THE ONE where the blockchain – ironically – could reduce our carbon footprint
Capitalism’s unique obsession with profit always had me convinced that it was unlikely to offer up any kind of real solution for encouraging humanity to move over to an economic model that accommodated ecological sustainability.
However, having recently read a whole host of white-papers written by blockchain-based, green energy start-ups, I now find myself reassessing that position.
I am not saying that the Blockchain has a magic wand solution for rescuing us from the impending problems associated with climate change.
But, going by the principal that it is better for us to adopt a less harmful mode of living regardless of whether Armageddon is around the corner or not, I do now carry a sense of optimism about our ability to move over to such a sustainable model in the near future.
I’ll try to explain why I think that is the case over the course of the next few paragraphs. Just take note whilst you read these lines that at no point does the Blockchain itself carry out energy transfers. That job is left to good old-fashioned electricity pylons and power lines.
The P2P Energy Model
On April 11th of 2018, Verv, a green energy start-up announced what was likely the UK’s first peer-to-peer energy transaction in which one kilowatt-hour of solar electricity generated from the roof panels of an apartment block in Hackney’s Banister House Estate in London was transferred to another apartment within the same block.
Whilst the electricity was transferred over a small-scale localised grid, the associated payment made during that field test was effectuated over a blockchain network which was able to secure the transaction in precisely the same way that Bitcoin ensures that payments on its own network are not subject to manipulation.
The principle behind P2P energy production is quite simple: I may have a solar panel or mini-windmill in my back garden which, on a particularly sunny or windy day, generates more electricity than I am able to consume.
Currently, as things stand, when I am unable to store the excess energy produced, that energy is wasted.
The centralised model has more or less worked quite well up until now, but it is not in a position to take advantage of new opportunities afforded by the latest technological developments
In a very small minority of cases, some producers are able to sell this excess back to the national grid – but that doesn’t happen too often, in part because the national grid itself isn’t particularly keen on the energy management nightmare that would arise from having tens of thousands, if not hundreds of thousands, of individual households contributing to the grid when it suited them.
A centralised model requires centralised management, naturally. And that model has more or less worked quite well up until now, but it is not in a position to take advantage of new opportunities afforded by the latest technological developments.
Blockchain Making For a Perfect Fit
And this is where the Blockchain appears to make for a perfect fit for more localised models of energy production. Blockchain technology offers the ability to create distributed, opt-in platforms which can offer secure transactions in real time along with equally secure smart contracts which manage the energy transfers.
The result is that blockchain technology is now setting in motion a whole host of green energy projects that are looking to create localised electricity grids that allow for the exchange of electricity between households and/or small commercial producers.
The precise mechanics of those platforms vary depending on the project in question. And there are lots of projects out there – Verv, Power Ledger, Restart, Wepower, RED and Max Keiser’s very own Sun Exchange, to name but a few.
In the case of Verv, the idea is to allow individual households to contribute to the local grid when they are producing an excess, and to take from it when their own production is short. So I can share the excess from my solar panels with my neighbour when it’s a particularly hot day, and he/she can pay me back the favour with his windmill when the sun disappears and it all gets a bit brisky.
In the case of Restart, the idea is to encourage the creation of local enterprises/franchises which produce their own electricity – and accompanying green energy certificates – which is then certified, monetised and distributed through a blockchain-based platform. Wepower has conceived of something not too dissimilar but without the franchise aspect.
Prospects for Adoption
Whilst the concept seems promising – and it isn’t hard to envisage more households now lining up to engage with such networks, particularly when there is the prospect of making money from doing so – there are some obstacles.
Firstly, setting up the required infrastructure is no mean task – and will likely require the collaboration of local authorities to help get things moving. National government – regardless of the country – is likely to act as a barrier to the new green energy models coming our way, particularly as existing legislation tends to favour existing producers and rarely newer arrivals.
However, where the political will exists, the chances look good – and there are already a few initiatives taking place at national government level to ensure that these new economic models are accommodated.
Lithuania is one case in point as its own energy ministry has given formal backing to the Wepower proposition. Whether its example will become more generalised remains to be seen, but it does appear likely that if one country – or at least one prominent municipal authority – can make a success of the model, then many others will be keen to follow.