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Blockchain & Distributed Generation: The Energy Market of the Future?

We’ve been writing a lot recently about the potential impacts of distributed generation systems - which generate power (usually through solar panels or wind turbines) near the point of use rather than at a centralized location - for both residential and commercial/industrial applications. The promise of this technology is enormous, as it allows greater freedom from utility companies, increased grid resiliency, and energy savings for consumers. Innovators the world over are exploring and testing the implementation of distributed generation “microgrids” to create a future of energy freedom.

What’s holding solar adopters back from embracing distributed generation systems? Utility companies, of course, who continue to throw up roadblocks for those who wish to decouple themselves from wasteful, unsustainable power generation and infrastructure practices. However, an emerging technology could hold the key to a new power paradigm that enables distributed generation installations to thrive. Let’s take a look:

Disrupting the Status Quo

“For over a century,” technology theorists write for IEEE Spectrum, “the electricity grid has been a top-down business with utilities and big power generators sending electricity to customers. But with the proliferation of renewables, the grid is rapidly transforming into a two-way street, where consumers... are themselves putting power back on the lines.”

“‘The future is moving toward distributed energy, distributed generation for local businesses and for consumers,’ says Susan Furnell, an energy industry consultant based in London.” However, “‘It needs a new set of technologies and a new set of business processes and a way of interacting to make all of that work.’” The current energy market, dominated for a century by utility companies, has been intentionally crafted to discourage independent, local energy production. To enable distributed generation to thrive, we need something new.

That’s where blockchain enters the equation.

All About Blockchain

Blockchain might be most familiar to non-tech-geeks as the underpinnings of the cryptocurrency Bitcoin, which made a big splash a few years ago and then faded from the news. Bitcoin may not turn out to be the currency of the future, but the technology developed to track it could have major implications for transactions in energy, finance, and beyond. This “distributed database” could do for value something similar to what distributed generation is doing for energy - create a new market for democratized, accessible commodities.

What exactly is blockchain? According to Blockgeeks, an online forum dedicated to blockchain technology, “Information held on a blockchain exists as a shared — and continually reconciled — database.” This information “isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.”

The Economist calls blockchain “the great chain of being sure about things,” noting that “It offers a way for people who do not know or trust each other to create a record of who owns what that will compel the assent of everyone concerned. It is a way of making and preserving truths.”

(For an in-depth blockchain explainer, check out this article from our friends at Invest in Blockchain.)

What does this mean for distributed generation systems?

Blockchain Meets Distributed Generation

The possibilities of blockchain as the basis of a new energy market are currently being tested by technology enthusiasts and energy disruptors who believe that it may provide a foundation for peer-to-peer distributed generation energy trading. As David Wagman writes on IEEE Spectrum, “blockchain’s unique attributes suggest it has the potential to play a game-changing role in the energy sector. For example... blockchain can streamline routine billing and facilitate still more amounts of automation in the process. As a disruptor, blockchain technology can allow potentially millions of energy devices” such as solar PV installations “to transact with each other at the electric power distribution edge.”

Wagman reports on one cutting-edge project taking place in Brooklyn, NY, where residents have come together to create The Brooklyn Microgrid, “a local, neighborhood-powered grid” using rooftop solar installations “that could operate in parallel to the main grid.” “The solar community emerged via a phone app and blockchain,” Wagman writes, “that allowed for information to be shared about available solar capacity, potential buyers, and transaction details.” The New Scientist, responding to this community effort, wrote that it “is the first version of a new kind of energy market, operated by consumers, which will change the way we generate and consume electricity."

There are larger forces at work behind the blockchain and distributed generation revolution as well. Wagman reports that “In early May, 10 energy companies in Asia, Europe, and the United States said they would chip in a total of US $2.5 million to seed the Energy Web Foundation, a nonprofit whose mission is to accelerate the commercial deployment of blockchain technology in the energy sector.”

The Energy Market of the Future

At Solar Design Studio, we’re excited about the possibilities that blockchain brings to the table. We envision a future in which solar distributed generation adopters are able to generate their own power near the point of use and distribute the excess through an energy market that rewards their investment in sustainable power. With so much enthusiasm for the potential of blockchain to create the energy market of the future, this reality may be closer than we imagine.

Would you like to learn more about Solar Design Studio’s consulting, design, and engineering services? Contact us today!

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