Blockchain and solar power: The decentralization of the energy sector

The recently completed field phase of the “Quartierstrom” project examined how decentralised electricity supply can function in Switzerland. In the pilot project, 37 households fed their surplus solar power into a local power grid for one year and sold it via an online platform. A block-chain-based system formed the technological basis for electricity trading between the project participants.

Until a few years ago, the electricity business in Switzerland was firmly in the hands of the electricity companies, which had a monopoly position in the respective region. This could soon change. Since 2018, private owners of solar plants have also been able to join forces and distribute electricity beyond their property boundaries. In the current example of “neighbourhood electricity”, the electricity producers use a block chain for local electricity trading. Various universities, industrial partners and the local water and electricity company are participating in the project, which is being carried out in Walenstadt, Switzerland.


Blockchain use case electricity trading

Switzerland’s first local electricity market was launched in the form of district electricity. The basic idea: Instead of feeding renewable energy into a public power grid, locally produced solar power should be consumed locally. Anyone who produces solar power and has more of it than they need for their own consumption can offer it directly on the local electricity market. Supply and demand determine the price. Interesting detail: Trading took place via block chain. For this purpose, all participating households received a computer with an integrated electricity meter and a block chain node. The nodes exchange data among themselves about who produces or needs how much energy.

In addition to various considerations regarding technology, customer acceptance and ecological and economic aspects, the project team also had to consider whether block chain technology is suitable for processing transactions in a local electricity market. In the press release of 6 February, the balance sheet is quite positive. The blockchain software ran very reliably and the system’s power consumption was kept within limits. The small computers, which serve as smart meters and Blockchain nodes, consumed around 3,300 kilowatt hours of energy during the entire project. Measured by the volume of electricity traded in the local market, their consumption was around 4 percent. So this may open up another field for crypto-adaptation.


Change from centralized to decentralized systems

Furthermore, developments in the electricity market – not only in Switzerland – are to a certain extent parallel to the changes in the financial system caused by Bitcoin & Co. Christian Dürr, Managing Director of Wasser- und Elektrizitätswerk Walenstadt, accordingly describes the development in the energy sector from centralized to decentralized systems: “Our customers are becoming more autonomous, the markets more volatile and liberalized. The same are the attributes that the media and scene observers attribute to crypto currencies: Citizens’ autonomy of money and wealth, volatile prices on the crypto stock exchanges, and the liberalization of markets, such as the energy market, according to Saifedean Ammous. Change has begun, including in the energy supply sector.