How Energy Works on the Blockchain and Why Entrepreneurs Should Pay Attention
Most of us can’t control where our power is coming from, yet. But, with blockchain, that day is coming; and businesses will benefit.
5 min read
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The UN’s Intergovernmental Panel on Climate Change recently issued a stern warning: End humanity’s dependence on fossil fuels within a decade or become directly responsible for not halting irreversible climate change.
Clearly we have to pay attention to climate change. And, here, one of the biggest areas we can change is the power sector; that’s because, currently, 33 percent of the world’s power comes from oil, while coal is responsible for 28 percent, and natural gas, 24 percent. Cutting out fossil fuels and switching to cleaner, renewable sources of energy could do a lot to impact climate change, but we may need to rethink some parts of our power grid.
Power grids in industrialized countries were developed to convey a steady stream of electricity to as many people as possible and provide that steady stream of energy in the most reliable way possible. While that was certainly a noble cause, the architects of this system failed to take into account that such ease of use would result in ever-increasing demand for power, which would in turn result in tons of carbon dioxide being dumped into our atmosphere every year.
In the United States alone, 35 percent of CO2 emissions comes from power generation.
Now we know better, but doing better isn’t looking as easy. Today, decades after scientists first sounded the alarm bells about climate change, alternatives to coal and oil are still costly and have poor adoption rates. Worldwide, only 3 percent of our power comes from renewable sources, 7 percent from hydroelectricity, and a measly 0.2 percent from solar.
Solar adoption is on the rise, but it can be cost prohibitive for many people. Just a few solar panels can power an entire home or office, and 1 gigawatt of solar power generation can prevent 690 metric tons of CO2 from entering the atmosphere. But even a standard system for a small house can cost an average of $13,188, while a system for a large house can be more than $20,000.
And even at those prices, there are complications and regulatory hurdles that can make the cost savings negligible, further discouraging adoption.
What Europe is doing to further blockchain’s positive impact on the environment
Already in Europe, there are multiple villages in the Netherlands where blockchain technology is being used to generate, share and store renewable energy among the homes, each of which has different combinations of energy production technology. Residents have solar panels, heat pumps and more and are governed independently of the main power grid.
So far, these power co-ops are able to produce about 90 percent of the power residents need, drastically reducing their reliance on fossil fuels.
In Europe, too, Eurelectric, the trade association of electric distribution operators for the continent, has been monitoring blockchain’s progress in modernizing the power grid and recently released a report about its findings. The report concluded that asset ownership of the power grid would remain an important task, and blockchain technology would be unlikely to change that aspect of the electric companies’ business model.
What blockchain could do
Blockchain could, however, impact the generation side of power distribution.
In fact, in 2017, a pilot program was launched using IBM’s blockchain framework to stabilize the power grid in Europe, a first step in incorporating renewable and clean energy solutions into the power grid. One of the main problems with implementing new sources of power generation is that they can be unpredictable in the volume of power they will output in a given day.
That means that on a cloudy day, a power grid would have to be able to shift from solar to an alternate source or battery backup. This is where blockchain smart grids come in handy on “dumb” existing power distribution networks — the smart grid can tell when there is a shortfall in one part and switch sources without the need for constant human intervention.
In undeveloped areas of the world, blockchain smart power grids can be used to solve the “last mile” problem in universal power adoption, by pulling power from multiple nearby sources. It can also give people the power to choose where their energy is coming from. Users on smart power distribution grids can choose how much of their power to gain from renewable sources based on market availability, cost, reliability and other factors.
This is an alternative to just relying on power distribution operators to sell them whatever those operators are generating. Smart grids can also help people make the most efficient use of their resources by forecasting energy needs and storage use.
Want to learn more about the potential of blockchain smart power grid technology to move your business forward? Check out this infographic from Lition: