NewsBlockchain in Renewable Energy

Blockchain in Renewable Energy

a group of cubes that are on a black surface
Photo by Shubham Dhage

You may know blockchain as a technology that offers secure, encrypted, and decentralized transactions without a central authority. This is true: with blockchain, you can send and receive money easily, and take advantage of this feature even on sites like However, second-generation blockchains offer much more than cryptocurrencies. They also have many potential uses in the energy sector, especially for renewable energy sources. Below, we will talk about this: find out how blockchain can help with renewable energy.

Definition of “renewable”

If the energy comes from natural resources (such as sunlight, wind, and water), it is “renewable”. In other words, it won’t deplete and renew itself, as long as we are not greedy. Such systems are of great importance in reducing greenhouse gas emissions and fighting against climate change. The thing is, renewable energy has lots of problems, such as:

  • Their initial costs are much higher,
  • Building an infrastructure for them is more challenging,
  • Variability of supply is volatile – there is no guarantee that winds will blow constantly, for example,
  • There are several difficulties in integrating them with the existing grid,
  • Stakeholders of them have trust and transparency issues.

The good news is that blockchain can help resolve most of these issues. So, how does it do that?

What Can Blockchain Offer?

Blockchain can offer lots of solutions for the current problems of renewable energy, simply by using its main features, such as:

  • Peer-to-peer (P2P) energy trading: Blockchain can be used to make direct and secure transactions between producers and consumers. There is no need for intermediaries. Likewise, a central authority is not needed. Such a system can lower the transaction costs significantly. It can also increase efficiency. P2P systems offer more benefits for those who both produce and consume energy too. Without dealing with heavy costs, anyone can produce it (via solar panels, for example) and sell it using blockchains.
  • Smart contracts: Second-generation blockchains can handle smart contracts. This means they can automate an execution once a certain condition is met. This condition can be based on predefined rules. For example, a smart contract can be created for transferring money to the producer once the client reaches a certain threshold. A smart contract can simplify the verification and settlement of transactions. They can also allow much more dynamic pricing.
  • Traceability and certification: Blockchain records cannot be changed in any way. For this reason, they can be used to create and store a record of the origin, quality, and quantity of renewable energy. This can resolve the transparency problem of this matter. It can also simplify issuing renewable energy certificates (RECs) or carbon emission credits.
  • Grid management and optimization: Blockchain can offer a more distributed and resilient grid, thanks to its “node” feature. With blockchains, multiple nodes can communicate and coordinate with each other much more easily and efficiently. In other words, they can manage the load of the electricity grid more efficiently and intervene immediately in a region that needs more energy, and there is no need for human intervention for this. This feature not only makes the integration of renewable energy into existing infrastructure easier but also makes it much more effective & efficient.

These are not just theoretical benefits: as of 2023, it is possible to find some real-world examples of use that offer these and many other advantages.

Real-world Examples of Blockchain & Renewable Energy

There are multiple utility companies and startups around the world that use blockchain technology for renewable energy. Some examples include:

  • There is a utility company in Spain called Iberdrola that uses blockchains to track the origin of the energy it provides to its customers and ensure it is 100% renewable. In other words, it actively uses this technology for supply management.
  • In Australia, you can find a startup called Power Ledger. This company focuses on P2P trading, allowing solar energy to be sold and purchased in real time. If you produce your own electricity, you can sell some of it or buy solar power from someone else.
  • Let’s go to Lithuania: here, we can find a startup called WePower. It is developing a blockchain-based platform for green energy financing and trading. This is how an investor can find a producer to support the renewable energy sector.
  • In the USA, you can find a microenergy initiative called LO3 Energy. It currently operates only in Brooklyn, New York, allowing users to share locally created solar energy among themselves.

Blockchain technology has features that will be very useful for renewable energy in the long term and it may even become the backbone of this industry. However, there are still some challenges to overcome. For example: 

  • Scalability and performance: Blockchain transactions need lots of computational power and time to process. And they can use a high amount of energy during this process. This can limit the scalability and speed of the infrastructure. Modern blockchains are much faster than before but still not instant. During periods when the chain is busy, speed and performance can be seriously reduced.
  • Regulation and governance: Blockchain is a decentralized and anonymous technology. While this has some advantages, it also means that dispute resolution can be quite problematic. There is no authority you can appeal to, and there will definitely be people who abuse this.
  • Compatibility and standardization: Blockchain is not a technology with “standards”. Each cryptocurrency uses its own chain. This means that chains that will be used for renewable energy systems will have compatibility issues, which can make the integration process even more difficult.
  • Education and knowledge: Blockchain is not that easy to use. For most of the consumers who just want to buy energy and pay for it, the overall process can be quite complex and unfamiliar. And this can affect its adoption.

Nevertheless, using blockchains in renewable energy is an exciting opportunity and it has the potential to revolutionize the entire industry. While it cannot solve all problems, it can create new solutions and guide us in the right way.

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