Is blockchain about to disrupt the electricity sector?
While EU lawmakers are picking over proposals intended to drag Europe’s electricity sector into a 21st century dominated by intermittent renewable power and decentralised generation, others are already contemplating ways in which new digital technologies might shake things up even more.
The buzziest such technology is blockchain, the brainchild of Satoshi Nakamoto, the shadowy figure behind the cryptocurrency Bitcoin.
When the leading lights of Europe’s electricity industry gathered in Portugal last month for their annual conference, they devoted a whole morning to technologies that promise a future “beyond utilities”.
The industry is already buzzing with theories about how blockchain might disrupt power trading by allowing individual households to buy and sell megawatts from each other in so-called peer-to-peer exchanges.
So what is happening, and is Europe really on the verge of a revolution in the way ordinary customers buy and sell electricity?
This is certainly the view of the European electricity transmission system operators association, whose newly appointed boss said he expects blockchain to become part of the new digitised energy landscape.
While tens of thousands of people have taken advantage of government subsidies to install solar panels on their roof, many people still cannot join in, perhaps because they live in an apartment or are renting.
This simple observation was one of the main drivers behind the launch of Powerpeers, a Dutch community-based power utility company. “Just give me your solar energy and I will take care of your plants during your summer break,” Lars Falch told his friend Michiel Ooms a couple of years back – and the idea for Powerpeers was borne.
“We are the alt. business model,” said Falch, now director of the Dutch firm, as he demonstrated the online platform that went live last year. Powerpeers allows customers across the Netherlands to buy electricity in real time from individual producers, perhaps friends that have invested in rooftop solar, or a farmer with a windmill in a field.
The firm reckons that only 30% of Dutch households are in a position to install their own solar panels, while more than double that number are interested in buying green electricity.
In fact, the major utilities have long been meeting this demand with “green” electricity tariffs. Behind these packages lie the “guarantees of origin” issued to renewable power generators, who can then sell them on in a secondary market to other producers. Consumers may find it difficult to get their heads round the idea, but electricity from conventional plants can then be marketed as “green” power because of an implicit guarantee that the corresponding amount of renewable power will have been generated somewhere.
Powerpeers’ model solves this conundrum using technology that is already in place: the internet, of course, and the smart meters familiar to consumers in many parts of Europe. Falch said his model works on a 15-minute time frame, meaning you can only purchase power from the farmer with a windmill if the wind is actually blowing.
“The transparency of allocation is the real difference here,” he said.