How blockchain and energy monitors will create the decentralised, renewable energy grid

There’s a lot of talk about using renewable and green energy sources, but the sheer amount of energy required to overcome the volatility and management hurdles have slowed down its mainstream implementation.

Fortunately, this is something that can be overcome with the use of revolutionary technologies such as Internet of Things, blockchain and artificial intelligence.

In October, our smart energy monitor Smappee became the first datalogger to join forces with SolarCoin, a digital, blockchain-based currency that was created to support renewable energy. This is a significant step towards a future where consumers also become major producers of renewable energy and trade that energy directly with other consumers.

The simple setup of a reliable on-site energy monitor like Smappee, combined with a distributed, blockchain-based digital currency like SolarCoin can actually solve three major energy challenges today and tomorrow:

1. How can we find a quick, universal way to support renewable energy?

Among early adopters and believers of renewable energy, it might seem as if the whole world has embraced renewable energy. We’re getting there faster than many non-believers think (see article), but for the foreseeable future we still need a lot more incentives to get people to invest in renewable energy.

It turns out that digital currencies such as SolarCoin are a great way to organise this.

First of all, it’s really easy to set up a digital currency that is released as solar panels (or other sources of renewable energy) produce energy. The link between renewable energy production and reward is simply hardwired into the currency – 1 SolarCoin for every 1 MWh of renewable energy produced.

Getting a reward (even if it’s not “worth” a lot of money) is always nice, but the way the SolarCoins are set up pretty much guarantees SolarCoin holders that it is possible to trade the coins for real money. The reason is that some people will choose to buy them as an investment and, further down the road, people might actually use them as legal tender – a way to pay for goods and services.

There is a limited supply of digital currencies like SolarCoin, which means that any purchase of the coins through one of the approved exchanges will immediately create more value for the coin holders.

Because of this mechanism, SolarCoins are also a great way for private or public players to subsidise renewable energy production. Any investment—however small—in SolarCoins will immediately raise prices for SolarCoins and be a de facto subsidy for renewable energy production.

2. How will we deal with decentralised energy production at consumer level?

There is no doubt that energy production will become increasingly decentralised. What many don’t seem to realise, is that this decentralised production will itself be fragmented.

It won’t just be solar panels. It will be a combination of solar panels, wind turbines (perhaps shared with some neighbours), a CHP (combined heat and power), and a home battery or a car battery. That’s on the production and storage side.

On the usage side, there will be appliances that can be switched off and on, but also appliances that can be turned up or down.

It’s noon and your solar panels are hard at work: now is the time to put the air conditioning a few degrees cooler so that you don’t have to blast it when you come home. You also might set the freezer a few degrees colder – a good way to get rid of excess energy in the short term. Or heat the swimming pool. And of course, fill the car and the home battery to capacity.

Or, it could be a grey Saturday afternoon, so you decide to turn up the heat before you come home and start preparing a three course home cooked meal while your son is in the shower after soccer practice? Maybe the freezer can be switched off for a few hours.

We will need AI-driven systems to direct the traffic of energy production and energy usage on a micro level – inside (and outside) our own home. That’s part of the vision for Smappee – a smart energy appliance that acts as a traffic controller for energy, optimising it so that you don’t have to import energy from the grid (expensive). It will also prevent you from having to export energy to the grid, which means that you didn’t optimise your energy storage/usage in the home.

3. How will we create a future grid that allows decentralised production?

This is the final step in the vision of how smart energy monitors like Smappee and SolarCoins will create a new, decentralised grid architecture.

Today, exporting energy to the grid and importing it requires a central administration that keeps track of all the energy traffic (to and from the grid) and sends each player an invoice at some point -usually, once a year or once a month.

What if you and a few neighbours have solar, wind power and CHP and decide you don’t want to be on the grid any longer? How will you keep track of consumption and who owes how much to who? The way the grid is set up today, we rely on a centralised grid manager to keep track of all this.

This is where blockchain will truly show its revolutionary potential. If every home has a Smappee (or equivalent) monitor and a personalised SolarCoin account that keeps track of production and consumption, there is no longer any need for a centralised grid management.

The on-site energy monitors will just keep track of energy usage and energy production. The link to SolarCoins will allow everyone to pay their invoice or be paid for their energy production.

You won’t even need to install energy production at your home. It will become perfectly possible to buy a solar panel, install it on a roof anywhere and collect SolarCoins.

Theoretically, your home might be an apartment in Boston, but your solar panel can be in the Nevada desert – already at grid parity. Just connect your SolarCoin wallet, based on your panel in Nevada, to your Smappee monitor, installed in your apartment in Boston, and pay for the KWh you consume in Boston with the SolarCoins that you earn with your panel in Nevada. Using a blockchain currency, you can trade this energy in a truly peer-to-peer way: transparent, in real time, and secure thanks to the distributed ledger.

In this scenario, there is no longer any need for a centralised grid management or utility which keeps track of your consumption. The digital currency in a sense becomes the energy meter: it keeps track of consumption/production and settles the bill at the same time.

For us, it’s clear that the decentralised future of energy will not be tackled by top-down “smart meters” that are installed by the grid managers that we see today. These meters will be more expensive and drive up the cost of the energy bill, but they will also take years to select, produce and roll out.

Knowing how most administrations work, it will take about ten to fifteen years from the decision to the moment that the meters are installed in all the homes. By that time, it will be like getting a 2006 laptop today – it will be obsolete, slow, buggy, expensive and prone to crashing (gee, thanks!). Let’s try to avoid that mistake. 

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