Using ICT to provide affordable and clean energy

United Nations Sustainable Development Goal 7 aims to “ensure access to affordable, reliable, sustainable and modern energy for all.”

Economic growth in the industrial and technological eras has relied on the use of environmentally damaging hydrocarbons. Recent decades have seen exponential increases in the uptake of renewable sources of power such as solar and wind energy. Such sources are not without their problems, however. One issue is that, while these sources of energy can continue to produce electricity at off-peak times, storage – in the form of battery technology – has not kept pace with the rapid increases in efficiency and cost effectiveness of renewables. One result, in an energy network in which renewables are generated by individuals’ properties or single businesses, is an increase in energy being sent from local networks at homes and factories into the grid, creating waste, or simply not being used at all. Both issues mean that renewable energy produced is lost, thereby failing to replace units of environmentally damaging hydrocarbon-generated energy.

What is a ‘blockchain’?

A blockchain is a type of distributed ledger technology (DLT). DLTs are, like traditional ledgers, lists of transactions. And like traditional ledgers, blockchain was created to record financial transaction data. Unlike with traditional systems, however, blockchain transactions do not require an intermediary – a bank for example – because the blockchain system is a closed system and the data are stored on all the computers within that network. Data are entered into a block, generating a unique cryptographic code (a ‘hash’) and a time stamp. When another transaction takes place, this process is repeated, and the hash from the previous transaction is added to link the two blocks together. Linked records therefore create a ‘chain’ of ‘blocks’ – a blockchain (Rogerson and Parry, 2020). A similar principle holds for a decentralized electricity network. Rather than a large utility company or electricity grid having the right to buy excess electricity at a certain price and sell it back to users, a closed network of energy traders can manage transactions between themselves. The blockchain is the technology which underpins this system, allowing data to securely be available to all relevant parties on the network without the need for an intermediary.

Using blockchain technology to simplify access to renewable energy

One solution to the problem of inefficiencies in single-property renewables generation is for groups of residential and/or commercial properties to group together as community renewable energy networks. One property might produce more renewable energy than its residents or proprietors need, while another might produce less. In a local network, the property with excess energy is able to sell that excess to its neighbour. The property requiring more energy does not, therefore, need to purchase hydrocarbon-generated energy from the wider electricity grid, reducing both hydrocarbon use and renewables waste.

The one remaining issue in this scenario is that it can be hard to calculate and track energy trades across a local network, increasing the need for costly bureaucracy and manual data entry, which can be prone to error and open to fraud. Bangkok-based property developer Sansiri has sought to solve this problem by using smart contracts on a blockchain platform to enable peer-to-peer energy trading. Sansiri uses Australian blockchain developer Power Ledger’s blockchain solution to trade excess renewable energy between units in a residential/educational/commercial development in Bangkok.

Benefits of blockchain technology

The use of blockchain technology in this case offers four major benefits. First, parties to the project are able to access affordable and clean energy, per SDG 7. Second, in doing so users save money, a direct benefit, while indirectly promoting the use of such systems. Third, by using smart contracts on a blockchain as the mechanism for trading, the system reduces the potential for error and fraud, which are known problems in systems in which human data input is required. Fourth, in promoting the system, the project reduces its carbon footprint from energy use by 20%, reducing carbon emissions by 530 tons per year https://remthailand.asia/sansiri-unveils-bcpp-the-worlds-largest-blockchain/

Costs of adopting the technology

The cost of developing and deploying the blockchain technology in this case are hard to ascertain (and are unlikely, for competitive reasons, to be made publicly available). However, the financial benefits of using the technology are known. The system reportedly saves users 15% on the unit cost of the electricity consumed, with the development as a whole reducing its carbon footprint by 20% as a result (REm, 2018).

Lessons for other organisations

The main lesson learned from the project is that efficient peer-to-peer sharing of energy within a local network is possible and is enhanced by using a blockchain to economically complete and manage all transactions within the network. In principle, this network could be scaled to cater to whole neighbourhoods (Stepparava et al., 2022). There are various barriers and challenges to executing a project such as Sansiri’s. First, adding additional features to residential and commercial construction projects increases costs, impacting either the price the ultimate client pays or the developer’s margins. Second, there could be legal problems in some parts of the world. In Arizona, in the United States, for example, efforts to promote and use renewable energy have met with legislative resistance (Cooper, 2021). In other states, utilities providing renewable energy at all have been attacked (Mortimer, 2017). Third, technically, the blockchain provides immutability, which ensures the security of the system. However, the inability to edit data in a system also means that, if a problem exists in the system, changing those data is extremely difficult.