The Special Relationship Between Energy Sector and Blockchain

According to Don & Alex Tapscott, authors of the book “Blockchain Revolution, “Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Based on transparency of network, blockchain is incorruptible (a huge amount of computing power is needed to override the entire network), and it could solve the problem of trust.

In energy sector, blockchain technology shows a lot of promise. For example, it is possible that blockchain is used to execute energy supply transactions or to provide the basis for metering, billing and clearing processes. Other possible areas of application are in the documentation of ownership, the state of assets (asset management), guarantees of origin, emission allowances and renewable energy certificates.

Therefore, it is possible to use blockchain to map and keep track of how much clean energy is produced. It is important because, nowadays, clean electric energy is generated from the sun, wind, or other renewable sources, but it is indistinguishable from those generated by fossil fuels. According to Jesse Morris, an energy expert at the Rocky Mountain Institute, tradable green certificates don’t work. Data management based on blockchain could fix this by combining business with sustainability and participation. This kind of technologies seems promising in energy sector because of its peculiar design. Although this has been a matter of centralized power plants, there is a growing number of smaller distributed energy producers that generates networks of peers such as electricity producers (for example, rooftop solar panels and electric-vehicle batteries) and consumers, connected via the grid, that depend on shared sets of data.

According to this scenario, actual energy system is fundamentally based on a central provider that collects information on how much energy is produced by every renewable-power plant. In a second step, intermediaries brokers deal between buyers and sellers of these certificates and another player is responsible for monitoring the purchase. It is clear that the complexity of the system and the lack of transparency concern a lot of potential buyers or sellers.

For example, according to Jemma Green, cofounder and chair of Power Ledger, a startup developing a blockchain-based platform that allows producers to trade energy peer-to-peer with consumers, it generally takes 60 to 80 days for an electricity producer to be paid. This is an example of above-mentioned inefficiency that “rewards only who holds privileges”. With a blockchain-based system, producers can be paid immediately because players could simply trade energy with one another.

Blockchain technology has the potential to radically change energy as we know it, by starting with individual sectors first but ultimately transforming the entire energy market. For example, Power Ledger has demonstrated that it is possible turning an apartment building into a microgrid based on a shared system of solar panels and battery storage. LO3 Energy set up a neighborhood microgrid in Brooklyn. Grid operator TenneT TSO and German storage company Sonnen are working on a community-based model for solar power and battery storage.

However, as Jemma Green says, “blockchain technology adds a level of sophistication to the market by enabling those more granular transactions” and the traditional energy system has not yet implemented a method to deal with that. A likely solution is given by Energy Web Foundation, a global non-profit organization focused on accelerating blockchain technology across the energy sector. Energy Web Foundation will be a test bed for promising use cases: based on Ethereum, Energy Web Foundation will validate transactions will rely of 10 major energy companies that have signed on as affiliates (such as Shell, E.On, Eneco, Ptt, etc.). In the longer term, the aim is not only tracking renewable-energy certificates but also equipping homes and buildings with a software that automatically trades power to and from the grid based on real-time price signals.

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Sono sempre più le esperienze di utilizzo della blockchain nel settore energetico. In questo campo, l’obiettivo non è solo arrivare a mappare i certificati energetici ma soprattutto ad equipaggiare ogni edificio con un software che, in modo automatico, vende e compra energia dalla rete in tempo reale in base ai segnali di prezzo.