Estonia Trials Blockchain Technology for Renewable Energy
The Baltic country of Estonia is traditionally reliant on fossil fuels to generate energy, with only 18 per cent coming from renewables. However, WePower, a renewable energy trading platform, is embarking on a groundbreaking trial to test the limits of what’s possible with blockchain technology as it aims to increase the percentage of electricity generated from renewables.
Making Energy Data Accessible
WePower’s CEO Nick Martyniuk explains that the decreasing cost of renewables has not translated into improved access for small to medium-sized companies to buy green energy. In response, WePower is making energy data available and enabling people to share their energy meter data with service providers. With Estonia boasting 100 per cent smart meter coverage, Georg Rute, Elering’s digitalisation development manager, believes Estonia is the ideal piloting country for such an endeavor.
Blockchain Technology Aids Data Sharing
The sensitive nature of energy data has presented obstacles for innovators and engineers, but Martyniuk states that blockchain provides the necessary trust for data sharing and creates liquidity and accountability between energy buyers and producers. This makes it easier for people to trade on the renewable energy trading platform, connecting energy buyers directly with energy producers, “hour by hour – token by token.”
Focus on Renewables
While blockchain technology could potentially be used for any type of energy transactions, WePower is currently focused on renewables. This approach allows the platform to connect the grid, local energy exchange markets, and end users of energy. Stephen Woodhouse, chief digital officer at Pöyry, explains that the cryptocurrency and tokenization approach is offered as an alternative to traditional renewable energy power purchase agreements.
Addressing Concerns
Despite the potential of blockchain technology, scaling up the project to facilitate peer-to-peer trading may face challenges. WePower primarily uses the public ethereum blockchain, which applies the energy-intensive proof-of-work approach. This could limit transaction capacity, according to Fei Wang, a senior research analyst at Wood Mackenzie.
Estonia’s ongoing trial of blockchain technology for renewable energy is a pioneering initiative that could revolutionize the energy sector. If successful, it has the potential to create an energy exchange and facilitate peer-to-peer trading. However, challenges related to transaction capacity and scalability must be addressed to fully realize the potential of this innovative approach.
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