Renewables and Crypto currency.. Can it really help the large scale deployment of renewables?
Small causes at small scale can have large impact on the world. The advancement in the technology is a big ripple in the sea of technology and has created even greater impact on the world as it has led to opening of new avenues for the world in various sectors and as it continues to lead the world towards development and innovation of new and disruptive technologies in all sectors of the economy and the finance and the power sector are no different. However, the new technologies being developed in both finance and power sectors can be linked to further accelerate the global growth in these sectors.
The advent of new technologies has brought about a drastic transformation in the power sector. The power sector that was earlier dependent and dominated by the central power plants and large utilities, has now become decentralized with the introduction of the renewable energy power plants which are of small quantities and still manage to occupy considerable amount of the market space. Further, the ability of generating the renewable energy from wind, solar, and even batteries at a cost which is cheaper to develop and operate has further acted as a catalyst for the rapid move of the sector to head towards the electrification and digitalization.
In addition to this, the finance sector of the economy is further going through a period of radical growth with the introduction and the attention that Bitcoin, a cryptocurrency that works through the use of the blockchain technology. However, the cryptocurrency Bitcoin is just one of the ways in which the Blockchain technology can be used. The Blockchain technology is a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain which makes it extremely difficult or impossible to hack, cheat or change the system. This feature of Blockchain technology is extremely attractive can be further developed to performs many other functions like that of a smart contract which is essentially a computer program that is stored inside a blockchain which once made can never be changed again and cannot be tampered with. This property of the smart contracts helps in building a system wherein the smart contracts which act like the digital contracts are being enforced. They can thus be used in the supply line management and also automating the entire payment line. An example of smart contract would be if someone ordered something from a company the payment would automatically be received by the company once the receipt of the delivered goods is confirmed.
The developments in both sectors can be linked together in order to fuel further growth in the sectors. The blockchain technology becomes especially important in the power sector as it can enable the development of smart electric grid in the power sector. The grid is changing drastically with the entrance of small utilities, small businesses and even homeowners as they can now become producers as well as consumers of electricity and this disparate group of producers, buyers and sellers of electricity can now easily utilize the new transmission path with the help of the blockchain technology and the smart contracts that has the potential of tracking, managing and verifying the thousands of energy transactions, even those that are way below the limit of the existing systems and in a matter of few seconds. This is already being tried by the various start-ups and energy organizations like the Energy Web Foundation. The Energy Web Foundation is a non-profit organization which believes that “the energy market requires a blockchain tailored to the sector”. It is holding trials of its own by shepherding an open-source version for its affiliates and according to their data this system is different as it utilizes less amount of than the standard energy intensive blockchain systems to track provenance and track ownership of the renewable energy produced while also including details like the source and type, the location, the time, and the emission. Another private trial is being performed in the Norway by the Vattenfall wherein both the commercial and the private consumers can sell the power from their solar panels or batteries and transactions are being recorded by the private blockchain. However, it is the Brooklyn Microgrid project which is in its third year of trial run that has become the first successful peer-to-peer blockchain system which is being operated with the help of the Smart meters as 500 people of Brooklyn buy and sell electricity through a mobile app at a price which has been predetermined through a bid. This has led to the world taking a note of the new possibilities and ways through which the power sector can operate, and India is no different.
Recently the finance minister of India, Nirmala Sitharaman, announced that the parliament would be passing a law on cryptocurrency in the monsoon session of the parliament. Though the cryptocurrency is not directly benefitting the power sector, it is amounting to bring a major limelight on the blockchain technology. This has been in addition to various steps taken by the government of India to promote green and clean renewable energy like solar, wind, green hydrogen etc. The blockchain technology has the potential to fat become the technology of the future and this could be a big step in the right direction.