Blockchain and the Power Market
Blockchain technology demonstrates clear utility within the power market. The Green Power Exchange will utilize this technology to bring significant savings to power consumers everywhere.
Many companies today are attaching the word “blockchain” to their title in the hopes of catching a portion of the latest craze. This has a tendency to make the entire technology look like nothing more than a scam or fad and implies it has no real utility.
So, let’s discuss the utility of blockchain.
The blockchain is a peer-to-peer (P2P) transaction process and uses a distributed processing and data storage structure for managing the transfer of digital assets without the need for a central administrator. The transaction information isn’t stored in any single location, no centralized version exists, so it cannot be corrupted by a hacker or lost due to a technical error. This structure is governed by all participating nodes and establishes an immutable, distributed, public, and ever-growing record of all transactions that occur on the network. The blockchain enables trustless transactions to occur without the need for a central administrator or trusted third party to verify and approve each transaction, saving time and money
This utility was further increased with advent of the Ethereum Network. Ethereum is an open-source, public, distributed platform with its own blockchain and a currency named Ether. Ethereum can do more complex tasks than Bitcoin and other standard blockchains, however, because it also incorporates a distributed, blockchain-based computing platform which can execute scripts. Since most contracts are, at their core, “If-Then” statements, they can be converted into executable scripts. These scripts can be written to execute contracts so long as the underlying criteria are met. This is what puts the “Smart” in “Smart Contracts”. These contracts can also include complex contractual information, computational requirements, other types of code, and token balances.
Power purchase agreements (“PPAs”) are complex documents with a variety of protections built in should one party fail to meet the agreed upon terms and are required to transmit power from a producer to a consumer. PPA’s take significant time and money to negotiate and implement and often a breakdown in negotiations can result in project killing delays. The surety that the agreement will execute automatically and only when terms are met would allow the power purchase agreement negotiation process to be dramatically simplified. Once the contract is posted to the blockchain, it cannot be changed and would allow for confidence from both parties. Therefore, blockchain technology can facilitate a direct peer-to-peer power purchase agreement between producer and consumer without the need for a utility to act as a third party/clearing house. This already has been aptly demonstrated in the Brooklyn Microgrid Project where an individual with solar panels was able to sell power directly to their neighbor through a PPA. Taken to a larger scale, industrial level renewable energy producers could use this method to directly market their product within the same region as the consumers. This would allow choice in the market as consumers can easily decide who they buy power from, and how it is produced, and, crucially, save money in the process.
