The democratization of distributed energy resources (DER) is reshaping the power generation landscape. These low-voltage services consist of local production facilities such as solar panels or mini wind turbines, as well as consumption facilities, storage, and monitoring and demand management systems. Used properly, these options would allow individuals or small communities to reduce their electricity costs, secure their access to energy, and integrate renewable resources into the power grid.
Currently, payments for DER services must be negotiated with electric utilities. This poses a serious challenge to their adoption, as this monopolizing industry currently has more to gain by trying to preserve conventional generation systems. As a result, DER deployment is often very unwelcome by existing utilities that may prohibit DER participation or seek monopoly rents in exchange for access to distribution infrastructure.
The implementation of a local energy distribution market has been presented as an effective way to incentivize the implementation of DERs. More specifically, the development of microgrids would bypass the dependence on the current monopolies.
A microgrid is a decentralized set of electricity sources and loads. It is connected to the main national grid, but has the possibility to operate autonomously when technical or economic conditions require it. In the case of island territories or remote rural areas, the microgrid system can be interesting to ensure a reliable energy supply and/or lower the energy bill of the territory concerned.
Microgrids are by essence highly transactive, so having an efficient, strongly-validated and secure ledger of these transactions is a great benefit. So naturally, some of the first “blockchain microgrids” were systems of trading neighborhood power from rooftop solar using an embedded blockchain.
But beyond the use of blockchain for tokenization purposes, several other key functions of microgrids could benefit from the technology. For accounting purposes, a blockchain would enable privacy-preserving use of smart meters and account balances. Smart contracts could enable automated enforcement of electricity trading contracts, or create an auction system to match energy supply and demand in a predetermined way.
The use of blockchain for microgrids offers hope for the democratization of an independent and much more sustainable energy access system, and the real opening of a market for alternative energy offerings that many consumers and businesses are already eager to participate in.