Blockchain is often misunderstood to be an energy-inefficient technology, with the Bitcoin mining process frequently criticized for its energy usage and perceived wastefulness. But in actuality, the technology behind the cryptocurrency allows for the decentralization of systemic processes which can help maximize energy efficiency as the world looks for sustainable solutions in the fight against climate change.
Decentralizing the power grid
As the number of small renewable energy installations like rooftop solar panels grow, electricity grids can become strained as they were designed to facilitate energy from large, centralized sources rather than from many smaller origins. One way in which blockchain has already proved its value, in this case, is through facilitating peer-to-peer energy transactions which allow energy users to pay each other directly for excess energy in their local area.
Community energy sharing projects have quickly found success across the globe, with notable projects taking off in New York and Australia. In Brooklyn, the LO3 Energy microgrid project was hailed as a success by the local residents. “To be able to provide energy, for emergency services, or someone in need, that’s how a neighborhood comes together,” said one participant, Noah Elgart.
However, the move towards decentralized energy markets cuts out the main market players as they stand today, namely retailers, metering point operators and the major energy supplies corporations themselves. Creating pressure groups, these actors have a high stake in the energy sector remaining in a centralized form. Perhaps partly in lieu of their influence, peer-to-peer energy sharing in Europe is still limited to regulated pilots or privately-owned microgrids — a long way from people having the freedom to sell their unused energy supply from their independent renewable energy source.
Blockchain energy tracking
An enormous benefit of blockchain energy tracking is its ability to prevent double counting as the data collected is immutable and transparent. For the technology to work, it would only need to rely on a properly calibrated and installed smart energy meter to transmit the data.
For electricity to be allowed legal classification as renewable in Europe, the supplier must receive a Renewable Energy Guarantee of Origin (REGO) certificate which is issued per MWh. Small energy producers who generate less than this amount are unable to receive the certificate or sell their energy as renewable. Blockchain energy tracking has been discussed as a potential way for these smaller suppliers to verify energy output and quantify their supplies, allowing consumers greater access to more choice of renewable energy suppliers.
A changing landscape
Whether blockchain adoption in the energy industry will really take off is still a question but as the case studies have shown so far, its potential is enormous. Concerns of the impending impacts of climate change are already driving progress in the energy sector and blockchain is proving it can transform the way data is stored and exchanged. As it stands, blockchain appears to be a leading technology that can enable the transition to a renewable, decentralized energy grid that empowers consumers to make climate-conscious energy decisions.
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