Smart Grids Electrifying Communities Facing Poverty With Blockchain
A dive into the use of smart grids to assist the alleviation of energy poverty
What Is Energy Poverty
The World Energy Outlook in 2018 stated that roughly 1 billion people in the world live without access to electricity(around 13 percent of the global population). In less developed regions like sub-Saharan Africa, this percentage is blown as high as 57% of the population.
With Africa’s population set to quadruple by the end of the century, solutions are needed in the near future to bring fundamental change in the way energy can be supplied to vulnerable communities. Historically, due to the centralized structure of many of the grids that are in developed countries, advancements in the accessibility of electricity are a long arduous process that can take decades.
In most macro-grids, consumers from vast areas receive their power from for-profit power plants that, due to shareholder interest, focus their efforts considerably more on profitability than accessibility. Those within the grounds of a centralized powerplant’s jurisdiction are subject to whatever rates are given for electricity with no other options, and those in communities outside the macrogrid must wait for the company to decide if expanding into unelectrified markets is worth the expenditure.
The Flaw Of Centralized Energy
At the time of writing this article (April 10th, 2022). Discontent with gas prices is at an all-time high. Americans are feeling the burden of economic hardship with every trip to the pump. One would expect that in such a crisis, American oil companies would be working overtime drilling to even back out the supply to return gas prices to their previous levels.
But the reality is that in the face of such a crisis, the American oil industry is drilling at rates 10 percent less than that of 2019. While the common citizen during an oil crisis faces economic hardship, shareholders of oil companies are met with booming returns on investment.
“Fifty-nine percent of oil executives said investor pressure to maintain capital discipline is the primary reason publicly traded oil producers are restraining growth”
Whether it be the fuel or electricity industry, the centralized model of energy distribution fundamentally is incentivized by shareholder profitability rather than consumer accessibility. Smart grids provide opportunities for community-driven infrastructure that can operate independently from for-profit macro-grids.
The Disparity of Energy Accessibility
Energy accessibility is at the root of economic development. No matter the complexity of a development plan, communities lacking access to abundant resources of energy have a ceiling to their industrial capability restricting them from competing in the global market.
Furthermore, those without electricity faced with the ever-increasing digitization of the world are increasingly entrenched in cyclical poverty. Central energy distribution creates substantial threats to already vulnerable communities in the event of stress on the system.
South Africa, Nigeria, Namibia
South Africa greatly exemplifies the struggle of attempting to supply an entire population of people under a single grid system. In 2019, South Africa experienced a grand total of 540 hours of blackouts due to stress on the grid. In an already fragile economy, the estimated costs of needed improvements to adequately supply energy to the South African population are between 60 and 120 billion dollars.
Farther north, Nigeria’s national grid failed its citizens 84 times from 2013 to 2020. Furthermore, Nigeria’s Federal Ministry of Environment, Bahijjahtu Abubakar reports that around 98,000 Nigerian women die a year due to smoke inhalation from cooking indoors with unclean fuel sources.
Cecilia Iyambo, reporting on a 3-day power outage that struck Namibia in 2021 details the hardship that struck local businesses in the city of Rundu. Not only did businesses lose tens of thousands of dollars in revenue, but the citizens were also without water during the crisis as well. The cause of the power outage was found to be a failure in a single generator in the system.
The centralized approach to energy distribution whether carried out by the state or the private sector continually faces incredible hardship to provide for an ever-expanding population. Communities dependent on the same energy that they are given no control of are left at the whim of external factors for their livelihood and wellbeing. A solution must be found that empowers communities independent from unreliable mega-grids regardless of geographic inaccessibility.
Micro-Grids In Remote Communities
Developed nations like the United States took most of a century to see their centralized model of electricity expand to all corners of the country. With populations booming, Vulnerable communities living in underdeveloped nations without access to abundant energy can’t afford a century to wait on infrastructure that may or may not be expanded to their reach.
Due to this, remote communities are in dire need of a new model for electrification, Micro-grids could be the solution. Characterized as community-driven power grids, smart grids generate and expend energy in a closed-loop, localized network. This community-first approach empowers communities in an unprecedented fashion.
Firstly, communities need not rely on large macro-grids controlled by the state or large corporations. Putting the power of electrification in the community rather than immense power plants means significantly less threat of things like price gouging or random throttling or outages taking place. Microgrids see the introduction of a decentralized network of energy generators (solar panels, wind turbines) and energy storage into a community. While the idea of a smart grid is not a completely new idea, blockchain networks, being decentralized in nature, provide striking possibilities for implementation.
Blockchain in Smart Grids
One of the most notable things about blockchain technology people hear time and time again is the ability to get rid of intermediaries. Currently, if an individual installs solar panels on the roof of their house and ends up generating more power than is needed, they have the option to sell that power back to the macro grid for a price determined by the power company.
Blockchain allows users to go a step further and not only sell power on the macro grid level, but on a microgrid level as well. Users can sell or just simply provide electricity to their neighbors based on agreed-upon terms in the form of a smart contract. In the case of an emergency, this technology could have the potential to save countless lives by providing power on a community level to allow necessary services continuous energy for operation.
Brooklyn and Blockchain
One unlikely pioneer of community blockchain smart grids is Brooklyn New York. A microgrid project founded by Siemens Software, acting as the backbone of the network of energy and community. The Brooklyn MicroGrid as its called, is a decentralized grid where community members buy, sell, and produce their electricity within their own community.
Through this, willing community members can break their reliance on the utility company and find reliance within their own community. Not only does this strengthen the community in its ability to put a face on consumers and prosumers, but additionally, the flow of money that in most networks funnels from communities into large utility companies is instead redistributed back into the community, thus economically empowering themselves as well.
Conclusion
The centralized structure of energy distribution has proven around the world to display flaws in its reliability to consistently provide for large populations of people. Fundamentally being driven by profitability over accessibility, vulnerable communities all over the world are subject to power outages, throttling, and price gouging on a regular basis costing many their economic stability.
The blockchain-based model of microgrids has seen traction in recent years leading many to believe in their community-first approach. Blockchain smart grids allow communities to take control of energy and empower not only their technology but their future as well.
