Have you wondered about the possibility of trading locally generated energy with the people around you? This might sound fictitious, but among many of its other features, cryptocurrency, is in fact enabling such transactions using micro-grids around the world today. Among the many prospective applications of cryptocurrency in the near future, utilizing it to solve the problems of the energy management sector is one full of potential. This literally means you could, for example, “buy” or “sell” energy generated at a local wind or solar energy farm to prospective consumers, without the constraints of the conventional energy market.
How blockchain based micro-grids work?
So what are micro-grids and how does all of this work? A micro-grid is essentially an autonomous unit which functions independently inside a grid. It can serve purposes like energy storage, or for the generation of renewable energy, away from the regular grid. It can function when the main grid isn’t operational.
Consider the room in which you’re sitting in at present. A microgrid could be created inside the grid supplying power the whole city (the macro-grid), just for your room, which you control. Solar panels on your rooftop could generate solar energy, which will power your own micro-grid. This microgrid gives you complete control over the energy you have generated for yourself, making you independent of the grid powering the whole city. Let’s suppose the microgrid powers your whole house. So, even if there is a problem which causes the macro-grid to breakdown (like a flood), your whole neighborhood will plunge into darkness, except your house.
The variable energy dilemma
Also, one of the shortfalls of renewable energy over conventional sources of energy, is that the amounts generated is variable depending on factors like season, time of day and weather. Once again, let’s take the example of your rooftop solar panels, this time considering their inability to generate optimum output during a string of cloudy days. As a part of the microgrid, you could now utilize the surplus energy that you may have generated before. These microgrids can also act as storage for situations when there is excess energy generated.
Like any other commodity for trade, energy trade too has the characteristics of networks of brokers and middlemen. In the traditional energy market, the consumers are at the receiving end of a macro-grid, purchasing electricity from the central utility, at prices set by them. Moreover, users do not have the freedom of choosing the energy source of their preference. These constraints of energy trade sometimes make renewable power more expensive and harder to access.
Taking the previous example further, where your house is connected to a solar powered microgrid. Let’s say, you generate surplus solar energy, and you have a neighbor who finds the electricity from the central utility expensive. You sell some of your surplus energy to them, at a more economic rate. This, is essentially how a peer to peer energy market works.
Where do cryptocurrencies come into the picture?
Cryptocurrencies can be used as a tool for enabling transparent and smoother transactions, and can be used as a medium for carrying out peer to peer energy trade. If you want to know more about blockchain, cryptocurrency, Bitcoin and how it works, check out this article. This will enable healthy interaction between the suppliers and consumers, unlike the present system of centralized and controlled grid system. Blockchain enhances the conventional capabilities of the present P2P energy market, making transactions smoother and modifying them as per the convenience of the consumers. This system, decentralized, creates a direct interaction between the consumers and the energy producers.
This idea is already being put to practice in some parts of the world. LO3, an energy trade startup, last year began testing this with the Brooklyn Microgrid project. As a part of this project, customers can choose to power their homes with locally generated renewable energy. They have utilized blockchain to buy and sell energy. Which means yes, you can sell that surplus solar energy from your rooftop to your neighbor. LO3 is aimed at making clean, renewable energy more accessible, and providing localized energy solutions. They describe their transaction process, through blockchain technology as “A decentralized digital ledger, in which private computers verify transactions automatically. As each new transaction is verified, it’s added to the ledger.” Every single energy transaction taking place is documented. Siemens has also invested in this project.
How does cryptocurrency benefit the energy grid?
The year 2017 saw some very lucrative deals in the energy blockchain market. For example, Conjoule, a German blockchain based peer to peer energy trading startup, received $3.5 million as funding from the Tokyo Electric Power Company and Power Ledger, an Australian company in the same field, and successfully raised $27 million via an ICO in October. In fact, Estonia as a country has elevated this concept by planning to test such a model on the national level, with WePower, another blockchain based energy trade company, partnering with Elering AS, an independent energy and gas operator in Estonia, to connect green energy producers to the Estonia’s smart grid infrastructure. The use of smart meters giving hourly consumption readings and the use of cryptocurrency being well established in Estonia, makes this a great plan. If you’re looking to invest in cryptocurrencies, our ten top tips will help you get started.
This concept is great news for clean energy entrepreneurs, and could provide a boost to them. It is the intersection of the two fields, both of which have a great future. Not only would it reduce our dependence on the conventional energy source based central grid, but also make energy trade much simpler. I’m no expert in this, but this is a brilliant concept for everyone: the consumer, the generator, and of course, the planet. The part of the renewable energy sector which truly needs development, is spreading it to more and more consumers. So hopefully, someday soon we will be able to harvest our own energy, and sell it to our neighbourhood!
by Aarushi Dave