Share energy with your neighbor: Welcome to Microgrids
Blockchain technology is revolutionizing transactions in the energy industry and opening the door to a new kind of service: microgrids.
A microgrid can be described as a cluster of decentralized energy resources (e.g. solar panels) and energy storage systems (e.g. battery, flywheel), which are operated in coordination to supply electricity reliably. Combined with blockchain technology, microgrids allow the exchange of energy in a peer-to-peer network.
According to Accenture new energy consumer research program survey 2016:
- 69% of consumers are interested in having an energy trading marketplace.
- 47% of consumers plan to sign up for a community solar program managed by a 3rd party and that even allows them to benefit from solar even if they don’t have solar panels on their property within the next 5 years.
This survey clearly shows that consumer habits are changing. Consumers are more inclined to fulfill their energy needs from decentralized energy resources functioning within their communities, rather than traditional power generation sources responsible for polluting our environment.
Microgrids can achieve a resilient, reliable, and sustainable network for customers, and are definitely the way forward for modernizing our electricity network.
Blockchain with microgrids is used as an accounting tool for the accurate documentation of transactions in ownership, metering, and consumption of energy.
Let’s imagine a small community connected on a microgrid: we are buying excess solar power from our neighbors when we need it, or sell ours that we do not use. However, it could happen, that the whole community runs low on power, and we would need to rely on the central provider again. Blockchain will help to register on the network all the transactions between peers, as well with the national power provider, and help establish efficient and transparent billing processes.
The number of installed microgrids is small, but it’s growing in many regions around the world. The International Energy Agency (IEA) estimates that to achieve its goal of universal access to electricity, “70% of the rural areas that currently lack access will need to be connected using mini-grid or off-grid solutions.”
The ability to determine what’s more cost effective to pull power from the grid at any given time or to use your neighbour’s solar PV would play a key role in making energy systems of the future.
In addition, the energy system does not only consist of a physical grid structure but also of the electricity market. In order to be able to talk about a well-functioning energy system, there needs to be a support from the market for the grid infrastructure.
Combining blockchain technology with microgrids could unlock their full potential: the decentralized structure of blockchain perfectly fits into the decentralized approach for control and business processes required to run microgrids.
Several blockchain companies, like LO3 or PowerLedger, are already experimenting with microgrids to enable P2P energy trading. Microgrids would mean a better, more sustainable use of our energy supplies, as well as support for the mainstream adoption of consumer renewable resources.
Authors: Fayaz Ahmed and Barbora Juhaszova
Fayaz Ahmed is our guest author, the Founder & Chief Analyst at Sustainable Energy & Blockchain Solutions (SEB’S).
Check out more about him: https://fzahmed01.wixsite.com/sebs
 Esther Mengelkamp, ” Designing microgrid energy markets A case study: The Brooklyn Microgrid”, 2018.
 Andrija Goranovi, ”Blockchain Applications In Microgrids”, 2018.
 http://www.microgridinstitute.org/about-microgrids.html [Online]
 Sihvonen-Punkka A. (2016). Fingrid Oyj Publication. Electricity market needs fixing: