A new report from the International Renewable Energy Agency (IRENA) in Brussels, says that to accelerate low-cost renewables in the power sector, countries will need innovative technology tools which enable them to benefit from renewable scale-ups. The report, Innovation for a Renewable-Powered Future, mapped 30 key innovations and 11 solutions in the variable renewable energy (VRE) landscape expected to transform the power sector while simultaneously creating cost-effective global energy transformation.
In 2016, the World Economic Forum reported that solar and wind energy became cheaper than fossil fuels. According to the IRENA report, countries at the forefront of the energy transformation get more than a third of their energy from renewables like solar and wind power. And, the three largest power systems in the world – China, India and the United States are expected to double their VRE shares to more than 10% of annual generation by 2022.
Adnan Z. Amin, Director-General, IRENA said that decarbonising the global power sector in line with the Paris Agreement objectives will require an 85% share of renewable energy in total electricity generation by 2050.
“We are now moving into a new phase, where a massive but cost-effective scale-up of renewable-power is central to the energy transformation," said Amin. "This new phase requires reinforced innovation efforts, in particular, to make electricity systems more flexible to accommodate the variability of large amounts of wind and solar PV generation while ensuring their reliability and low-costs.”
The innovations listed in the report include time-use tariffs, aggregators and enabling technologies like blockchain.
The report notes that 189 companies are working with blockchain in energy with 71 projects using blockchain in energy and about 50% of those projects are built on the Ethereum blockchain. In total, the IRENA report says that $466 million has been invested in blockchain in the power industry as of September 2018.
Dolf Dielen, Director, Innovation and Technology Center, IRENA says that an increased power sector complexity requires great intelligence, transparency and automation.
"Blockchain can help by enabling the implementation of smart contracts used for peer-to-peer photovoltaic power trade or the management of renewable energy and carbon emission reduction certificates," said Dielen.
Fabio Canesin, the co-founder and lead developer of the Liechtenstein startup Nash, agrees that blockchain solutions for the control and payment of distributed energy generation networks can help renewable energy.
"Renewable energy’s biggest blocker today is that they are in general bad at storage; they are non-base load power sources. To solve this, you need to connect the grids to allow a place that is not so windy or sunny today to receive the energy from another that is windy or sunny," said Canesin. "Blockchain can be directly applied to monetize and control both production and consumption in a distributed network of energy providers and consumers."
Canesin notes that the same type of problem (distributed networks needing decentralized value transfer) also happens in the Internet of things (IoT) solutions for sensor data.
"One can imagine a much better carbon footprint tracking if a regulatory or certification agency installed blockchain equipped sensors on power stations - that data could be used to emit carbon assets for trading on cross-border markets, meaning a better allocation of capital on more efficient power generation," added Canesin.
Canesin believes that the most significant value for solving real-world problems will come from decentralized exchanges.
But blockchain itself uses massive amounts of energy, and that continues to grow. According to Christopher Koch, Research Analyst, SAP Insights Research Center says on average a single bitcoin transaction consumes 455-kilowatt hours of energy and each transaction is twice as energy-hungry as it was in November 2017
"To put that into perspective, the energy used to complete a single Bitcoin transaction is enough to power nearly 15 households in the United States for an entire day. When you add up all the bitcoin mining going on in the world today, it uses as much electricity as Singapore. In terms of carbon footprint, the annual output of blockchain mining generates as many carbon dioxide emissions as one million transatlantic flights," said Koch.
"The only bright side to this wild growth in energy usage is that it's driving miners to seek lower-cost energy sources and these days, that means renewables," said Koch.
"The one advantage that bitcoin mining has over traditional mining is that it is completely location independent. Bitcoin “mines” are actually data centers, and data centers can be located anywhere there is cheap power," said Koch. "One of the Achilles heels of renewables has been that they don’t travel well and not well integrated into the electricity grid, but bitcoin data centers can go wherever the solar panels and wind turbines are to a point, and no one is building data centers in the oceans next to offshore wind turbines—yet."
Koch says miners are also identifying and taking advantage of other sources inexpensive, renewable electricity, including geothermal and hydroelectric.
Several technology companies, including Intel, Samsung, Nvidia, AMD and Bitmain, have developed purpose-built chips specifically designed to handle the intense demands of blockchain more efficiently and reduce energy use.
Koch believes that while blockchain energy consumption is vast, it also presents an opportunity for global organizations.
"Bitcoin isn’t the only use for blockchain, contracts are one example where companies could replace today’s complex web of lawyers, accountants, and banks that are all big users of technology with blockchain to manage the issues of authentication, identity, and trust inherent in the contractual relationship between two businesses," said Koch. "The slowing growing use of blockchain for day-to-day business processes gives organizations a clear, ROI-intensive path to become early adopters of renewable energy sources."
"If organizations can generate low-carbon energy at scale, with IoT-enabled devices measuring production and demand in real time, blockchain technology could help transform the electrical grid. It could encourage more widely distributed and decentralized energy production—making renewables more economically feasible in more remote locations, such as hydroelectric plants on remote rivers, or acres of solar panels in deserts," added Koch. "That, in turn, could spur more investment in renewable energy sources and power storage, generating an abundance of cleaner, less expensive electricity for all kinds of uses."
Koch says we could even imagine a more evolved future for decentralized markets, like having several water reservoirs bidding to provide a customer with water credits and the most efficient reservoir will likely be able to bid at a lower price.
"With it, we could see a steep change on the efficiency of utilities; the same example applies to gas, electricity and internet connection," said Koch.
Echoing Koch's views on multiple solutions, Amin notes that the analysis from the IRENA report concludes that there isn't one unique game-changer innovation to change the market.
"No innovation in isolation may have a significant impact, but it needs to be combined with other innovations across the four dimensions of the power sector; innovations in technologies, business models, market design and system operation."
