Sustainable practices and the inclusion of renewable sources as the dominant contributor to the source of energy will be the norm for the future. Transparency, better efficiencies, and reducing the carbon footprint are goals that have to be achieved by the energy sector.
With growing environmental concerns adding to the pressure of implementing measures for mitigating climate change and ending the use of fossil fuels, there is an intense demand to decarbonize, decentralize, and digitize the energy sector across the globe. These three global trends are all set to transform the way we produce, distribute, and consume energy. Our Smart Cities, Smart Campus, eMobility and Smart Factories will be modelled for clean energy consumption and utilization.
Centralized energy grids are slowly disappearing and rapidly shifting towards a decentralized, sustainable, and transparent, peer-to-peer energy-trading marketplace that can validate and record direct transactions through Blockchain-enabled Smart Contracts.
The Blockchain Intervention
Blockchain is a decentralized, distributed, digital ledger that provides a secure gateway for transactions between multiple participants. It is driven by clearly-defined trust protocols that bring in enhanced levels of credibility to information, so as to ensure that approved owners have authorized all levels of transactions with no trust deficit.
It allows us to audit all transactions: be it change in ownership, or the point of origin from the raw material state to the point of sale. This technology can transform the energy marketplace in many ways. The most disruptive way is by introducing radical levels of trust and transparency across the energy value chain.
Blockchain Impact on the Renewable Energy Market
Global energy consumption trends are rising across energy markets, especially in Europe. It is becoming increasingly difficult to manage renewable energy needs due to lack of an integrated strategy across energy markets to maneuver demand and manage shortages and price fluctuations. There is also an urgent need to fix the gaps in managing green energy costs and complications that could happen due to the trans-global participation of energy markets.
To overcome these, the European Union member states have developed a system called the Guarantees of Origin (GOs), also termed as Certificates of Origin, for renewable energy sources.
GO is an electronic document that certifies one MWh of energy of electricity that is generated from sources with origins specified by the European Union GO Rules Legislation.
GO has its advantages. It has the ability to trade energy across geographies and has no physical electricity transfer restrictions. However, there are some challenges. There is a risk of double counting of certificates, fragile tracking mechanisms, and lack of a harmonized market – leading to scattered systems.
Blockchain can address these challenges, by harmonizing the market, promoting trust and transparency, thereby simplifying the tracking of GOs, eliminating double counting, and ensuring decentralization.
Blockchain and IoT – Streamlining GO Transactions
With the digitized world heavily leveraging Internet of Things (IoT) for internet, connectivity, and infrastructure; there is an imminent need to secure all connected devices with the help of Blockchain while enabling total transparency and traceability of origin and ownership of GO energy sources.
This intersection of Blockchain and IoT has resulted in Smart Contracts. Smart Contracts are driven by a set of pre-defined rules for transactions and are managed remotely without any manual intervention. Only one record is maintained for all transactions in a tamper-proof distributed ledger that ensures complete transparency of the origin and ownership of the energy source.
Each transaction is also time stamped for enhanced levels of security and transparency. Smart Contracts can manage and validate themselves; remove intermediaries, automate GO certificate issuance, improve compliance, and mitigate any risks.
Bosch Provenance Platform – Energy sharing with Autonomous Economic Agents
Blockchain has proven abilities to execute secure energy transactions and automate the entire energy value chain. This includes clearing and billing processes, transparency in documentation of ownership and origin, and automation of certificate issuance (GOs and emission allowances).
At Bosch, we are well prepared to transform the energy sector with our Provenance Platform for Green Energy. The platform is aimed at modelling the clean energy needs for smart communities, campus and smart factories. The platform will have Autonomous Economic Agents which will settle micro transactions, develop sustainable energy consumption and also provide benefits to consumers. These Autonomous Economic Agents will be self-learning contracts on a secured Blockchain ledger. With these agents, we believe that our future of energy will be more sustainable, efficient and clean.