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Blockchain Technology Application in Energy Supply – Estonia

Estonia, one of the three Baltic states, is an advanced technology country known to be adopting innovation policies including “Digital Government” strategy which makes all personal information such as birth certificate, death notification and family registration into digital formats. Now Estonia has begun to undertake the new project applied blockchain in the energy supply. 

Blockchain and Smart Grid Accelerate Deregulation on Electric Power

By linking the blockchain technology to the smart grid (next generation power grid) and applying it to the power supply industry, it is possible to provide the power data base that is temper free and highly transparent. This could be a help to accelerate deregulation on electric power due to minimizing the initial investments for the newcomers of small business operators, as they could use token funds.

What is the Smart Grid

It is a next generation power grid to optimize the electric power on the grid by using Smart Meter (electronic device that records consumption of electric energy and communicates the information to the electricity supplier for monitoring and billing. The officers do not need to read meters.).  Although the way Smart Grid is utilized vary from country to country, its main purpose is the stabilization of power supply and the acceleration of electric power liberalization.

The power supplier can reduce the cost due to over generating power by predicting demand and optimizing supply of power depends on the time of the day and the seasons.

In the recent years, there is a tendency of increasing demand of renewable energy such as solar power and wind power energy, thus it is predicted that the management of supply to accommodate the variable sunlight and air volume will be more complicated. Under this situation, it is imperative to promote the efficiency by Smart Grid, understand the Smart Meter information in a real-time and streamline the related systems.

Estonia began to roll out the blockchain based renewable energy transaction platform trial

In the beginning of January this year, Elering AS, an independent electricity and gas system operator in Estonia, and WePower, a developer of blockchain based green energy trading platform, have announced that they will undertake the first collaborative pilot project in Europe to test large scale tokenization of energy data on the blockchain in Estonia. Through this alliance, the preparation phase of leveraging Estonia’s existing advanced smart grid infrastructure with the renewable energy suppliers in Europe will be launched.

Estonia has completed the project to replace the all power meters in the country with the smart meters in the last year. The advanced smart grid infrastructure, the 100% smart meter coverage with hourly reading and a central data hub, is developed in Estonia.  WePower manages the electric power data by using this Smart Meters.

To achieve the current task in energy supply, WePower will integrate its blockchain and smart contract powered green energy trading platform into Elering’s Estfeed electric power consumption data exchange platform.  The government of Estonia is aiming to establish the system of Proof of Concept which enables the operator to manage the comprehensive energy data produced from the integration of blockchain technology and smart grid.

This system will be first of its kind and make energy trading accessible to prosumers of all sizes and configurations.

What is Prosumer?

It is a coined word of “producer” and “consumer”.  In the recent energy field, Prosumer is a owner or manager of plants, buildings and houses that consumes power and at the same time produces electric power. Prosumer as a business operator aims to generate green energy and expand the usage including installing solar power and wind energy generators while reducing the power consumption.

According to Taavi Veskimägi, CEO of Elering, their motivation is to enable energy innovation by removing market barriers, and built the Estfeed data exchange platform, which enables people to share their energy meter data that is more transparent with new service providers.

Nick Martyniuk, Co-Founder and CEO of WePower, said“it is the first step towards our project in our goals of making the smart grid greener.”  He emphasizes that this partnership is a marvelous use-case to show the feasibility of blockchain technology in the green energy field, and brings a great leap forward creating a Ethereum global blockchain powered energy trading network.  

Summary

At present, feasibility study experiments using blockchain technologies including the integration of smart grid and blockchain are vigorously pursued globally. Particularly in Europe where the deregulation in electricity market is advanced, the various innovation is continuously established to support prosumers.

As a developed country in Asia, Japanese government is willing to follow this global movement and expecting economic outcome from deregulation in electricity market.  Using green energy is encouraged regardless of company or individual, or the size of company, and the government is showing a willingness to address environment issue. The newly found additional value of blockchain which supports sustainable green energy related businesses will continuously draw attention.

References:

https://www.businesswire.com/news/home/20180104005488/en/Elering-WePower-Announce-Pilot-Project-Test-Large
https://www.smartgrid.gov/the_smart_grid/smart_grid.html
http://www.whatissmartgrid.org/smart-grid-101/smart-meters
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