Individual households and consumers are increasingly generating their own electricity as the cost of solar panels wind generation and battery storage falls – through these, it makes them less reliant on the power grid. This is the reason why energy systems are becoming increasingly decentralized, and it actually helps shift market power from large utility companies to individual “prosumers” – or consumers who produce their own electricity. The said developments have increasingly encouraged a rapid number of community energy projects throughout the globe, where households generate, store, and trade energy with each other.
Specific projects that enable the exchanges of energy between producers and consumers provide local energy resilience to future supply shocks. One house can actually buy excess renewable generation from a neighbour’s solar panels, or from a community wind turbine.
Blockchains are also best known as the technology behind cryptocurrencies such as Bitcoin, but they are increasingly explored in community energy systems. Even without the need for a utility company to act as a trusted intermediary, Blockchains can still act as a digital record to track energy and money transactions.
Blockchains is actually promising to look forward to “real electron trading” in the broad context of energy where it enables energy bought and can be traced to a specific generator, battery or storage unit it came from at the time it is consumed. This is totally different from a consumer who simply purchases energy from a “carbon-free” utility company, of which energy sources come from a renewable generator such as an offshore wind farm. In general practice, this is actually not as effective as it seems, due to power network constraints, its demand during peak times can often only be met from a nearby conventional power station that burns fossil fuels.
However, there’s always a negative side to that — when a community energy scheme allows consumers to buy power directly from the solar panel of their neighbours or from local storage once they use blockchains. It can also provide them a specific choice to what should happen if the neighbour’s solar panels cannot supply power when needed. This not only cuts carbon emissions but also keeps energy revenues in the community.
Yes, blockchains can be a promising technology, making us dream for a potentially decentralized energy system requiring research from a variety of areas. But, if we can only imagine a future in which softwares are being enabled by blockchains and Artificial Intelligence (AI) negotiating smart energy contracts on our behalf, it has actually something that cannot come quickly enough for communities and the climate.