Whether heating a cup of tea or commuting to work, easy access to energy enables modern society to function daily. The way we harvest and consume energy directly affects our climate and quality of life. As we suffer adverse effects from fossil fuels, efforts like the Paris Climate Accord hopes to encourage individual countries to lower worldwide greenhouse gas emissions and mitigate climate change. This will require investing more in renewable sources like wind, solar, and hydroelectric power. Along with high transaction and investment costs, these alternative energy sources can be inconsistent. In this post we’ll cover how blockchain technology is helping the solar energy marketplace be affordable and reliable.
As our knowledge of how the universe works increases, we are better able to capture sustainable energy sources. Solar power has been proven to be “clean” energy that doesn’t emit Greenhouse Gases. Transitioning to solar power sources reduces our collective dependence on fossil fuels.
The future of energy is not just what we use for fuel but also how we commodify it. Because electricity grids cannot distinguish between electrons created by fossil fuels, the sun, wind, or other sources, world governments created a system of tradable certificates to track the production and purchase of energy.
Between having renewable energy plants send spreadsheets of production data and creating and transporting certificates between energy buyers and sellers, transaction costs in the energy business have become high. This system is also prone to accounting errors, mistakes, and fraud.
Luckily clean energy advocates and producers have become receptive to blockchain technology. These two technologies have been working together on projects promoting peer-to-peer energy selling. In October 2017, Forbes reported that the “Sun Exchange, an online solar equipment leasing marketplace based in South Africa, has raised $1.6 million in seed financing from strategic partners including New York-based Network Society Ventures and three globally leading technology accelerators from the U.S. to accelerate global access to solar power.”
The project combines blockchain technology and cryptocurrency with solar leases to increase transparency and reduce the costs of the cross-border transactions.
Harvard Business Review also reported that similar projects had success in New York, Austria, Germany and other locations .
“What is more likely to happen is that blockchain will become part of the answer to updating and improving centralized, legacy systems with a distributed hybrid system made up of a patchwork of both large power plants and microgrids powered by distributed energy resources such as solar power. Such a decentralized energy system would be capable of delivering efficient, reliable, and, in many cases, renewable energy.
So while blockchain may at first appear to be a form of technological disruption that the power industry should avoid, it could prove to be exactly what is required to keep up with evolving demand for electricity in smaller, lower value blocks and at higher frequency. While there’s always room for startups to move in and disrupt this industry, established utilities are best placed to evaluate and make strategic bets on blockchain technology’s potential applications. If they can seize the moment, centralized incumbents may turn out to be the true disruptors, ushering in a new era of decentralized power.” (Harvard Business Review, March 2017)
Elizabeth Woyke for MIT Technology Review reported that “69 percent of consumers told the technology consultancy Accenture that they were interested in having an energy-trading marketplace, and 47 percent said they planned to sign up for community solar projects.” Indeed this could solve data management challenges in the electricity sector without disrupting business as usual. Having this data stored directly in a blockchain can eliminate most of these errors and transaction costs.
Blockchain technology in combination with smart contracts can facilitate crowd financing so that solar power producers could get paid immediately without having to first sell electrons back to the main grid which usually takes 60-80 days. World Economic Forum explained in detail how blockchain adequately addresses the challenge of speed, secure interconnection, and regulatory reform.
While some are hesitant to embrace blockchain, Abraham Cambridge, Sun Exchange founder and CEO and the Sun Exchange team did the math. They found that “While Bitcoin’s potential to fuel investment in and distributed ownership of our future global energy supply is promising, the amount of energy that the Bitcoin mining network requires continues to draw criticism…. In this case, the energy it took to mine that Bitcoin (666 kWh) will be paid back in just under 18 weeks. Given that a solar panel will carry on generating clean electricity for at least 25 years, a single Bitcoin used to fund solar energy actually creates a positive balance of 400,000 kWh (400 mWh) of clean sun-powered electricity over the system’s lifespan.” (Sun Exchange blog, January 2017)
Forbes also reported that the “Sun Exchange has been leading in the African energy market since 2014, and has expanded globally with a U.S. headquarters in California and a regional operating office in Dubai. Supporting its claim, the enterprise won Best Bitcoin and Blockchain Business in Africa two years in a row now (2016 and 2017) at the Africa Fintech Awards.”
By breaking down solar panel ownership to a single cell, the Sun Exchange reduces the cost of going solar while making the technology more consistent by utilizing empty roof space in some of the sunniest cities on the planet. Presently it is possible to go solar and monitor your solar production through the Sun Exchange dashboard for as little as $10. This investment can lead to 20 years of passive income.
Note: Network Society Lab is Venture Development firm that focuses on adding value to startup companies that are based upon exponential technologies and decentralized networks. The Sun Exchange is one of its portfolio projects.