Proof-of-Green: Blockchain Technology to Revolutionize the $1.35T Clean Energy Sector

By:

Dr. Theodosis Mourouzis (Cyprus International Institute of Management, UCL CBT)

and

Dr. Kyriacos Pavlou (Cyprus International Institute of Management, UCL CBT)

 

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Renewables and clean energy production are increasingly gaining ground on traditional fossil-based production methods. Governments and organizations are starting to embrace environmentally-friendly energy policies and are actively investing in Research and Development (R&D) that will lead to the creation of clean and renewable types of energy. Statistics reveal that the U.S. Clean Energy market cap was $200B for 2017, while the corresponding global market reached $1.35T, exhibiting an exponential growth over the years that signifies a marked advancement in this sector. At the Business of Blockchain conference organized by MIT Technology Review and the MIT Media Lab in April 2017, an Accenture survey was quoted stating that 69% of consumers were interested in having an energytrading marketplace, and 47% said they planned to sign up for community solar projects. This great demand in the renewables energy sector, has spurred various companies to begin developing blockchain applications for the energy sector. None of these, however, have moved beyond the concept or pilot stage yet, with the sole exception of a trial run in Brooklyn, New York, which in April 2017 facilitated the selling of generated solar energy directly from one neighbor to another via a blockchain system. Despite the fact that there have been many investments towards building efficient and green energy grids, many inefficiencies still remain due to the large topology of said grids and their inefficient management. Current power grid systems worldwide have become outdated and inefficient, incapable of handling multiple energy types simultaneously. The transmission and distribution of energy over large distances are very inefficient with a 5% loss incurred between power plant and residential area transmissions.

More importantly, current grid infrastructures do not provide any solution for the massive environmental pollution and carbon dioxide emissions produced during energy production. Moreover, no substantial incentives are given to individuals and organization to switch to green energy. The dream of each home becoming carbon-neutral is currently unrealistic due to the high costs involved in buying and installing the appropriate equipment. The solution appears to be a decentralized model that facilitates greater local interaction and incentivizes direct P2P exchange of renewable energy, which at the same time exploits the massive data available to make smart and informed decisions. Blockchain technology, the backbone of cryptocurrency transactions, seems to be an ideal candidate solution to the above problem. It has the potential to create decentralized energy systems in which energy supply contracts are made directly and executed automatically between energy producers and energy consumers. Blockchain technology is a distributed ledger with many desirable properties: it is transparent, immutable, secure, with no-need of third party intermediary acting as a trusted authority. Blockchain enables consumers to directly trade the energy they produce with other consumers in a peer-to-peer network with all the data and transactions being automatically available and guaranteed by smart-contracts. The mounds of data generated by these transactions, if leveraged correctly through analytics, can lead to great improvements in efficiency and cost. Furthermore, the application of blockchain to the energy sector can guarantee the energy origin, can certify that the energy produced is indeed renewable, can keep historical records of ownership and state of energy assets, can certify emission allowances, as well as, monitor of the metering and billing of electricity consumption. Thus, such a blockchain infrastructure can create a system that would reward users based on a proof-of-green scheme that has the potential to shape better, eco-friendly communities. These properties and capabilities described above coupled with the fact that blockchain can act as a common framework that solves interoperability issues sets up blockchain as a valuable tool for the green energy sector. Greeneum, an Israeli startup is working towards generating a new gateway for green energy, utilizing the decentralized architecture of blockchain technology. A blockchain-based energy-trading token, named GREEN, aims to empower individuals and communities to easily manage produced renewable energy, giving the option to buy services and products and trade on the GREENEUM network. The Greeneum network aims to leverage a tokenized economy in order to enhance the generation and consumption of renewables while at the same time facilitating decentralized energy trading between utilities, producers, grid operators, and consumers. Specifically, it facilitates the exchange within a community of renewable energy produced by solar panels belonging to members of that community. This occurs without any restrictions and results in the reduction of grid management overhead costs. In addition, the Greeneum network is built to be smart; equipped with the necessary tools and methodologies required to achieve full efficiency and peak performance. Data is “the oil of the 21st century” and the members of the Greeneum team have demonstrated they fully embrace this notion by building into the platform tools that allow optimized energy distribution. Artificial Intelligence and machine learning algorithms can help the network managers gain a deeper knowledge of the entire clean energy life cycle. These tools will provide insights into real-time energy trading and projected production/consumption. Consequently, producers, consumers, businesses and organizations will be in a better position to trade globally and locally products and services on the Green Market Place. The Greeneum platform is the first solution that addresses all challenges faced by the energy sector, such as lack of efficiency, energy type interoperability, lack of incentives to go green, lack of proper network infrastructure and lack of data-driven strategy. The combination of blockchain technology with advanced analytics are the future of the clean energy sector and Greeneum is poised to deliver both.

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