Over the last couple of years or so, blockchain has evolved as a tool that solves plenty of world problems. However, the basis of the technology remains mysterious and confusing for many, especially with the rise and fall of bitcoin – the currency that employs blockchain in its regulation. We’ve tried to simplify the same and make it easier to understand the basis of blockchain and the works.
While for now, the primary use for blockchain only being a cryptocurrency, there are many developments being made. Energy is one of the sectors being talked about and we’ll delve further to understand how it can be used.
What is blockchain?
In simple words, blockchain is a new way to handle data – with the help of a decentralized database. For example, money transfers occur after most people keep money in the bank which stores their crucial financial data. The bank has a monopoly on the data and all digital transactions need to go through the bank, and they are the only ones who have an idea about your balance.
With blockchain, you can cut out the bank and give people the power to make these transactions directly. Blockchain’s difference, however, is that it has no owner and is trustworthy and secure as well. The network for blockchain is run on a slew of individually-owned computers, also known as nodes. They maintain a database for all the transactions, with the same history stored on decentralized computers.
In the case of bitcoin, it is stored on every computer, which makes it harder to tamper with. Hackers would have to tamper all the devices at once to get through. Blockchain generally eliminates the need for any third-party application. It has applications in databases which have no intermediaries, and provide security for both transfer of data as well as money.
Blockchain and energy
Blockchain has the potential to also be used in energy grids. Startups are using blockchain to create grids that are more sustainable and accessible, by promoting the factor of data sharing in real-time. By creating these energy grids, linked to a blockchain is simple – it gives consumers the total control over the place they source their energy and the information that goes behind the production, thus driving competition and producing energy that’s sustainable.
Those using smart grids rely on blockchain and can compare energy providers by buying from them directly. An Estonian company known as WePower has tested how an energy market that’s choice-driven could work. They teamed up with independent energy providers who share all the energy data in real-time.
Whoever’s piloting the program have bought into the idea and have been given credits that they can spend on energy sources, thus giving them the freedom to alter choices based on real-time power generation.
How will blockchain affect energy?
Peer-to-peer energy transactions can disrupt the energy industry, and encourage decentralization and blockchain has the ability to do so. Small installations have increased over the last few years, Rooftop solar panels, for example, create a bit of stress on the electrical grids that are designed with centralized power plants in mind. With peer-to-peer energy trading as well as placing an incentive on the local consumption, blockchain stabilizes the grid and aids in decentralization.
With users paying one another directly, the traditional market roles can be questioned, including retailers, suppliers, distribution operators, balancing groups, metering point operators and more. There have been pilot projects that have been successful, with peer-to-peer community energy projects run in NY, Germany, Australia and more. In Europe, these are limited to regulatory exemptions and to universally run these projects, a few years are required.
Electricity tracking is another application for blockchain, with two purposes – renewable certificates or carbon credits and rewards if you generate renewable energy. For those who want to invest but lack funds, blockchain enables collective investments and ensures transparent sharing of all the revenues as well.
Is blockchain a reliable method?
Properly calibrated smart energy meters can ensure electricity tracking in real-time as well as avoid any double counting. Electricity can be called renewable in Europe only if it comes with GO or Guarantee of Origin certificates. Both normal and EKO energy-certified energies are issued and they can be prohibitive, especially for small producers. They won’t be able to generate the amount of electricity required for this type of work.
Blockchain can also help small-scale producers and newer players in the market receive energy certificates as well. There needs to be a way in which these installations don’t use blockchain certificates. Once the blockchain is widely accepted as an energy tracking solution, it needs to be strictly monitored, with certain criteria evolving for the same.
What does the future hold?
The future is uncertain, but the way we exchange and store information is slowly changing. It is unlikely that we will look at the energy market the same way in the next few decades. Once harnessed, blockchain can play a major role in boosting the transition towards renewable energy.
There are many nations still trying to figure out how to harness solar and blockchain together. While there is optimism, there also needs to be a recognition of the challenges that exist as well.
The intermittent nature of solar harvesting and ancillary storage problems are just some of the current challenges. It is nice to think about a solar neighborhood where everyone shares or uses their own solar energy when required. However, weather conditions still play a role in determining the effectiveness of these solar grids. Using your own solar energy at high rates can be a challenge and finding a way to solve the same will make a world of difference.
Hoping the rest of the world finds the right solution towards solar and other forms of renewable energy sources can make a big difference. Once the transition is made, with blockchain at the helm, decentralization will guide the way forward in all aspects of energy storage and use, resulting in a world where energy is spent the right way, at the right time.