Blockchain could transform clean energy sector
Booz Allen Hamilton highlights ways blockchain can help integrate renewable energy in electricity grids in GCC
Blockchain could recharge the renewable energy market in the GCC, according to Booz Allen Hamilton.
The consulting firm has identified three specific use cases in which blockchain can facilitate the integration of renewable energy in electricity grids across the GCC. These include: Enabling peer-to-peer (P2P) energy trading; tracking renewable energy certificates; and articulating smart contracts.
Renewable energy is a good candidate for blockchain use since it operates in a system of economic and financial transactions (electricity and fares), currently operated by a central authority (utility). This is gradually becoming more decentralised thanks to the role that distributed energy resources are playing.
In this context, energy players are increasing their efforts to develop blockchain-based applications and processes in order to solve some of today’s challenges, while also integrating renewable energy in traditional grids.
Since the development of Bitcoin in 2008, the interest in blockchain technology has exponentially expanded into many different industries, with its global market predicted to grow to USD 2.3 billion by 2021. However, despite the impact blockchain may have on different industries and its clear potential to disintermediate and shorten entire value chains, the technology is still young. Organizations are now starting to explore its application to traditional business models and processes, and players in the energy space, including start-ups and large-scale utilities, are starting to engage with this technology to explore its real potential.
Dr. Adham Sleiman, vice president at Booz Allen Hamilton, MENA, said, “The UAE is already testing more than 20 public and private sector use cases across different industries, including Dubai Water and Electricity Authority’s initiative for the charging of electric vehicles, RTA’s project to track the maintenance lifecycle of a vehicle or Dubai real-estate Blockchain solution powered by the Dubai Land Department to simplify the paperwork associated with real estate operations.”
P2P energy trading
According to the International Energy Agency, by 2040, one billion households and 11 billion smart appliances could actively participate in interconnected electricity systems. Transactive energy, enabled by distributed energy resources is the major disruptive change that the electricity industry may face in the coming 10 years. Several pilots have already illustrated the ability of a blockchain ecosystem to monitor flows of both value and energy as multiple parties transact.
Renewable energy certificates
It is impossible to distinguish electricity generated from renewable energy from electricity produced by other means. Therefore, it is important for utilities to make use of tracking tools such as renewable energy certificates (REC) that track renewables as they flow into the grid. Just as blockchain technology enables users to transact money or data, blockchain tokens can be submitted to the market as units of energy in the same way as RECs, becoming a tool to validate the authenticity of genuine green energy.
Smart contracts are self-executing programs that respond to a pre-defined trigger event. Once the action is done, it is added to the blockchain as a permanent record. Successful pilots based on blockchain have been tested in the operation of electric vehicles charging stations, enabling a fully automated, worldwide authenticated, charging and billing solution with no middleman involved.
With electricity demand in the GCC expected to continue growing rapidly, renewable energy has become a key asset in government strategies to diversify the domestic energy mix. By 2030, the GCC aims to install 80 gigawatt (GW) of renewable energy capacity across the six member states, constituting more than fifty percent of the region’s existing conventional capacity.
Dr Sleiman however urges caution: “Many digital services are already possible today without blockchain, and energy players should avoid adopting this technology for the sake of it or for fear of missing out. Early adopters should conduct a holistic assessment to understand their own role in the energy value chain, identify the business need and define a clear direction of where and with what economic benefits blockchain-based applications could be used.”