By incentivising neighbors to share their energy without going through traditional providers, and by also encouraging the latter to turn their networks into “smart” networks, blockchain can be an agent for change in creating smarter cities.

Smart contracts

Can blockchain help create smarter and greener cities? With the explosion of cryptocurrency, one of its key technologies has now caught the eye of nearly every single bank or company – no matter what sector the latter belong to – and especially companies that specialise in green energy.  The goal for creating these smarter cities: blockchain technology.

Whether Bitcoin or Ethereum, cryptocurrencies depend on one particular thing: a public ledger onto which every single transaction is recorded, making it impossible to fabricate or falsify. This decentralised, distributed and secure ledger allows for smart contracts – automated protocols that come into existence under certain conditions. These protocols could help build all sorts of services; decentralised transactions, blockchain powered elections, legal contracts, stock purchases…as well as the production and distribution of electricity.

In practice, it could be possible to group together a neighborhood on a blockchain (which may or may not be linked to a cryptocurrency) to allow them to produce and distribute renewable energy. Neighbors could exchange energy depending on their immediate needs. The exchanges would be overseen by smart contracts that certify that users that need the energy can avail of it and purchase it from a seller that is certified to have produced the energy, with the transaction captured in the public ledger.

Brooklyn Microgrid

In New York, the Brooklyn Microgrid, a green energy project, has allowed a group of about 60 neighbors to produce energy via PV cells and to resell it P2P via the use of the blockchain. This so-called “micro-grid” (local energy grid) is supported by the State of New York and Siemens, and was developed by a cooperative called TransActive Grid. This cooperative groups together Lo3 Energy (its core business: developing energy networks) and ConsenSys (specialised in Bitcoin). Their goal: to limit the energy consumption of the inhabitants of President Street from traditional suppliers such as Consolidated Edison or Energy Star. Money generated from the sale of energy therefore stays in the community’s purse and limits the effect of power line loss through the transport of the energy by keeping it local.

By using Ethereum’s platform, smart contracts can manage energy exchanges in real time, without any human or economical input, depending on what the demand on power is at any particular time. “By going through a local supplier, who just happens to be my neighbor across the road, money stays in the community, and the impact on the environment can really be felt. On top of that, by buying from my neighbor I am also incentivising my other neighbors to put PV panels on their roofs.

Making Chicago into a smart resilient city

The Brooklyn Microgrid has become a flagbearer for blockchain powered green energy projects. According to GMT research it has spawned about 40 other similar projects Stateside, making solar energy production a possibility for anyone. In Chicago, they are looking to turn their city into a resilient “smart open source city”, with Northwestern University using australian P2P platform Power Ledger to allow the different buildings on its campus to distribute their excess energy produced by solar panels so as to reduce their energy bills and their CO2 footprint.

Supported by the state of Illinois, Chicago’s project “Clean Energy Blockchain Network” allows for real time energy transactions to be made through a secure and automated billing program. Power Ledger (its structure is based on  Ethereum) is used by many countries worldwide: Australia, New Zealand, Japan etc…Similar Microgrid projects are beginning to see life in India and Thailand.

Pro-sumers

As for France? The big energy players such as Engie and Schneider Electric are pursuing blockchain technology to optimise the use of “smart electric grids” as well as allowing their clients to become”pro-sumers” – consumers that can produce energy. Even though it might seem that Engie may have the most to lose from the decentralisation and empowerment of their users, their wish is to “follow the movement”  and to “produce renewably” by becoming a “local producer”or a “prescriber” to consumers wishing to produce their own. “ We have come to a point where local production is competitive versus centralised production. We therefore need to abandon centralised production” states Etienne Gehin, R&D Digital coordinator at Engie in a recent interview in the Journal du Net.

Micro-networks based on the american microgrid systems are currently being put in place by many different parties. Just like in Chicago and Brooklyn, blockchain in France represents a valuable tool that can “measure, account for and certify all of the information related to the exchange of energy, green or not, without having to fallback on a 3rd party provider” as explained in  Le Monde.

Startup Sunchain’s ambitions are to “circulate solar energy on public electricity distribution networks” by creating “new schemes for smart and green energy production”. To do this, they will create a “private blockchain” capable of prioritizing “collective consumption” and the exchange of energy between dwellings. On its site it explains how this will work: “Instead of selling the excess energy created by a home, it might be smarter to transfer it over to another. Thus, on the scale of an eco-neighborhood, consumption can be shared out, no matter where the solar panels are

Since 2017, in collaboration with Enedis (ex-ERDF) and the department of Pyrénées-Orientales, Sunchain has been experimenting in Perpignan with an independent micro-network of 5 public offices which should see a reduction of their reliance on non-green energy sources. Enedis who, just like Engie, would like to remain in the energy race, will be continuing down this path with other blockchain powered energy consumption projects.