Blockchain technology reduces transaction costs: recording every transaction, it can be identified on the public record by all parties of the transaction.
Therefore, also in the energy sector, blockchain technology has the potential to play a significant and potentially game-changing role:
- It may lead to reduced costs of utility bills and/or reduced transactions costs in wholesale market for gas or electricity limiting the need for working capital.
- Game-changing will be the impact of blockchain technology on the communication possibilities among energy devices (water heaters, electric vehicles, batteries, solar PV installations, etc.) and with the grid operator (smart grids).
- Lowering costs are also expected due to more information for utilities and grid operators for the integration of volatile renewable energy capacity into the grid.
- The source of electricity can be identified; for example, with blockchain technology it can be possible to identify whether the kWh a consumer currently uses has been produced via renewable energy systems or via traditional ones.
- [What other impacts will blockchain have on the energy access market?]
Blockchain technology in financing energy access
In many regions in Africa, many solar panel projects are often left unfunded. Most of them are under 1 million USD in value. This funding gap could be closed by crowd-financing: individuals around the world can purchase the photovoltaic cells that make up the solar panels on African houses. Only if enough solar cells are pre-purchased, the solar panels are constructed. During the crowd-sale period (a certain limited number of days), the sum a buyer is willing to spend is allocated to the number of solar cells he will get for it (due to the volatility of the bitcoin). Those cells deliver energy to the African households, in turn households pay a rental income in bitcoin to the investors for some years. The solar cells are owned globally by individual digital currency users with ongoing solar powered nano-income payments made possible because of the unique properties of bitcoin, the blockchain technology used to finance energy access.
Companies and organisations using blockchain technology for energy access
[What other companies are in this field?]
Renewable cryptocurrencies aim to motivate solar prosumers by rewarding them. This is a take on how bitcoin incentivizes miners to commit processing power to the network by rewarding them with bitcoins for each block of transactions mined.
For example, SolarCoin: MIT start-up SolarCoins pays people with an alternative digital currency for generating solar energy, one coin for 1 megawatt-hour of solar electricity. So far, it is active in 32 countries. SolarCoin is incentivizing 97,500 TWhs of global solar energy production over the next 40 years.
Experiences: Investment Platform based on Blockchain Technology by EcoKraft
EcoKraft GmbH is developing a next-generation social impact investment platform for community energy projects in developing countries.
Smart meters collect the consumption data from households in Malawi and send it through SIM cards (GMS data system) to Germany. So far, this is only the pilot. But EcoKraft expects to change the financing of energy access project worldwide!
EcoKraft provides information on the economic viability of mini-grids for investors to finance additional mini-grids.
“With interest rates at 32-35% at traditional banks, especially small companies are not able to finance the access to electricity in their communities.” Bjoern Fischer, CEO of EcoKraft GmbH, states. That is why EcoKraft is looking for investors to help finance the access to electricity in remote areas. They offer a unique investment with competitive rates of returns and valuable information to the investors.
Blockchain technology enables transparent investments and risk management through forecasting future cashflows. Additionally, EcoKraft offers targeted technical assistance during the early stages of a new energy access project. Therefore, investment are de-risked.
Investors can track their projects at any stage, and stay updated on project performance and operational metrics. Therefore, they have access to the data about the total energy generation, energy reliability, and social and environmental impact of their investment. Investors can check how much CO2 was reduced, how many more people have access to lighting and healthcare. Due to the IRIS industry-standard performance metrics, investors can compare the EcoKraft investments with competitors.
Experiences: Solar Energy Finance Platform by Sun Exchange
Sun Exchange has built a blockchain based solar energy finance platform which fills a huge funding gap for commercial and industrial solar energy projects in Africa. It enables anyone in the world to buy and then earn revenue from solar panels powering Africa.
How it works: Buy solar cells and lease them to schools and businesses in developing nations. The Sun Exchange arranges your monthly lease rental collection and distribution.
The Sun Exchange is a marketplace where you can purchase solar cells and have them power businesses and communities in the sunniest locations on earth. You lease your solar cells purchased through The Sun Exchange to hospitals, factories, schools and other end-users, earning you decades of solar powered rental income wherever you are in the world.
The Sun Exchange hosts the so-call 'crowd-sale' of solar cells. It works similar to a crowd-funding as the project will only go ahead once all the solar cells have been sold. Solar Exchange arranges the solar equipment leases for the investors and arranges the revenue collection and distribution systems so investors earn a passive stream of rental income for 20 years powered by the sun.
This book lists a few companies involved in “Energy & Block chain”. It states that “Blockchain applications can help achieve a more efficient management of the power distribution grid, low-cost microtransactions between peers or machines, secondary market creation, or rule-based payments.”
- TransActive Grid, a joint venture of LO3 Energy and ConsenSys, developed the first application for a mini-grid: delivers real-time metering of local energy generation, enables residents to buy and sell renewable energy to their neighbours. In March 2016, 5 home owners with solar panels in a Brooklyn, New York neighbourhood started to sell to 5 customers across the street their left-over energy.
- Accenture has developed a smart plug that coordinates and monitors power use of appliances in the house. When demand is high or low it searches for energy prices and then uses the modified blockchain to switch suppliers if it finds a cheaper source. It could help many people on lower incomes who pay for their power via meter.
- Grid Singularity is experimenting with the blockchain to authenticate energy transactions. The company is targeting developing countries where it wants to make pay-as-you-go solar more secure. Its eventual goal is to build a blockchain platform for energy systems that can be applied to any type of transaction on the grid. The new platform will support forecasting for grid balancing (smart grid management), facilitate investment, trade of green certificates/certificates of origin and eventually energy trade validation.
- ↑ Energy Web Foundation. (2017). Energy Web Foundation | Home. Retrieved 10 July 2017, from http://energyweb.org/.
- ↑ Philipp Sandner, Frankfurt School Blockchain Center at the Accelerator Frankfurt event (5.07.2017)
- ↑ Cambridge, Abraham. ‘Powering Africa through Blockchain Crowdfunding’, 25 April 2017. http://www.bizcommunity.com/Article/196/704/160906.html.
- ↑ 4.0 4.1 Groarke, David. ‘Energy and Blockchain Go Global: Utilities, Startups, and Use Cases’. Power Ledger -A New Decentralised Energy Marketplace, 17 March 2017. https://powerledger.io/energy-blockchain-go-global-utilities-startups-use-cases/.
- ↑ Rutkin, A. (2016, March 2). Blockchain-based microgrid gives power to consumers in New York. Retrieved 10 July 2017, from https://www.newscientist.com/article/2079334-blockchain-based-microgrid-gives-power-to-consumers-in-new-york.
- ↑ 6.0 6.1 Bjoern Fischer, CEO of EcoKraft GmbH, at the Accelerator Frankfurt event (5.07.2017)
- ↑ 7.0 7.1 EcoKraft GmbH. (2017). Invest in Communities. Retrieved 10 July 2017, from http://www.eco-kraft.com/invest/.
- ↑ The Sun Exchange: Interview @ engerati 04 May 2017 and Powering Africa through blockchain crowdfunding 25 April 2017