How Blockchain helps renewable energy revolution
Renewable energy sources, such as wind or solar, are crucial in preventing the climate catastrophe the world is heading toward. Blockchain and Smart Contracts offer a technology to match unstable supply of renewable energy with flexible demand, paving a way to sustainable carbon-free future.
Something remarkable has happened in The Netherlands on April 15, 2020. On that sunny Saturday afternoon, for a short time, 40% of the energy consumed by the country was coming from solar panels [link]. A remarkable achievement for a country with the lowest share of renewables in the national energy mix in the EU [link].
Exponential growth in solar generation
While the occasional drop in demand caused by the low economic tide did help to set the record, the reason is more fundamental: the exponential rise in installed solar capacity, as illustrated with this figure.
Solar capacity is growing exponentially, with nearly every roof getting covered with panels.
The growth of solar generation is very different comparing to other sources of energy, even wind. It is not a result of centralized planning common in energy but private initiative of thousands of individuals.
Household roofs are being covered by panels, and all suitable surfaces are being looked at: fields, farm stalls, office buildings, stations, even lakes. Every week new solar parks are being opened, inviting everyone to buy a share of new panels. In a matter of a few clicks, an individual may quickly be owning sets of panels here and there, all doing the same thing: producing energy when sun shines.
When a household has rooftop panels, it can consume excessive energy locally before it hits the grid, simply by putting an air conditioner on, or charging an electric vehicle. That is something investors can’t do: they want their air conditioners in downtown offices, rather than in farm fields where the panels are. The same happens with investments in wind parks: owning a turbine in an offshore park gives you energy when the wind blows, but you need to sell it.
The infrastructure for that is ready and operational, with solar panel convertors are connected to the Internet and smart meters, with the necessary regulations in place.
Connected energy consumers
Consumer side is getting ready too. Socially, the new generation is both connected to the Internet and concerned about the environment, with half of UK young people rate climate change as their top concern [link], creating momentum for a global movement with impact [link].
The technology is mostly there. Just look at household heating systems: from HVAC’s to small 100$ room heaters. Most are connected to the Internet, and operated with a mobile app: just swipe to tell you are coming and it will warm up the living room for you.
The boom in solar panels is mirrored with a boom in batteries. While household batteries are not there yet, chargeable electric vehicles are in the rise: plug-in cars, scooters, and, in particular, electric bikes.
They all have certain flexibility in choosing the times of charge when parked at home.
Most significant energy consuming devices are connected to the Internet, with infrastructure ready to support smart behavior.
Smart and connected energy consumers are not a distant theory anymore, but a widespread reality.
Energy trade
Energy companies are going through a revolutionary change as well: changing from distributors of centrally produced energy into matchmakers between small generators and small consumers.
A new breed of energy companies has already emerged: those that have no own generation capacity but serve as mediators between solar parks and consumers.
The energy sector is following the footsteps of retail, where online retailers turned intermediary platforms, with Amazon.com being the biggest. But, unlike the retail where we still have humans buying stuff, energy is only consumed by devices. These devices are now smart enough to put complex bids online, such as a request for 40 kWh solar/wind energy to consume over the weekend at 2–6kWh throughput to have a car charged by Monday 8 a.m. They are not doing that at the moment, but, really, nothing prevents them from starting doing that tomorrow.
Make Zero-emissions real
Energy sector is the last one that needs technological advice: they were operating way before the first modern computer was assembled, and have gone through several fundamental changes. A new change is in the making: matchmaking dynamic energy suppliers with dynamic energy consumers.
The existing solutions are fundamentally virtual, and your ‘green’ energy is only green on paper. In reality, solar energy buyers are not disconnected when the sun goes down, they are just getting thermal energy at night. It is just the cumulative total that looks good: the annual solar and gas production may match the volumes of solar and gas energy sold. In a way, greenness of energy is measured similar to average patient temperature in a hospital. The average may, indeed, look green and healthy.
To enable sustainable future, the world needs to switch to true green energy trade, when a solar consumer would get no energy the sun goes down, switching to another contract or stopping with consumption.
That will also create trust in ‘green’ energy: do you trust a solar-powered tram that still goes after sunset?
Technology foundation: Enterprise Blockchain
Enterprise Blockchain is a new distributed database technology based on the concept of an append-only, crypto-protected ledger of transactions committed by consensus of members of a network sharing this ledger. Enterprise blockchain platforms are developed and promoted by world-leading enterprises, including IBM, Intel, JPMC, and others. To process and commit data transactions, these platforms typically rely on the small distributed programs called smart contracts.
Enterprise Blockchain is tailored for markets where parties do not fully trust each other but need to cooperate, such as solar farm co-owners, energy consumers, grid operators, regulators.
The enterprise blockchain landscape is dominated by the two leading meta-organizations: Hyperledger Foundation and R3 Corda Consortium, backed by hundreds of participating businesses and non-profits.
Let us come back to the example of a car bidding for 40 kWh of energy over the weekend. That bid may be placed on a ledger and that fact would be automatically cryptographically recorded and distributed to other network participants. A someone’s else household with rooftop panels may examine weather forecast and family vacation plans for the weekend, to realize that it has the ability to fulfill the order, and pick it up. That would be also registered on the ledger.
Various changes and conditions of these energy bids are programmed with the smart contracts, and executed automatically, secured with cryptographic means.
Blockchain technology makes a natural fit to support a network of renewable energy providers and consumers offering a trusted reliable distributed ledger of energy sell/buy transactions validated and confirmed by consensus of the blockchain peers participating in the network. That may be illustrated with the diagram below, where various players initiate transactions that are encrypted in a chain to ensure trust.
Capability to execute smart contracts processing and validating each submitted transaction based on the latest consistent “world state” recorded by the ledger makes it possible to implement interesting and useful trading scenarios involving dynamic bidding for energy, energy credits, varying pricing dependent on the time of the day, types of energy sources, etc. while keeping the consistency, transparency, and provenance (no past transactions are purged from the ledger ever) of the data across the entire peer network. As an efficient means of fraud detection and prevention both the rules encoded in smart contracts and the ledger data are always available for inspection and analysis by any interested party, including regulators.
Some examples of the scenarios easily implemented with help of on-chain smart contracts:
- Buy or sell predefined amount of electrical power at a certain point of time or at the preset price
- Choose the provider with the lowest price or the consumer with the highest bid at the real-time
- Monitor available offers for the optimal price or other conditions (preferred source of energy, provider’s region, etc.)
- Provide discounted power to consumers matching certain criteria (loyalty, type of consumption, etc.)
And, of course, with Blockchain we can build a system to trust that a solar-powered tram gets no dirty energy in.
SoftServe
SoftServe offers professional services in building custom Enterprise Blockchain solutions: strategic advice, building pilots and prototypes, solution implementation and delivery. Contact Andriy Shapochka, ashapoch@softserveinc.com, leader of Intelligent Enterprise blockchain practice at SoftServe Inc.
Authored by Borys Omelayenko and Andriy Shapochka.
