The speed with which technology progresses takes, ironically, some time to get used to. According to Forbes, every day there’s 2.5 quintillion bytes (25 followed by 17 zeros) of new data being created. This not only implies that analyzing and storing data call for ever more sophisticated processes, it also generates an enormous pressure to keep our information up to date with as much frequency as possible. Fortunately, the creation and boom of cryptocurrencies, like Bitcoin, came with a technology that has changed our definition of immediacy: the Blockchain.
Blockchain is a shared digital logbook of transactions. It’s maintained by a web of computers connected to the internet, with no need for a centralized authority. Over the last few years, Blockchain has become a key component in both public and private sectors, all due to its ability to register and stay updated on goods and transactions without the need for a mediator. The International Data Corporation (IDC) estimates that the global investment on Blockchain will double this year to 2.1 billion dollars, from the 945 million last year.
However, the arrival of this technology hasn’t come without criticism. Apart from the skepticism that has surrounded cryptocurrencies since their beginning, there’s also the debate about the high energy demand in Blockchain applications. To maintain their updating power, the Blockchain requires a process of constant mining. It’s not simple to understand and this SciShow video is a great reference to understand how Blockchain works, but it suffices to say that mining constantly requires an enormous amount of energy. In 2017, the energy consumption index in Blockchain operations was 36.6 TWh; this year, it’s closer to 69 TWh. For comparison, this is enough energy to power 5,500 average households for an entire year. To make things worse, most mining farms still use traditional energy sources, such as coal and oil.
Nonetheless, labeling Blockchain as an excessive and unhinged consumer of energy is a premature move. With the updating powers that characterizes it, this method of registering information is changing the way in which energy is being measured, produced and sold.
In Brooklyn, New York, an experiment is taking place involving dozens of solar panel arrays across rooftops and interconnected in a network continuously growing. Known as the Brooklyn Microgrid, the project is recruiting homeowners and businesses in a platform of virtual exchange, based on Blockchain, that will allow solar energy producers to sell exceeding energy credits to buyers inside the network; buyers who could literally live in the house next door.
The ability to complete safe transactions and create an exchange-based energy business will allow participants to circumvent traditional offers from big companies and build a microgrid with energy generation and storage that can operate on its own, even with major outages from the central grid. The use of IoT sensors and a Blockchain-based network eliminate the long-established way of calculating electricity tariffs by adjusting the prices in real time.
“This takes central providers – historically the Electricity Commission – out of the game” said Audrey Zibelman, former chairwoman of the New York State Public Service Commission.
Although this project is at an initial state, with fewer than 50 participants, the Brooklyn Microgrid is an example of what is being developed worldwide. New companies such as LO3 Energy which, alongside Siemens, is responsible for the New York project, are building digital networks with the promise of decentralized, user-controlled energy systems. These new models are able to operate along with the traditional grid or, in the case of developing countries, work entirely on their own.
In 2016, a company named Power Ledger started an energy market based on Blockchain in a residential community in Perth, Australia. In Bangladesh, where an estimate of 65 million people have no access to the central grid, ME SOLshare is working on a peer-to-peer network commerce in rural areas where some households are equipped with solar panels. The producers/consumers (now known as prosumers) are able to sell their excess energy back to the grid, there neighbor houses and businesses can buy it in small increments using their smartphones. In Germany, Sonnen, a leading provider of household batteries and producer of intelligent energy, is creating a grid of around 8,000 consumers, both with and without solar panels, where people are already exchanging energy.
“Peer-to-peer is slowly but surely becoming a reality,” said Olaf Lohr, Sonnen’s head of United States business development. “This really is a very disruptive technology. The customers are also the owners — they are the producers of the energy. There is no centralized feed-in from one big power plant.”
Furthermore, the disruption is being fueled with the help of cryptocurrencies. Moldova, a country that imports three quarters of its energy, has seen rises of more than half in energy prices in the last five years. This led to the United Nations Development Program (UNDP) to launch an initiative to power the Technical University of Moldova with solar energy paid with cryptocurrencies. The project, created alongside Sun Exchange, a South African solar energy market, will allow people to purchase solar cells using SolarCoin, a cryptocurrency created by the startup ElectriChain, to then be leased to the university.
“One of the biggest obstacles to countries investing in renewable energy is a lack of finance, as you often have to wait 10 to 15 years before you get a return on your investment” said Dumitru Vasilescu, program manager with UNDP in Moldova.
Should this trial in the Moldovan university be successful, the UNDP plans to replicate the project in neighboring countries. Daruis Nassiry, executive at the Overseas Development Institute, predicts that the greatest growth in crypto-financed energy will come from developing countries. According to Nassiry, countries with emerging economies have bigger energy needs, as well as a more flexible legal environment to allow these kinds of innovations.
Even when applications for Blockchain and cryptocurrencies in the energy sector still have a long way to cancel out their own electricity consumptions, the IDC expects a double-digit increase in the energy market between 2018 and 2021. This will be possible because of these technologies’ capability to adapt to new energy sources, as well as boosting these sources within new forms of exchange. As prosumers, it will be easier to acquire a conscious mind about the energy we consume.
“It’s a recognition of energy needs beyond your own,” Garry Golden, an energy consultant working on the Brooklyn Microgrid said. “There’s a microgrid of our community, and that’s great, but the hospitals, the clinics, the schools, large housing complexes — you can feed the energy where it needs to go.”