By Douglas Miller and Peter Mockel
You can’t have one without the other.
Frank Sinatra famously sang those words about love and marriage. But they also apply to mitigating climate pollution and finding smart ways to create and use energy. The two are inextricably linked.
And while some parties see the Paris Agreement as restrictive with regard to energy use, in fact it presents a unique opportunity to accelerate and scale the adoption of clean, affordable, reliable, and resilient energy, both in advanced and emerging economies.
Yet emerging markets face a significant obstacle to seizing this opportunity: A lack of investment. Tackling climate change while also increasing access to reliable energy requires the mobilization of trillions of dollars in new investment, much of it in leading edge technologies.
These new technologies, including “smart” devices, the Internet of Things, and big data, are critical to creating “smart” energy grids in which consumers of electricity become “prosumers” and one-way power distribution gives way to two-way communication, with devices such as smart thermostats and batteries responding to the variability in both renewable and conventional power generation.
But we’re not quite there yet. Managing such a grid, with its millions — or even billions — of customer devices and all the data those devices produce, is a monumental task. Attracting the investment needed to accomplish it is just as tricky.
The missing ingredient may be blockchain. Energy sector stakeholders believe this nascent technology may be able to marry the other technologies together and unlock the new business models necessary for a true energy sector transformation in emerging markets.
How?
Blockchain by its very nature has the ability to establish trust and support automated transactions — of both money and information — that could bridge the various energy technologies and by doing so attract the required investment. And energy technology investments are ripe for blockchain solutions because they typically involve a shared repository of information, multiple sources and contributors of that information, and multiple intermediaries and dependencies.
As a result, the number of companies, consortia, and startups that are developing blockchain applications and platforms for the energy sector is exploding.
Power Ledger is developing several applications, including C6 and C6+ for carbon credits and certificates, Power Port for electric vehicle metering and settlement, and xGrid for peer-to-peer electricity trading across the grid, among several others. Deployments are underway in Australia, Thailand, India, Japan, and the US.
Brooklyn-based LO3 manages decentralized electric grids, enabling new types of relationships between utilities, prosumers, and consumers. Sun Exchange increases solar power access for schools and businesses by connecting those who own solar cells with those in need of electricity. And We Power enables financing for new renewable energy generation projects by using tradeable smart contracts and digital power purchase agreements.
These are just a few of the companies creating blockchain-based solutions that will promote investments in renewable energy, smart grids, demand response, and electric vehicles.
These dispersed blockchain applications are coordinated by the Energy Web Foundation, which is developing an open-source and energy sector-specific blockchain, as well as a portfolio of customizable, open-source toolkits to build state-of-the-art, decentralized applications that issue, trade, track, and report relevant environmental attributes in these markets.
Blockchain — if paired with smart, interconnected devices — can promote the energy investments needed in emerging markets by accelerating the adoption of modern energy systems and business models. That means a more modern, cleaner, more accessible energy future for these nations. Learn more in this recent IFC EM Compass Note 61 Using Blockchain to Enable Cleaner, Modern Energy Systems in Emerging Markets.
Additional applications for blockchain opportunities for private enterprises in emerging markets can be found in this IFC report Blockchain: Opportunities for Private Enterprises in Emerging Markets — Second and Expanded Edition, January 2019.
Combating climate change and providing clean, affordable energy… go together like a horse and carriage. Thanks Frank!
Authors
Douglas Miller, Origin Market Development & Regulatory Affairs Manager, Energy Web Foundation
Peter Mockel, Principal Industry Specialist, Climate Strategy and Business Development, Climate Business, Economics and Private Sector Development, IFC
(pmockel@ifc.org)
