Massive investments in the production of cheap and green energy are yielding dividends. The cost of generating renewable energy has continued to drop. Now, individuals can have access to solar panels, efficient batteries, and wind power generating technologies.
There is a sudden realization that anyone can generate their own electricity and even supply the excess. Therefore the reliance of households on the power grid has reduced while the number of community energy projects has increased rapidly.
Numerous researches are carried out on ways to promote and sustain the emergence of community energy projects such as the Findhorn Ecovillage in northeast Scotland which owns its own electricity grid. This grid is powered by solar panel arrays and community controlled wind-turbine. In a system like this, households can buy the excess power generated from a neighbor’s power generating grid.
How Can Blockchain Tech Improve Community Power Grid?
Blockchain technology became popular with the introduction of cryptocurrencies. The technology creates a platform that registers transactions on in a distributed ledger that is sent to all the participants of the platform. The validity of the transaction depends on the consensus of the network nodes. One of the advantages of this technology is that there is a guarantee that information recorded on the blockchain cannot be manipulated. Another is that the platform created by this tech is decentralized.
This technology is a perfect fit for a community-based project that intends to create a decentralized network that allows its members trade electricity. The technology will identify the source of the energy (batteries or other storage units), monitor the quantity of energy disbursed, request for payment from the energy consumer, pay the prosumer (an individual generating electricity and intends to sell the excess) and create a receipt (i.e. notifying the whole network of the transaction).
All the underlisted processes will be carried out automatically and with no supervision. The failure of a transaction can only occur when one of the parties or both defaults on existing terms and conditions.
A system Run on Smart Contracts
A smart contract is a mechanism that allows the implementation of blockchain tech in real life situations. We mentioned earlier all the processes involved in the utilization of blockchain technology in a community energy transfer system. However, it is the smart contract that sets up the terms and conditions governing these processes. They are a set of codes that determine the validity of an automatic transaction.
How Does Smart Contract Work?
When using a blockchain-based platform, transaction (trading of electricity) can only commence when terms and conditions are agreed upon. The prosumer and consumer can reach decisions on the total units of electricity to be transferred, the timeframe of the transfer, as well as the price of each unit. These are examples of possible terms and conditions that can be written into a smart contract. This guarantees a transaction that can be trusted and one that is free from external regulators.
Advantages of Introducing Blockchain Technology into Energy Transfer Schemes
There are lots of possibilities for a blockchain-based energy transfer system. Some of these solutions include:
(i) It creates a system that allows participants to choose preferred energy sources
(ii) Since there is a wide range of options, a healthy competition will be introduced into the sector
(iii) It creates a system that is free from manipulations, errors, and fraud
(iv) It will promote the development of cheap and renewable energy
The future that blockchain can create for the energy sector can only be unlocked if we continue to research and work on various ways to introduce it to our current systems.
Ifeanyi Egede is an experienced and versatile blockchain technology and cryptocurrency content writer and researcher with tons of published works both online and in the print media. He has helped several startup companies grow their businesses in the blockchain and cryptocurrency space. Ifeanyi has close to a decade of writing experience, and when he is not writing, he spends time with his lovely wife, Tega and adorable daughter, Chimamanda.