Blockchain

The basis of blockchain, in the underlying distribution ledger technology (DLTs), matched with the proliferation of distributed energy resources and grid-interactive devices makes blockchain applications a potential game-changer in the power sector. The technology has the ability to propagate decentralized communication and coordination, by building the technological infrastructure to allow users to safely, and cheaply and quickly connect with each other without a centralized intermediary. Peer-to-peer validation of transactions through enhanced security, better data management, and increased ability to cooperate among multiple actors in the power landscape can be operated while bypassing the need for a trusted, centralized intermediary to verify each transaction.

Currently in the energy sector, blockchain technology is considered for many aspects of the sophisticated energy network, from management of power generation and distribution, sales, billing, payments and trading - particularly in the aim to reduce transactional time and costs. Tools such as blockchain, due to its decentralized and cryptographically secured structure, help to reduce fraud and abuses in privacy which have become a major problem in the power sector.

• Peer-to-peer trade: With smart contracts, trends can be made automatically using price signals and real-time renewable energy production data through the network. The ability to freely sell one’s generated power at market rates to a network of peers can provide incentives for increased adoption of distributed renewables.

• Finances: While hundreds of billions is being invested in renewable energy annually by the public and private sector, it is still not enough to address climate needs. Thus, an opening is still apparent for financing mechanisms and marketplaces to bring together energy demand and finance supply. Blockchain offers a low-cost transactional platform and security features to accelerate financing, in either community-based grassroot movement or large institutional investment.

• Management of renewable energy certification: In many countries, RECs are awarded based on estimation and forecasts rather than on actual generation. This guarantee of origin paradox is yet to be properly addressed in legislation, while the EU have proposed issuing GOs based on measurement of electricity produced. The potential usage of blockchain in the REC process is preventing double spending via cryptography and decentralized governance.

Examples of initiatives that use blockchain for renewable energy operations and management

LO3 energy	LO3 Energy operated the Brooklyn Microgrid, allowing participants to actively engage in the generation, storage, and selling of energy at a local level. This blockchain-powered trading system makes renewable energy more accessible, while making the localized region resilient to external factors, such as power outages.
Energy Web Foundation	EWF is a non-profit organization focused on accelerating blockchain technology across the energy sector, and is developing an open-source platform for large-scale energy sector use cases.
Sun Exchange	Crowdfunding for solar PV installations are operated and overseen through distributed ledger technology, allowing for cross-border transactions and investments.