19 January 2017


Blockchain Technology: a Hidden Gem of Innovation for the Solar Industry

Author: Jordan Kouzmanoff, Solarplaza

On 14th December 2016, Solarplaza organized the webinar “Blockchain Impact on Solar Energy”. Axel von Perfall, senior manager in the Energy & Utilities Team of PwC, Abraham Cambridge, CEO of the Sun Exchange, and Scott Kessler from LO3 Energy joined the webinar as speakers, sharing their expertise on the nature of blockchain technology and its disruptive impact on the solar industry. The entire video recording of the webinar and the speakers’ slides can be freely accessed here.

Key takeaways

  • Blockchain technology, famed for its use in the cryptocurrency Bitcoin, can have an immense impact on the solar industry;

  • Although it is currently only implemented in small-scale microgrids, at a larger scale blockchain technology could make utilities and government-involvement obsolete, passing the savings onto the consumer;

  • Surprisingly, blockchain technology might first flourish in Africa, where high demand, low supply and consistent corruption have prevented the establishment of continent-wide regulatory frameworks.

The Potential of Blockchain Technology

Over the past few years blockchain technology has proven itself as one of the defining technologies of the decade, yet its nature and function remains enigmatic to most. Despite the rather complex mathematics involved, the concept of blockchain technology is simple.

In short, the blockchain is a decentralized way of storing transactions, a database that is inherently resistant to falsification. Since every party has the same authenticated copy of the blockchain, transactions are easily validated and cannot be edited retroactively.

The implementation of blockchain technology in the solar industry might not be immediately obvious. For one, the transactional nature of the blockchain necessitates the use of smart contracts, which among other things specify the exact amount of energy you want from a given source.

The primary real-life implication of blockchain technology is the removal of intermediaries and their control over the network. This is most evident in Bitcoin, which governments across the world are still struggling to regulate due to its robustly independent nature.

Should blockchain technology become dominant across the energy sector, one should expect a similar effect: the obsolescence of utilities and government-involvement. This is one of the big reasons why regulations tend to be hostile against blockchain development; in effect, the blockchain could strip regulators of most of their power.

Where Blockchain Technology Currently Stands

The potential for blockchain technology is immense, but surprisingly it’s proliferation might first begin in Africa. The large demand for energy, combined with high corruption and lack of established continent-wide regulatory integration, opens a window for the introduction of blockchain technology.

“Тhere are still 650 million people without any electricity in Africa, and the biggest question is where will they get their energy from. The simplest answer is solar, and that creates a remarkable opportunity for blockchain technology.”

One interesting aspect of Africa’s struggle in deploying green energy is the lack of funding infrastructure for projects. There are plenty of investors ready to pour capital into renewables, but they lack the infrastructure to do this; blockchain technology provides a clear solution to this through its built-in credibility.

Over the past few years dozens of renewable energy startups have sprung up across the world that utilize blockchain technology. Among these early pioneers is LO3 Energy, which focuses on developing microgrids in partnership with local communities and utilities.

Currently, most regulatory frameworks don’t allow consumers to sell any surplus energy they may have beyond what they themselves use. This significantly disincentives the average homeowner from investing in residential solar.

Blockchain microgrids solve this problem by essentially eliminating the barriers that prevent members of a community from selling surplus solar energy to one another. Such microgrids aren’t merely a theoretical concept, they exist and have been successfully implemented in dozens of communities across the world, including one in Brooklyn.

The only viable alternative for homeowners who want to buy renewable energy right now is buying it off energy markets. The reality, however, is that such transactions essentially act as funding to a distant power plant, whose energy likely never reaches the consumer. Consequently, although the capital does get invested into renewable energy, the homeowner’s local community doesn’t benefit from it, in contrast with blockchain microgrids, which ensure that the renewable energy is sourced locally.

The potential for blockchain technology to disrupt the solar industry is immense, and numerous firms are already developing their own blockchain-powered solutions. Suffice to say, the future of microgrid solar projects based on blockchain technology is looking bright.

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