Blockchain in Solar Energy: What You Need to Know

By Scott Laskey


Last Updated on January 25, 2021 by
Mar 16

By now, you’ve probably heard about blockchain and the Internet of Things. Disrupting all industries across the board, these technologies have created major shifts in everything from healthcare to shopping.

Did you know, though, that they’re also major disruptors in the energy and utility sector? Today, blockchain solar energy is an emerging technology, and it’s got installers and homeowners alike very excited.

As solar prices decline, solar blockchain steps in to create exciting new opportunities for the industry and for people in our state, and beyond.

Here’s what you need to know about this exciting new shift:

Blockchain Could Make Solar Energy More Affordable

Right now, installing home rooftop solar panels and lowering the household’s electric bills involves hiring a skilled professional.

While the help of solar installers will always be an essential addition to a good solar project, blockchain energy trading stands out as one technology that could make the process more affordable and accessible for everyday homeowners.

Although blockchain storage technology isn’t widely available to homeowners yet, lots of companies in the peer to peer energy trading industry believe it will be in the future.

This owes, in largepart, to the structure of the green electricity market, and its potential for expansion.

How the Electricity Market is Structured

Right now, the electricity market relies on the services of independent auditors. These auditors assess renewable-energy producers and grant “green” electricity certificates.

Once the certificates (known as Renewable Energy Certificates) are granted, the producers who hold them can sell that energy back to consumers who want to purchase green energy.

Unfortunately, this certification process is far from streamlined. Certification requires a physical audit, and it’s tough for small-scale green energy generators to obtain them. On this same token, Power Purchase Agreements can only be negotiated by producers that create a large amount of green energy.

As such, smaller energy producers (residential homes, for example), are forced to simply accept the price that their local utility is willing to pay. This leads to price volatility and higher-than-necessary levels of risk.

Blockchain’s Effect on Solar Energy Trading

Blockchain would have wide-ranging effects on the solar industry. These effects include lower cost of certification, more streamlined auditing, and the total avoidance of non-market price control, which would benefit residential green energy generators across the country.

Right now, many companies, including brands like LO3 Energy, based in Brooklyn, are using blockchain technology to organize generation certificates. The benefit of blockchain, of course, is that it’s a hyper-accessible, secure, and streamlined system.

In these blockchain storage systems, the generation certificates are produced by meters attached to rooftop solar panels. When people trade certificates, the blockchain systems store those transactions, as well. This prevents people from trading and re-trading the same unit of generation.

This whole system eliminates auditors, transaction costs, and price regulation practices, which makes it possible for even small-scale producers, like homeowners, to invest in renewable energy intelligently.

The Challenges of Peer-to-Peer Energy Trading

One of the criticisms blockchain faces is that may be hard to scale in the solar industry.

While blockchain storage systems stand to streamline certificate storage, it’s true that they can’t handle more than a few hundred transactions at any given second.

This is because servers need to come to a consensus about the contents of the blocks they move, and this gets challenging when there are dozens of blocks flying around at any given time.

While there are companies working to address this issue, it’ll be a process. Given this, and the fact that distribution companies currently exert careful control over green energy integration, it’s evident that blockchain in solar energy is a ways from total saturation, but that it is on the horizon.

As the cost of solar energy continues to drop, blockchain-based storage technologies will continue to advance and become more available to residential producers.

Have questions about the future of blockchain and how it could affect rooftop solar panels for your home? Contact Sandbar Solar today!

About the Author

Scott is the founder of Sandbar Solar & Electric. With a Bachelor’s Degree in Economics from UC San Diego, Scott has an NABCEP certification, and has lectured on and taught many high-tech construction practices and solar PV technical concepts to education institutions, including Stanford University and state-recognized electrician apprenticeship programs. Scott enjoys sharing his knowledge of the evolving renewable energy space and making a difference in his community.