How can blockchain be used to certify the source of green energy?

Blockchain has changed our conventional ways of how the world operates. It is a potential tool that can modernize several sectors, including energy. Blockchain technology has grabbed the attention of energy sectors and national governments who see blockchain as having the potential to bring significant benefits and innovation.

What is blockchain technology?

Blockchain is a newly introduced technology that is defined as a decentralized distributed database that stores the proof of digital assets. The only difference between a traditional database and a blockchain is how the data is stored on it. Unlike a typical database, blockchain stores information in the form of multiple interconnected ‘blocks’, that are responsible for holding sets of information.

Two types of assets can be recorded on the blockchain:

• Tangible assets
• Intangible assets

Blockchain reduces the risk, fees, and provides an overall efficient system of tracking and trading anything of value digitally without any third-party intervention. Thanks to the blockchain network, the data stored on it cannot be modified, making it an effective technology for digital payments, cybersecurity, healthcare, the energy sector, and several business needs.

Also referred to as Distributed Ledger Technology (DLT), blockchain uses decentralization and cryptographic algorithms that convert any form of data into a unique string of text so it becomes impossible to alter the data hence providing complete transparency to the users. Blockchain is commonly known for its role in cryptocurrencies such as Bitcoin and Ethereum.

The Blockchain network is similar to how Google Docs works. When we create a document on Google Docs and share it with other people, the document is shared directly with the selected group of people instead of sharing its copied version or sending it. That document is decentralized and all the people in the group can access the document at the same time without requiring third parties to manage or make changes to it. Moreover, every change to the document is recorded in real-time, making it completely transparent and members can see what changes are being made.

Blockchain network is far more complicated than Google Docs yet this analogy is demonstrating the mechanism of blockchain.

What are the uses of blockchain?

Blockchain technology is getting increased recognition now. Given its transparent, fast, and secure nature, blockchain is implemented in several areas of business and national governments are starting to accept it broadly.

Among hundreds, some of the uses of blockchain are discussed below:

1. Payments Transfers

The main reason behind blockchain innovation is to make the digital world more efficient and secure. With the help of blockchain, transferring payments becomes low-cost and faster as compared to traditional money transfer services using fiat currencies. The blockchain serves the best in the case of international payments that are usually expensive and slow. Even in this technologically advanced era, cross-border transactions can take up to several days. Using blockchain, transferring money takes only a few minutes while ensuring security at the same time.

2. Decentralized Exchanges

Blockchain made it possible for everyone to deposit or store their assets without any intermediaries. On blockchain-based decentralized financial exchanges, the transactions become fast and less expensive allowing users to have full control over their assets. Traditional financial exchanges are shifting towards decentralized crypto exchanges; however, users are also allowed to make traditional investments there.

3. Lending

Blockchain provides the same lending service as banks but it does so in very different ways. Getting loans using blockchain becomes far more accessible based on collateralized loans through smart contracts. Smart contracts are the automatic protocol built on blockchain that is responsible for triggering events at a certain set time such as making a payment, the release of collateral, and repayment of the loan. Lending using blockchain is much faster, more accessible, cost-efficient, and secure.

4. Real estate

The implementation of blockchain brings a real-ease to the real estate business. Normally, real estate business and transactions require tons of paperwork of both seller and buyer before transferring ownership to the new owner. Blockchain application in real estate has made transactions fast and reduced the hefty paperwork. Real estate transactions can be verified and transferred using blockchain technology securely and effortlessly.

5. Energy Transfers

The application of blockchain in the energy sector is relatively new. However, it offers several new opportunities such as legitimizing, securing and enhancing the energy transfers automatically. Blockchain can produce a decentralized energy sector that can possibly remove the curtains between consumers and suppliers. It can be a potential breakthrough in the energy sector as it can remove the need for expensive producers, provide transparency, coordination among producers and consumers, and efficient information sharing across the energy industry.

6. Protected Information

In every business, information is the most important asset and every business runs on information. Keeping information and data security is the prime priority of every business. Fortunately, blockchain provides improved security and easy identifying information for users as well as for business owners.

Other uses of blockchain are for example:

• Insurance
• Digital Voting
• Government Interests
• Media and Supply Chains
• Cybersecurity

Can blockchain be used to help the transition to green energy?

As explained above, blockchain technology can track the source of renewable energy and it can completely change the relationship between producers and consumers. Blockchain can change the conventional ways of collaboration with energy suppliers and can boost the usage of low-carbon energy (green energy).

The decision-makers in the energy sector are considering blockchain as a solution to several problems in the industry. According to the German Energy Agency, blockchain technology can make the energy industry efficient by providing modern IoT platforms and digital solutions (https://www.dena.de/fileadmin/dena/Publikationen/PDFs/2019/dena-Studie_Blockchain_Integrierte_Energiewende_EN2.pdf). In addition, blockchain has the potential to improve traditional energy production and consumption processes with the help of P2P decentralized energy trading and generation. They further added that blockchain will not only help the consumers but energy providers and utility companies will also get facilitated by the technology as it can help them in improving internal processes, consumer information, their service quality, and overall costs.

Blockchain technology makes it possible to track and manage electricity generated from green energy and certifies from the origin through all stages and transactions (https://jpt.spe.org/how-can-blockchain-support-the-energy-transition). In simple words, blockchain technology allows the consumers to have a certainty that the electricity or power they are using is generated from green energy sources alone. The reason is that the blockchain can track green energy from its source to utilization so it gives consumers an additional layer of certainty of its low-carbon attributes. Since blockchain can store unalterable data. So data like time, location, carbon attributes for the electricity production can also be stored on it to provide transparency to the consumers. Just like a smart solar panel system, that can store this information and can distribute it to the blockchain ledger.

Blockchain is a digital solution that allows producers and consumers to engage directly. Blockchain can play a crucial role in energy transition as it can make it possible for individuals, producers, and even smart devices and systems to engage and transact independently. But before starting using blockchain directly, it is important to have a well-structured digital system that can implement blockchain on it to enable the energy transition (https://www.sciencedirect.com/science/article/pii/S1364032118307184).

For example, consumers using a smart grid built using blockchain can interact directly with their producers to compare and buy from them (https://www.forbes.com/sites/jamesellsmoor/2019/04/27/blockchain-is-the-next-big-thing-for-renewable-energy/?sh=3579d73f48c1). Several countries have started to test smart grids based on blockchain to check how it works for the industry by directly interacting with independent energy providers who share their energy data in real-time. In this way, consumers have choices which they can make on real-time power generation and their costs. Moreover, they can be rewarded with credits or tokens which they can spend on specific energy sources while ensuring the source of their energy.

Why are green energy certificates important?

Renewable Energy Certificate (REC) also known as green energy certificate is an official certificate that validates that the bearer owns one megawatt-hour (MWh) of electricity generated from renewable energy sources such as solar, wind, and other green energies as they flow into the power grid.

Electricity generated from green energy and other non-renewable sources is indistinguishable, so it becomes necessary to put some tracking and that’s where RECs play their role in validating the energy source. Due to overproduction, it becomes expensive and difficult to store electricity in batteries. In such cases, the unused electricity is fed back to the grid and used by other consumers. So, tracking the electricity production and energy source becomes important. Renewable Energy Certificate bearers can be homeowners with solar rooftops or any producer who owns one megawatt-hour (MWh) of electricity generated from green energy.

RECs can be traded or sold for profit from the difference between buying and selling prices as different states have different renewable energy standards. Usually, RECs are used as a credit against the power used by the owners.

What are the other examples of using blockchain technology for sustainable development?

Undoubtedly, blockchain technology can play a vital role in sustainable development. It can contribute to environmentally sustainable development goals (SDGs) in several ways including improving the overall energy efficiency and certifying the source of green energy.

White Hydrogen Coalition

WHC is an exemplary community that is striving hard to purify the planet and decarbonize industry, transport, and energy by adopting blockchain innovation. The main goal of the platform is to promote clean technology solutions like LTC (Low-Temperature Conversion), to reduce carbon attributes by converting plastic waste into White Hydrogen.

The members of the WHC get rewarded with White H2 Token (WH2C) in exchange for supporting the development and helping the community to bring about the future of clean technology. The platform is implementing and using blockchain technology and aims to transform waste materials, especially plastic into environmentally friendly white hydrogen — clean energy.