Energy system blockchain solutions

We illustrate the main use case classes - as well as selected projects/initiatives - in the green certificates & carbon credits and the energy crypto-assets & investments fields:

 

3b1. Green certificates and carbon credits

The certification of renewable energy sources is a complex and costly process requiring a central verification agency. For these reasons, the green certificate markets used to be reserved to large customers only.

  • Certificate of origin today (figure on the left): Renewable energy generators and the renewable energy certificate (REC) buyers do not interact directly. The processes of trading & ownership and of tracking happen through brokers/aggregators typically via two markets: the OTC (Over-the-Counter) markets or the REC (Renewable Energy Certificate) Exchange.
  • Certificates of Origin with blockchain (figure on the right): This time there are no intermediaries between renewable generators and certificate buyers, but the blockchain: renewable energy generators and buyers interact directly, use smart contracts to streamline the overall Certificates of Origin (CO) process through automated issuance, tracking, and retirement. While there is no specific regulatory framework on blockchains, they have a potential to enable a simplification of such processes as well as transparency.

Under new business models using blockchain, smart Power Purchase Agreements (PPAs) might become accessible to more producers and consumers, might be cheaper to put in place and take less time to validate, if blockchain registry is used.

By simplifying the Power Purchase Agreement (PPA) process, more consumers will be willing to source their energy from renewables. PPA offers can therefore be added to a blockchain-based network, for off-takers to buy them directly without going through a long and burdensome process.

At present however the technology is suitable for applications with a relatively low number of actors/transactions, whereas the scalability and speed are not adequate to the requirements of larger scale PPAs.


Acciona Energy became the first utility to use blockchain technology to certify the origin of its energy to consumers. The company created a commercial demo to trace renewable generation from five wind and hydro facilities in Spain through to four corporate clients in Portugal. The company used a platform and software developed by the Energy Web Foundation (EWF).

Acciona’s GREENCHAIN application, based on blockchain technology, enables clients to check – in real time and from any location in the world – that 100% of the electricity they consume is clean.

The declared advantages are: simplicity of its integration with data systems, ease of access, scalability and complete security and privacy.

Customers can check the specific renewable plant that is generating the electricity, as well as past consumption statistics and other relevant data, such as CO2 avoidance or the social initiatives that Acciona is carrying out around the project that supplies them.

Telefónica and ACCIONA have reached an agreement for the annual supply of 100GWh of renewable energy over the next decade. This Power Purchase Agreement (PPA) is Telefónica's first long-term clean energy supply deal in the country. 

Telefónica will also be given direct access to ACCIONA’S GREENCHAIN traceability application, which guarantees the renewable origin of the energy in real time.

 


Energy-Blockchain Lab, a Beijing-based collaborative initiative on energy and environment blockchain applications, has partnered with IBM to create a carbon credit management platform that uses Hyperledger Fabric.

Energy Blockchain Labs provide blockchain financial services to businesses aiming to improve their energy saving and sustainability agenda. They aim to create a decentralized platform for trading carbon credits and other environmental attributes.

More in detail, the Chinese government established Carbon Emission Reduction quotas, which fix carbon emissions limits to enterprises and individuals. Those quotas can be traded as a carbon asset: in practical terms, high-carbon emitting enterprises can buy the equivalent of their reduction quotas from low-emission enterprises and use those funds to invest in greener technology.

Currently it takes more than 10 months on average to successfully develop a carbon asset. Blockchain can streamline this process. The platform aims to reduce the costs of China's national carbon market by 30%.

So far, Energy Blockchain Labs have compiled more than 200 carbon asset development methodologies into smart contracts, a blockchain feature that automates the calculation of quotas for enterprises that need to reduce emissions.

Energy Blockchain Labs allows participants to easily track their carbon footprint and better understand when to buy or sell in the carbon asset market. And regulators can more easily monitor progress against quotas to ensure that participants meet carbon reduction goals.


3b2. Energy crypto-assets and investment

Crypto assets, including, cryptocurrencies are one of the most popular and well understood applications for blockchains.

Cryptocurrencies are used as a method to ‘tokenise’ assets that aim to create new markets or novel business models based on co-ownership and sharing of assets.

An increasing number of enterprises are using cryptocurrencies as an instrument to attract investment and raise funding.

New cryptocurrencies can be used to reward desired behaviours and facilitate green energy investments: for example, generators can be rewarded with more cryptocurrency units if they generated the least carbon-intensive energy.

Example - how Solarcoin works:

1. Any size solar energy producers freely submit a claim to register their solar installation.

2. Claimants download a free SolarCoin wallet to create a receiving address that acts like a bank account.

3. This address and some solar facility data and documentation are shared with the Affiliate (who help to verify, process, and submit SolarCoin claims).

4. The SolarCoin Foundation then sends SolarCoins to the Claimant’s wallet at a rate of 1 SolarCoin per 1 MWh of verified electricity production. 5-6. Claimants can save, exchange, or spend SolarCoins as they wish, and may receive ongoing grants over the next 20-30 years they generate energy.


The WePower platform brings together RES generators and investors interested in supporting sustainable energy projects.

Renewable energy produced is tokenised and subsequently traded through the platform either to purchase electricity or exchanged for fiat currencies or cryptocurrencies. The platform uses blockchains and smart contracts.

WePower has tokenized – turning it into 39 billion smart energy tokens and uploading it on a blockchion - a year’s worth of Estonian hourly production and consumption data.  The hourly data from 700,000 households was aggregated by postal code, per hour, to preserve privacy and reduce data to a manageable size.

Estonia was chosen because it has 100 percent smart meter coverage and a smart meter data platform (called Estfeed) to provide detailed data.

Each token is essentially a digital self-settling power-purchase contract representing one kilowatt-hour of power. The tokens are tradeable and can be sold into the local energy wholesale market by linking the digital contracts with power grid data on the blockchain.

The financial and legal instruments that currently exist in the market, such as Power Purchase Agreements (PPAs), are too complex, lengthy and expensive for energy buyers.

They aim to enable all companies, regardless of their size, to enter this market.

Lack of scalability is one of the biggest roadblocks Wepower met: While Ethereum is currently one of the most mature blockchain solutions supporting smart contracts, large-scale energy trading on the blockchain is not yet fully feasible. Wepower will continue to work on different technologies while monitoring the development of Ethereum and other blockchains.


NRGcoin, a cryptocurrency issued by Enervalis, is an incentive and reward mechanism for more efficient use of renewable energy at a local level.

The NRGcoin cryptocurrency that enables energy system members, including household consumers, DSOs and energy suppliers, to make energy transactions via smart contracts.

For every 1kWh of green energy, consumers pay 1 NRGcoin directly to the Smart Contract. This ratio (1kWh=1NRGcoin) always holds, regardless the retail value of electricity. The Smart Contract then pays all grid fees and taxes to the DSO from the coins paid by the consumer. The Smart Contract then validates the reported injection of green energy by prosumers using a variety of methods.

If all reports check out, the Smart Contract mints new NRGcoins and rewards prosumers for their injected green energy. Prosumers can then sell those coins on a currency market, or use them to pay for green energy later on. The currency market is where consumers buy their NRGcoins from in order to pay for their consumption.

While NRGcoin offers numerous advantages to different stakeholders, there are a number of shortcomings. The concept relies on blockchain technology and smart contracts, which are themselves very new and rapidly changing technologies. They are quite different from established technologies and are relatively complex to grasp. Moreover, regulation is unclear and therefore adoption is slow. These factors render the NRGcoin concept not mature for mass adoption.


Several companies are using DLT and cryptocurrencies to facilitate green energy investments and asset co-ownership.

The Sun Exchange is a startup that focuses on investment-driven solar installations. It identifies sun-soaked areas in South Africa where solar panels could be at their most efficient, then sells the modules to private investors who can then lease them to local schools and businesses. This business model ensures that local communities are able to benefit from cheap, clean energy whilst investors help fund and develop several projects that will generate income for the twenty years that solar panels are viable.

All transactions can be processed bitcoin simplifying international monetary transactions, and the Sun Exchange uses blockchain-based smart contracts to reduce the needs and cost of physical administration.

The Sun Exchange acts as a crowdfunding platform for small- to medium-scale solar projects in developing countries, allowing investors worldwide to help fund plants with national currency or bitcoin payments.

Sun Exchange has developed a sharing economy blockchain platform aiming to crowdsale PV projects to potential investors. DLTs keep track of ownership and revenues in immutable records and provide transparency required for regulatory compliance.

Prospective investors can buy solar assets, which are subsequently leased to consumers in the developing world, typically local schools and small-sized enterprises. Smart contracts are used to automatically execute payments from solar producers to investors, as energy is being produced in near real-time. Blockchain-enabled solutions can reduce money transfer costs and increase security in cases of identity theft. Payments can be collected in cryptocurrencies or fiat currencies. Sun Exchange has successfully funded 5 solar projects and working at additional ones. On top of regular payments from supported projects, investors can also collect 1 SolarCoin for every 1 MWh of energy produced.


Efforce is a platform for trading energy energy efficiency projects worldwide.

One of its co-founder is Steve Wozniak, who was the Apple Co-Founder.

How does EFFORCE Work?

  • Contributors can participate in energy efficiency projects by acquiring tokenized future savings.
  • Companies benefit from energy efficiency improvements at no cost and the resulting savings are written in real time on the blockchain.
  • Blockchain: A smart contract redistributes the resulting savings to token holders and the companies without intermediaries based on exact consumption/savings data.

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