Blockchain and energy explained

How Blockchain Technology Affects the Energy Sector

Gas reserves are running out, oil wells are drying up, coal resources are burning down, and it’s nothing new! It’s the same old story of fossil fuels draining because of the world’s exponential growth of consumption. Known crude oil reserves are vanishing at a rate of more than 4 billion tonnes a year. At current production levels, they are estimated to run out in 2052. Next step would be to try to compensate for the loss of oil by natural gas, but eventually, even those resources will only allow us eight additional years before being used in like manner, taking us to a dead end in 2060. Utterly, needless to say, a quick and right on-spot solution is needed. This is where the Blockchain Technology comes in to fend off this –no pun intended- everlasting abuse of power.

Blockchain & green energy

Why Blockchain can be the Right Solution for Energy Consumption?


Blockchain in simple words is a decentralized distributed and public digital ledger or database, existing on multiple computers at the same time, where users cooperate to create blocks containing information about a transaction and provide an almost error-free and fraud-proof verification of the entered data before validation.

This characteristic of it being decentralized renders any middleman or third party obsolete.
In this case, utilities won’t be the only centralized actor to keep a hold of data, instead, it will be shared among households. With the help of Smart meters, information about energy consumption can be trailed and recorded on the blockchain in absolute transparency. Consumers turn into Prosumers who have control over their energy consumption and get the ability to transact their energy with other prosumers represented as nodes in the Blockchain. In other terms, prosumers can buy and sell green energy, and make some wealth out of it.

Peer-to-Peer Networking

This concept introduces us to the terminology of a peer-to-peer network, an important characteristic of blockchain technology. Users are connected in a local ecosystem via microgrids where electricity navigates and energy is generated and stored. Through Smart contracts, households can trade energy while blockchain assures them security and translucent trust. This makes the system less prone to fraudulent activities since nobody has control over the transactions of the users, except them.

Billing and Cost Saving

Billing would be another advantage in the implementation of blockchain in the energy sector since transactions are relatively much cheaper compared to traditional banking processes. Customers would be interested in having fewer costs to pay in their electricity bills. Additionally, the P2P network trade allows buyers to gain transaction fees upon energy sales in a way that passive income can be earned from transactive grids. In this way, customers can start investments out of green energy and have payments directed to their digital wallets. Hence, blockchain’s act on the energy field can bring a small touch of financial prosperity to customers.


Technological advancements are considered helpful for their added value on productivity levels.

Blockchain is no different.
It forwards fast problem-solving solutions by assisting smart meters in diagnosing problems, identifying their precise source and finally responding to them.

In emergency cases, the blockchain, still supported with smart meters, can order the grid to reroute power to prevent blackouts.

Green Finance and Carbon Trading Systems 

Lightency, one of the few hundred start-ups that chose to dive into the still-fresh blockchain and green energy business, is an example of a start-up giving center stage to the features cited before. Lightency operates on the African market to bring smoother access to renewable energy for people who still lack electricity.

From what can be observed, blockchain can serve a social and environmental cause more than anything. It encourages the use of small renewable energy installations and relieves the pressure on electrical power generators, promoting for Green Finance and carbon trading.

It can help businesses and governments provide evidence for an ecological and environment-friendly manufacturing through renewable energy certificates, guarantees of origin and emission allowances. This prescribes what Greeneum, an Asian start-up, is aiming to furnish, as a matter of example.

Speaking of which, start-ups concerned with the use of blockchain to benefit green energy start to scatter in different corners of the world.

If one wishes to take a further look further look into other promising start-up names, SunExchange is a South Africa-based business, that eases the use of solar panels by permitting customers to buy PVs and lease them to businesses against a rental payment return via blockchain to the benefit of the customer himself/herself.

L03 Energy in the US, PowerLedger in Australia and many other names are arising with the vision of creating efficient, resilient and sustainable communities.  

To combat the fast dwindling number of resources, hopes and bets are put on the blockchain technology to empower renewable energy, considering the subsequent advancements it can deliver to the sector. But is it safe to say that blockchain will ensure a worry-free future for energy production? Predictions are clouded by a lack of clarity. This technology is so brand-new that it is hard to perceive its outcomes in certainty, especially with the obstacles it needs to surpass. Regulatory issues and challenges are one part of the problem. Most governments are still skeptical of such disruptivity coming all at once.
A second part would be scalability issues. Customer engagement is very much a necessity for peer-to-peer sharing to take hold. However, uptake and the rate of adoption are not at their best. Customers are still unfamiliar, fearful, and in many cases even misapprehending towards the new concept of decentralization and blockchain. A third facet would be the existence of alternatives. The Faraday Grid is one example. With its emergent platform, the solution provides an electrical network architecture that allows higher penetration of DERs (Distributed Energy Resources) at low costs aiming to enable a fully transactive energy marketplace. The system relies on DLT (Distributed Ledger Technology) which is not specifically Blockchain, and thus making it an alternative.

Truth in the words of Vitalik Buterin, Co-Founder of Ethereum, when he said:

The main advantage of blockchain technology is supposed to be that it’s more secure, but new technologies are generally hard for people to trust, and this paradox can’t really be avoided.


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