Blockchain for green energy

Blockchain formation diagram
Many people in Canada consume energy, but few produce their own. The current system of energy distribution does not encourage small-time producers, like homeowners who install solar panels. Instead larger companies profit almost exclusively. Costly in-person auditors assess renewable-energy producers to certify them as green, after which producers can sell Renewable Energy Certificates (RECs) as green energy. Upon certification there is no guarantee in return on REC sales due to fluctuating non-market controls, such as legislation changes, that are outside of the producer’s control. 

Large-scale green energy producers can also benefit from deals under Power Purchase Agreements in which they commit to produce a certain amount of renewable-energy at a set cost over a time-scale of around 20 years – securing financial stability and overcoming this uncertainty. Smaller generators simply cannot compete. Without incentive, why would people elect to change from their energy-inefficient consumer ways to become green energy producers or users anyways?

Srinivasan Keshav, professor of computer science and financial technology researcher at the University of Waterloo, is exploring how blockchain technologies offer a solution to this green energy distribution problem. By modifying the system to reduce the cost of certification, dispensing of auditing, and avoiding non-market price controls, smaller scale green producers would be motivated to invest because of the minimized risk. This transactive energy system would do away with the green energy monopoly and let green energy be sold by producers at rates they set. 

In Keshav’s model, transaction records of REC trade are stored within blocks so that the same unit of power cannot be resold. A distributed network of servers agree on the contents of each block, reaching consensus and authenticating the transaction. Transactions can be stored in and added to the blockchain ledger but cannot be changed once consensus is reached between servers. 

Users can have trust in the system because no one party validates the information, rather the blockchain is a distributed network of servers reaching consensus, and because they can interact directly with it directly, eliminating third parties. As more transactions become part of the chain, a scaling problem arises in current blockchain technology. Right now, blockchains cannot handle more than a few hundred transactions per second. The well-known “consensus problem” puts the scale needed to support hundreds of millions of solar panels out of reach of current technology. Keshav and his research group are developing a new solution to address this consensus problem so that green energy transfer is possible. Its name: Canopus. 

What sets Canopus apart from other blockchain technologies is that it takes a server’s location on the internet cloud into account, minimizing communication between geographically-distant servers. In this solution, smart meters attached to solar panels send RECs to producers to sell. Consumers can purchase these RECs, effectively purchasing green energy. By keeping most communications local and fast, Canopus blockchain servers can process far more transaction records each second than a traditional consensus protocol. 

Blockchain technology has great potential for making green energy more desirable to produce, increasing the likelihood homeowners will adopt it. With systems like Canopus in the works, the green energy system is just the first step in distributing ineffective centralized systems to benefit everyone.