Grid operators in Singapore and the United States have joined the growing number of companies around the world that are experimenting with blockchain. They hope the technology can radically simplify renewable energy trading.
In Singapore, a blockchain-powered system is enabling companies to engage in renewable energy certificates trading. Those using the system can purchase RECs from companies producing surplus clean energy to offset their fossil fuel-based production.
In the US, a company operating a grid from Washington, D.C. to Chicago is developing a blockchain system to track electricity from wind and solar power plants as it’s produced, delivered and traded. They hope it will make transactions faster and cheaper, as well as attracting more participation than existing mechanisms.
Another example is a blockchain energy trading platform project in Britain backed by several household energy suppliers, the National Grid and a German electrical conglomerate. The trading platform is built on the Ethereum blockchain and uses simulated data from 53 million metering points and 60 energy suppliers.
In the IEC White Paper Edge intelligence, blockchain technology is defined as “a well-ordered distributed database that maintains a list of all transactions and which grows continuously over time”. Each of these recorded transactions is called a “block”.
Blockchain was invented by Satoshi Nakamoto in 2008 and was originally developed as the accounting method for the virtual currency Bitcoin. Blockchain uses cryptography to allow anyone granted access to a distributed database to digitize and insert data, as well as its metadata, in a secure way.
Unlike traditional centralized databases, which are situated within a central cloud, the blockchain is not located and maintained on a single server that belongs to a central authority (a bank, for instance). It is spread across multiple points, making it much harder for hackers to gain access to it.
The technology was primarily devised to verify transactions but it is possible to code, digitize and insert practically any document in such a database. Once a block of data is recorded, it’s extremely difficult to change or remove.
The authenticity of the record can be verified by the entire community using the blockchain, instead of by a single centralized authority. Each time a block of data is completed, a new one is generated.
The blocks are connected to each other, like links in a chain, in a proper linear chronological order. If an attacker gets hold of a component of data and attempts to tamper with a block, the system will try to locate the one that differs from the rest. If it is located, it is simply excluded from the chain and recognized as false.