Right now, the way electricity is produced and disseminated is a highly centralized process. Due in part to our ever-increasing dependence on electrically-powered infrastructure, grid operators often enjoy regional monopolies on electrical generation. The centralized grid is also due to the inherent properties of electricity. The power you are consuming as you read this was likely generated just moments ago, travelling from its source through an extensive network of transformers and power lines. Of course, it was not generated as a direct response to you turning on your laptop. Rather, electricity is constantly being generated, sent out around the grid, and drawn through outlets in the wall wherever it is needed; any remainder completes a circuit of the grid. As such, a centralized grid is also susceptible to widespread outages: a broken link in the chain has far-reaching repercussions.
Blockchain is a technology that exists to decentralize. The core concept being a “distributed ledger,” blockchains allow secure and transparent exchanges to be made between individuals without the need for third-party verification. In the financial world, for example, companies are implementing blockchain to save themselves the time and money required by lawyers and analysts when drawing up investment deals. Some of the most exciting applications of blockchain technology are the ones gaining traction in the energy sector. Both traditional generators and renewable energy providers alike have adopted the technology as a means of securely and efficiently tracking generation and distribution data.
For the renewable energy sector, blockchain offers a unique opportunity to alter the way energy is produced and consumed. While the central grid is not something most communities can live without, with blockchain-enabled microgrids, they can become less dependent on it. By securing microgrid generation data in a blockchain distributed ledger, connected consumers have access to information on pricing and availability that allows them to make the best decisions, both for their wallet and for the environment. Transactions between producers and consumers can be made without the need for any middle man, and can even be automated with blockchain “smart contracts.” Locally generated solar power, for example, would be available at a lower price during the day when excess power is available. For the producer then, too, the blockchain-enabled microgrid provides an additional source of income—fair market value for excess power—which helps to recoup solar panel investments more quickly.
For those directly connected to the microgrid, the benefits are clear. More generally, the construction of such infrastructure provides a boost to local economies, both from the jobs created and the increased spending power that results from more efficient energy distribution. And one cannot forget that this is all merely a concrete way of making environmental change economically viable. As the number of severe storms causing blackouts increases year after year, communities everywhere are expressing the desire to transition toward a lower-impact energy economy. Microgrids offer a path forward that makes financial sense for energy producers and consumers, while working to ensure the health of our environment for future generations.
Based in Boston, Massachusetts, and supported by award-winning technology from the MIT pipeline, Power2Peer is leading the charge for local energy blockchain research and development. Subscribe to Power2Peer’s newsletter here and stay tuned for updates!