How Blockchain Could Change the Renewable Energy Market
- March 6, 2018
- 1189 views
The blockchain technology is the unsung hero of the highly hyped cryptocurrency market. Its infrastructure of encrypted decentralized ledgers is the force behind many cryptocurrencies out there that boast to have the ability to disrupt the currency markets.
Blockchain can disrupt nearly every industry in the corporate, institutional, manufacturing or industrial sectors. Startups from all walks of life are churning out ideas to the market every day, some of which, have been received positively thereby triggering a chain reaction that now seems inevitable to embrace for those looking to dominate the future.
After the successful disruption of the currency markets, gold was next, then there was real estate, diamonds, and even the lending market. So, where does that leave the energy sector? Well, it is next in line according to recent developments. The renewable energy market has caught the interest of several startups that are hellbent on democratizing green energy.
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A recent report published by The Conversation gave a detailed development about how startups are attempting to use blockchains to democratize green energy. According to the report, the real game-changing concept is embedded in the growing market of Renewable Energy Certificates (RECs).
Currently, large-scale green energy generators can sell their certified RECs to large corporations that are looking to make their names appear green and eco-friendly. The likes of Apple and Google are some of the top RECs buyers in the market.
Interestingly, some of these large corporations do not use 100% renewable energy in their operations. However, they are required to use a certain amount of green energy relative to the overall energy consumption and the RECs acquired.
However, while large renewable energy generators are easily capable of gaining certification for the green energy generated. Small-scale players in the market including households that generate more energy than they can consume do not have this luxury. The main stumbling blocks include the rigorous audit assessment process that is required for certification before a green energy generator can sell the RECs to other consumers.
Not all small-scale generators can keep up with that process. The expenses can be prohibitive while the process itself is equally unsettling for those that are inept of patience. The permutations do not yield a sensible outcome for the small-scale green energy generator, and this subsequently locks out many potential players from the market.
Nonetheless, there could yet be some hope in the foreseeable future. The blockchain technology architecture could solve this in a few years’ time when more startups like the Australia-based PowerLedger join the market in the spirit of democratization.
And given the progress made by counterpart blockchain success stories like bitcoin, this adds impetus to the aggressive entrepreneurs that have become enthusiasts of blockchain’s disruptive force. Just to demonstrate the scheme of this progress; a few years ago, you could only buy bitcoin using fiat currencies. Today, you can buy bitcoin using other cryptocurrencies like Ether, Litecoin, or you can even earn bitcoin online via various non-cash avenues as reports indicate. This cryptocurrency is completely democratized and decentralized in a way that any investor regardless of social class can participate.
Clearly, this sets up things well for alternative blockchain-based applications to succeed. And that is why the renewable energy market now appears ready for disruption. But there is another tingling challenge that’s well pointed out in The Conversation article.
It correctly points out that even bitcoin, which is to date the most successful cryptocurrency, can only process 10 orders per second. This can be a major obstacle when it comes to processing RECs between parties. If all green energy generators were to join the blockchain-based application, then the application, say Australia-based PowerLedger might need to process hundreds of thousands in seconds to keep up with the traffic and avoid causing inconveniencing delays.
However, developers are already working towards putting this problem to rest with a blockchain platform that could process up to a million orders per second. Computer scientists at the University of Waterloo have devised a solution dubbed Canopus, which “takes a server’s location on the internet cloud into account, minimizing communication between geographically-distant servers.”
The developers of the prototype blockchain platform described their project as one that will use “smart meters attached to solar panels to send RECs to brokers.” Consumers can then purchase these RECs using their own brokers. The goal here is to get as many as possible homeowners and small businesses to invest in green energy technologies.
This could further boost the growth of one of the most exciting markets in the energy sector, and along with it, continue promoting the fight against climate change.
Nick is the editor of CAGRValue.com a growth investing focused blog, which discusses emerging industry trends and the best growth opportunities in the market. Follow our latest guides on Investing in general, and especially Growth Investing. Opinions expressed here are my own and do NOT represent an investment advice or recommendation.