Blockchain’s role in the energy transition: improving renewable energy adoption through distributed solutions

Blockchain’s role in the energy transition

Excerpt from unescap.org

The Asia-Pacific region accounts for over half of total final global energy consumption, 85 per cent of which comes from fossil fuels. The associated emissions are expected to increase as the region struggles to meet its renewable energy (RE) targets and decrease its energy intensity.

One factor that contributes to the region’s dependence on fossil fuels is technological, infrastructural, institutional and behavioural lock-ins, which make the entire sector subject to a strong path dependence. Once a country takes an energy-intensive pathway, it becomes challenging to shift to a more sustainable energy system. Despite this tendency, subsidising policies (for example, feed-in-tariffs) and decreases in the price of renewable energy sources have incentivised the emergence of distributed energy resources (DER) solutions. Such policies that provide local grid solutions have the energy production located near the site of consumption.

However, the volatility of energy production by DERs from RE creates some supply and demand management challenges.

The main issues include intermittent energy supply as well as multi-directional energy flows (as opposed to traditional, unilateral flows), causing disruptions in grid capacity and challenges in setting prices that reflect the real-time conditions of the grid. Peer-to-Peer (P2P) market mechanisms address these issues by allowing prosumers/consumers to purchase energy based on their demand. This creates an energy trading platform adaptable to the flexible demand and supply from grid participants.