Energy is on everybody's mind, from the policymakers at the federal level down to small-town farmers. Startups are popping up in all corners of the globe to revolutionize the world of energy, whether they focus on renewable alternatives like wind and solar power or restructuring existing grids.
By the same token, the blockchain space features a seemingly unrivaled vivacity within the greater tech realm – the continued growth of the market proves it. But besides each industry's fiery spirit, the two intersect more than one might think. Whether Australian blockchain energy startup Power Ledger is teaming up with a new client or the entire city of Liverpool wants to become climate-positive through blockchain, energy remains a popular use case for the evolving technology.
Martin Lim, COO of the blockchain-powered retail energy marketplace Electrify, sees blockchain technology as important to a P2P energy market and the continued development of the renewable energy sector:
"[Blockchain] allows energy prosumers — or, someone who both produces and consumes energy — to set prices more fairly and execute trades directly with consumers via smart contracts. These transactions are then stored immutably and transparently on the blockchain. Electricity consumers are in turn presented with a greater selection of energy options, as well as complete certainty about the sources of their energy — solar or wind, for example. Ultimately, this will lead to the growth of renewable energy assets."
Particularly, the lack of transparency within conventional electricity contracts concerns Lim, as consumers may not have a clear understanding regarding the sources or pricing of their energy. For example, a customer may be worried about their carbon footprint, but energy retailers might not provide them with an accurate account of the energy they use.
Blockchain technology combats this transparency issue. Although there are private networks, many blockchains are public, allowing anybody to view their ledgers. Even if a blockchain is permissioned, that network's ledger is transparent and available for all relevant parties to view. For example, a participant on a blockchain-powered P2P marketplace would, theoretically, be able to see how all the energy on its grid was procured, used, and transferred.
Transparency isn't the only benefit of blockchain technology in the energy sector. Lim believes that the technology can "mitigate issues with consumer credit risk." He noted that in a P2P system, energy retailers are typically unable to filter out customers with poor credit histories, resulting in higher energy costs for all in the marketplace. According to Lim, blockchain could be used to create "a decentralized trustless credit database" that would help the system regulate itself and deter potentially risky participants from entering it.
A final focus of current blockchain energy solutions is microgrids, which are localized electricity sources that are connected to the main grid but can operate independently of it. Although many companies are developing projects within this realm, Lim's team is focusing on main grid solutions.
According to Lim, microgrids are "significantly smaller in production scale and limited in range due to the length of cables." Working on the main grid, however, would allow the energy to reach more people across large urban centers. That's why Electrify intends to operate within Japan's and Singapore's main electric grids.
Of course, although Electrify's approach to blockchain energy development is different than other companies in the space, it's not necessarily better. Microgrid projects make sense because they create a sort of sandbox to test out a network without negatively impacting the main grid.
Moreover, other blockchain initiatives in this sector opt to work more closely with renewable energy – computing company Soluna, for example, announced it would build a wind-powered cryptocurrency mining center in southern Morocco. There exists a variety of projects within the intersection of these two industries, and the infancy of blockchain technology means there's a lot of room for growth across the board for blockchain-based energy solutions.
In any case, it's safe to say that the blockchain and energy spaces are compatible, and we will continue to see projects emerge as time passes.