For a long time, Energy market has been heavily centralized and regulated. Authorities try to protect consumer rights leading to heavy centralization, control and usually a single electricity provider in a country.
Consequently, consumers have fewer or none options to choose from when it comes to an energy provider. We usually use the central grid, paying the defined prices set by centralized corporations not having the ability to choose the type of electricity we want to consume.
The world is switching to renewable energy like solar, hydro or wind. Green energy is the one people want and are willing to consume and support. Even paying an extra buck is not an issue as long as people have the possibility to consume green energy and support such initiatives.
However, using green energy on a daily basis is expensive and complicated. Unless you can afford to have a solar panel on your rooftop or set a wind plant next to your house.
Blockchain and Electricity exchange
With all this noise by the ICOs it is hard to find a real use case where Blockchain and Smart Contracts make sense. The idea of Blockchain is to enable decentralization and Peer to Peer value exchange without an intermediary. This is what energy market needs: an ability to decentralize the connection between supply and demand, enable direct trade and financing of green electricity facilities.
There are few projects in the market right now working on such platforms. However, I would like to focus on WePower project, as I helped the team to build Smart Contract structure, Token model and integrate Ethereum Blockchain.
Each new green electricity plant (solar, wind, hydro) joining the platform would have to pass integration process and the platform would predict electricity produced in the future based on the plant parameters and AI-algorithms. This electricity would then be “tokenized”. What does that mean? Each kwH will have a representation on Ethereum Blockchain as a Token. Once electricity is tokenized for a certain period of time (for instance one year), it becomes available for trading.
Peer to peer trading
Once you physically connect to WePower physical grid, you will be able to purchase Tokenised Electricity directly from the Plant owner. You would see a list of various electricity providers and price for future Electricity tokens. This will enable you to choose the best option, purchase it, consume it and all this direct trading will be enabled by Smart Contracts and Blockchain.
Token model is structured in a way, that Token holders would be rewarded for being part of the community and for the support of the decentralized electricity network. Each new Electricity plant joining the platform will donate a percentage of Electricity Tokens to WePower decentralized community — WPR token holders. It does not matter in which part of the world you live, if you are physically in the WePower infrastructure, you can consume the green electricity, if not — you can sell it in the market for other WePower community member!
From a Smart Contract perspective, the flow would be as such:
- Electricity plants will be transferring a percentage of their Tokenized Electricity tokens to the Community Pool Smart Contract.
- Tokenized Electricity will accumulate within the Smart Contract.
- At a certain frequency, WPR community will be able to claim these tokens.
- For a certain period of time token holders would have to transfer their WPR to Community Pool Smart Contract, where after the end of the period based on the percentage of total WPR tokens transferred the community reward will be calculated for each participant.
- After that, people would call the Community Pool Smart Contract once again and would get back their WPR as well as Electricity Tokens.
For a better customer experience, there will be user interface provided, where you will be able to perform it with a few clicks in WePower dashboard.
It is definitely a long way to go to create such decentralized Electricity exchange marketplace on a Blockchain as there are various integration, legal and other challenges. However, with such competent and experienced team in Energy industry, we should be able to see platform working in a near future!
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