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Why use blockchain to certify green energy?
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Renewable Energy Certificates (RECs) play a crucial role in the transition to a low-carbon economy, certifying that energy has been produced from renewable sources. Integrating blockchain into the distribution of these certificates offers significant benefits in terms of efficiency, transparency and reliability, transforming the renewable energy market. This article explores the benefits of using blockchain for RECs, using concrete examples and figures to illustrate their impact.
Transparency and fraud reduction
The blockchain provides a decentralised and immutable ledger, ensuring that each CER is unique and non-duplicable. For example, the Energy Web Foundation project uses blockchain to issue and track CERs, ensuring total transparency from renewable energy production to consumption. This avoids double counting and fraud, recurring problems in traditional systems. In 2019, EWF managed to register more than 17 TWh of renewable energy on its platform, underlining the effectiveness of blockchain in CER management.
Automation and cost reduction
Blockchain facilitates the automation of CER sale and purchase processes via smart contracts. The WePower project, for example, tokenises CERs, enabling renewable energy producers to sell their energy directly to consumers. This approach considerably reduces the number of intermediaries and, consequently, the associated costs. In one of their first deals, WePower enabled a solar power plant in Estonia to sell around 26 GWh of energy, demonstrating how blockchain can reduce transaction costs and make the REC market more accessible.
Eased access and democratisation
Blockchain democratises access to RECs, enabling small producers to enter the market. Sun Exchange is one example where blockchain is being used to fund solar projects in Africa, allowing investors from around the world to buy CERs associated with the energy produced. This has not only made it easier to finance solar projects in regions with high insolation, but has also enabled thousands of people to take part in the energy transition. In 2020, Sun Exchange financed the production of more than 20 MW of solar power, proving the effectiveness of blockchain in expanding access to the CER market.
Measurable environmental impact
The use of blockchain for CERs allows the environmental impact of renewable energy production to be accurately tracked. For example, the US project Nori uses blockchain to certify carbon sequestration, providing a transparent and verifiable method of measuring the environmental impact of renewable energy projects. To date, Nori has facilitated the sequestration of several thousand tonnes of CO2, illustrating how blockchain can help quantify and value the environmental impact of renewable energy.
