In the transition to renewable energy, blockchain technology can enable decentralised energy distribution, monitoring and trading
In 2009, the still unidentified ‘Satoshi Nakamoto’ conceptualised and developed the world's first digital crypto-currency, known as Bitcoin. This currency was developed based on blockchain technology.
Blockchain is a series of constantly growing transaction records called blocks that are globally accessible and cryptographically secured. It can be visualised as a global ledger of all transactions between the parties involved. The entries are secure by design, which means that they cannot be modified or erased, thus rendering the system suitable for financial transactions, people’s records, voting, and many other applications. It is a peer-to-peer (P2P) technology that enables decentralised, digitally verifiable, and immutable transactions. This means that any two parties connected by the network can transfer data and digital assets such as Bitcoins to each other without the need of a central authority such as a bank. These secured transactions also enable identity protection, since details about peers are not disclosed except for a unique 24-bit computer-generated address that represents the peers in transactions, something like an alias.
The advent of blockchain technology has enabled the development of several applications around the world. These applications include digital crypto-currencies, such as the Bitcoin and Ethereum networks, secure e-wallets similar to PayTM but with blockchain security, online currency trading and exchange platforms, digital payments and buying/selling products on e-commerce platforms.
Recently, there has been increasing interest in using blockchain technology in the energy market. This is specifically in the context of decentralised energy distribution in developing countries, such as India, Nepal, Bangladesh, Sri Lanka, etc., wherein grid-connected power does not reach people in remote locations. For example, in India, around 239 million people remained without access to electricity in 2016 although the annual installed capacity is around 330 GW .
Decentralised energy distribution with blockchain technology
A blockchain enabled microgrid has already been demonstrated in the case of the Brooklyn Micro-Grid. 'Prosumers', meaning people who consume power from the grid and produce power from established rooftop solar panels, sell electricity to consumers at an agreed upon rate, thus creating a micro market.
The microgrid or a pre-existing electricity sub-station partakes in the transactions between the prosumer and the consumer. The principle of net-metering is applied here.
The excess power produced using solar panels is fed back into the grid and an equivalent amount is subtracted from the prosumer's monthly power bill. With blockchain technology, trading of this excess power is also facilitated in an efficient manner. Consumers can purchase excess power from the grid to meet their peak demands. In near real time, money for this consumption is deducted from their account and transferred to the prosumer. The traded money is tokenised in the form of online digital currencies, which are issued at the time of setting up the entire system. The digital currencies can, in turn, be traded in the online crypto-currency exchange platforms as in a typical stock-trading platform.
Further, any transaction taking place in the network generates additional digital tokens, which means a unit of energy when transferred to the consumer or the grid would automatically generate payment to the prosumer with the use of computer programme mechanisms called smart contracts, which are already built into the dedicated software environment.
Such a system can be established in the Indian rooftop solar power and smart metering programme. The matter above also highlights the potential and opportunities in the off-grid rural Indian power scenario.
Establishment of solar/biomass microgrids within villages would turn consumers into stakeholders. There are two mechanisms by which this can be disseminated. Firstly, similar to the case of the Brooklyn Micro-Grid, each individual household can partake in a prosumer–consumer arrangement.
Secondly, plant set-up can be centralised, with households acting as consumer nodes only. In the second case, the establishment of microgrids in different villages/blocks and their interconnection would offer more scope for energy trading. Since the network is Internet based, any system can connect to the network, even from long distances. This could potentially attract investment into the solar grid set-up from all over the world. Since it is all on a secure ledger available to the nodes in the network, investors can monitor their investment and revenue streams.
The ongoing research in this direction offers an arena for technologists and innovators to explore the blockchain mechanism further. An entrepreneurial spirit and adaptability to novel methods could prove an effective game changer.