Blockchain and Renewables: Winning Minds in Gear

Renewable energy has become more important than ever, drawing lots of public attention within the recent years. This can be easily proved by traveling back in time to Paris, to the year 2015. There were the participants of the United Nations Climate Change Conference (also known as COP-21), who decided to adopt the brand-new global climate goals. The signatories of COP-21 final communique have ruled to take measures to limit global warming to ‘well below two degrees Celsius’ if compared to the pre-industrial level. The Paris climate agreement is aimed at reaching zero anthropogenic greenhouse gas (GHG) emissions during the second half of the 21 century. This is how energy sustainability was brought into the foreground of the world energy policy. The following years have marked the divide between the fossil fuels such as oil, coal and natural gas, and the renewables. The power of the sun, water, the wind is earning minds of energy consumers in Europe and slowly but steadily increasing its share in the energy mixes of the most climate conscious countries.

Today, it’s not only the proponents of clean energy who are concentrated on the renewables. The trend is predictably caught by the crypto enthusiasts who have clairvoyantly noticed the renewables’ potential to become a new promising niche to develop blockchain technology on. Below, we will tell more on how blockchain gains popularity among clean energy enthusiasts and what their complementarity is.

There are five types of a renewable energy rival with fossil fuels. These are solar energy (harvested through sunlight via solar panels), wind energy (generated by wind and harvested through turbines), hydroelectric energy (water used to spin turbines), geothermal energy (harvested through deep wells of water and steam) and, last but not least, biomass energy (treating organic matter by burning, fermentation, or heating).

In this article, we basically focus on solar and wind energies as they can easily be produced in households by final energy consumers themselves. By the way, consumers producing energy themselves are to be rather called prosumers or producing consumers. This is a new, post COP-21 term widely used to describe a proponent of clean energy. So, why is a prosumer supposed to be interested in blockchain technologies and vice versa, why will a crypto enthusiast eagerly enjoy the benefits of solar power?

The base of renewable energy sales is formed by Renewable Energy Certificates (REC), which provide a special mechanism for the purchase of the amounts of renewable energy that is added to the electrical grid and pulled from it. Such tracking certificates shape the global demand for sharing renewable energy. These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy. REC system is available in the U.S., where it gains more and more popularity on a day-to-day basis.

How does it work? Take a green energy producer, say a solar plant or a wind farm. Imagine it is credited with a single REC for every single MWh of electricity it produces (for you have a better idea on quantities, an average residential customer purchases about 800 kWh in a month). A certifying regulatory authority gives each REC a unique identification number to be confident that a certificate would not be double-counted. The amount of the so-called green energy supported by a certificate is then fed into the electrical grid with a right to further sell the accompanying certificate on the open market.

With regard to Europe, a similar REC System (also known as Guarantee of Origin System) identifying renewables sources was introduced in 2002 and is today valid in 15 European countries. As follows from own statistics published by the Association of Issuing Bodies, Germany, Sweden, Switzerland and the Netherlands were the largest European markets for guarantees of origin.

All these REC developments in the renewables technologies are undoubtedly making clean energy more and more viable to adapt into our everyday lives. Imagine a householder who has a solar battery placed on his house roof. As we have already stated, we call him a prosumer, the one who produces energy and at the same time consumes it himself or — what is more — shares it with his neighbor. To guarantee that an amount of the renewable energy was produced on his behalf and to further send this amount to the electrical grid, he has to purchase a REC. As more and more people can afford producing energy themselves acquiring certificates, the true energy independence is becoming closer. Once we remember that photovoltaic and wind power prices have dropped by nearly half since 2008, we can imagine that sustainable future is almost here.

By now you have already probably guessed what we mean. Yes, managing this certificate system can be a blockchain’s duty. More than that, this is the blockchain technology that is poised to become a standard for managing RECs distribution. Let’s imagine that this tricky multilayered market of RECs is managed not by multiple authorities with intermediary brokers adding some extra margins but via a peer-to-peer network that can function on its own even within a local community. What would this mean? We think reduced time, labor and money costs is the answer.