Make no mistake: 2022 was a bad year for crypto, and a bad year for blockchain. US$630 billion of wealth was wiped out. But blockchain isn’t going anywhere. In fact, it’s just picking up pace: the market is predicted to be worth US$39 billion by 2026, with uses spanning banking, gaming, NFTs, supply chains, pharmaceuticals, food, events, decentralised finance, voting, education, fashion, sports, and media. As Powerledger co-founder and Technical Director, John Bulich, says, “I can’t think of an industry it won’t reach, like the early days of the internet, or even computers.”
Energy is one of the sectors that will be most radically transformed by blockchain technology – including ours. As we look ahead, we’ve identified what we think are the most important milestones and principles signposting the way to our bright, blockchain-powered future.
The tokenisation of energy is the first step towards a flexible and sustainable energy system. For the uninitiated, it’s the process of representing a physical asset, such as a unit of energy, as a digital token on a blockchain. These tokens can be used to create a secure ledger of energy transactions, which removes the need for intermediaries and allows investors, asset owners, generators, consumers and prosumers to trade energy directly, securely and democratically. This will drastically improve energy efficiency, enabling energy to be allocated in real-time according to consumption, and aligning supply and demand. It will also open up vital new finance pathways for renewable energy, driving the global energy transition. “It will transform ESG-linked financing,” says BNP Paribas Head of Real Assets Khoi-Ahn Berger-Luong. “It provides transparency, scale, better granularity for smaller amounts, and verifiability of ESG data across the whole value chain.”
The use of blockchain technology supports the decentralisation of energy networks, allowing renewable energy to be transparently generated, stored and distributed within the local community. Decentralised energy has the potential to significantly increase both energy efficiency and resilience, catalyse industry competition, accelerate the renewable energy transition and drive down carbon emissions. The EU has affirmed its commitment to democratising energy systems, and schemes are already underway in Australia, the Netherlands, Spain, the UK and many other parts of the world (including our projects in India).
But decentralised, democratic and distributed energy systems need the right conditions if they’re going to succeed. Powerledger’s Anya Nova explains, “Regulatory support is essential for the success of peer-to-peer trading in the energy sector. Governments and regulatory bodies can encourage the development of decentralised energy systems by providing incentives for renewable energy projects and creating a favourable policy environment for peer-to-peer trading. ” To realise blockchain’s promise, better, simpler and more coherent regulations are key.
If regulation is about changing the playing field to encourage mass participation, collaboration is about getting to the Olympics. For the mass adoption of peer-to-peer trading to happen, existing and legacy players must be willing to open up access and integrate the technology. “Collaboration with energy retailers and other stakeholders is crucial,” says Anya Nova. “Energy retailers can play a key role in facilitating the integration of decentralised energy sources into the grid by providing access to their existing infrastructure and customer base.” It’s a win-win: new kids on the block can scale up, while offering customers attractive, sustainable energy solutions, enhancing grid stability and flexibility, and helping energy retailers achieve their sustainability agendas.
Blockchain technology is already revolutionising Renewable Energy Certificates (RECs). In the 20 years they’ve existed, RECs have been used both voluntarily and compulsorily to prove the purchase of equivalent units of renewable energy to that consumed. Blockchain fundamentally changes how they are created, purchased and claimed, enabling complete traceability from generation to retirement. “They’re transforming the Renewable Energy Certificate (REC) market, enabling instantaneous ownership transfer and settlement, creating an immutable audit trail of REC ownership, and addressing the trust issue facing environmental commodities markets,” says Anya Nova.
Blockchain-based RECs offer granular, immutable source detail that enables purchasers to not only achieve 100% renewable energy, but to get to 24/7 carbon-free energy by transparently matching every kilowatt-hour of consumption to renewable energy generated locally and contemporarily. Next-gen blockchain-powered RECs also dramatically streamline purchasing costs, administration and auditing, thereby reducing friction for end users.
Blockchain technologies – and use cases – are expanding every day. At Powerledger, we’re working at a pace commensurate with the scale of the urgency of the task: building energy systems fit for the future. The future is notoriously hard to predict, but we know it depends on renewable, democratised energy, and blockchain holds the key. That obsession with sustainability applies to how we operate, as well as the solutions we create: Our proof-of-stake blockchain, built on Solana, is one of the most energy-efficient blockchains for the volume of transactions it processes. We’re working on reducing its energy consumption even further by reducing the number of voting transactions and requiring fewer CPU cores than Solana. Building such a sustainable infrastructure is going to be vitally important as blockchain technology becomes ubiquitous across every sector, every business and every process – because soon, John Bulich predicts, “it will be everywhere, and you won't even know you’re using it.”
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