a blockchain ledger associated with the grid
- Both you and Bob will be notified of the transaction and you will be compensated for the energy Bob consumed.
All records of the transaction will be available to you and Bob, and you won’t have to wait 60-80 days to be compensated for the excess energy you generate
Peer to peer energy renewable energy trading will not only make renewable energy transactions more transparent but also encourage people to start using renewable energy options to generate their power. Startups around the globe have already started toying with the idea of applying Blockchain to Energy trading. Consensus, a Brooklyn based firm is currently working on a project called Transactive Grid with LO3( a distributed energy outfit) which uses Ethereum based smart contracts to trade energy in local microgrids. Powerpeers in the Netherlands is also working on the same concept of a transactive grid.
As people get educated about the benefits of blockchain technology and how it can be used to trade renewable energy in a safer and more transparent way, this technology will soon be applicable on a larger scale.