Blockchain's Impact on Energy Grids

By CIOReview | Friday, November 3, 2017

The electrons falling onto an electricity grid cannot be distinguished in terms of its source: whether natural sources like the sun, wind or even non-renewable sources like fossil fuels. To bring this distinction out of the darkness, the governments across the globe collaboratively formed a system based on tradable certificates. While this seems fairly doable, managing these certificates is a tedious task and often this rather byzantine system shoots up the transaction costs, while leaving ample space for accounting errors. This is where blockchain comes into picture.

Blockchain is a distributed, encrypted ledger that is managed by a large network of computers: each computer can verify transactions, while each user in the network has access to this ledger, with no single point of authority. In this particular scenario, advocates are certain that blockchain could have a significant effect to its advancement. The network of peers would be the electricity consumers and producers, and they are connected through means of the electricity grid. This technology can keep track of renewable energy certificates, thereby solving issues revolving around data management in the electricity sector, without disrupting business. Additionally, it is rumored that blockchain has the potential to cause the transformation of modern energy grids.

Using blockchain should bring about a change in the infrastructure of the electricity sector as well; changing from massive centralized plants to smaller distributed power plants and storage systems. This trend has already started making an appearance, like solar panels and electric batteries for vehicles, which are connected to the electricity grid. Additionally, the transfer of cryptocurrency would prevent delayed pay for electricity producers, which typically take about 60-80 days. Apart from getting paid immediately, these producers would require lesser capital to run a generating business.

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