A couple of years ago, we discussed[1] a phenomenon appearing entirely novel back then — namely, a symbiotic relationship between two blazing technologies — microgrids and blockchain. Moreover, new possibilities for safe multilateral agreements without third-party authority (brought primarily by Ethereum’s [2]smart contracts) were catalyzing completely new approaches in the economics of renewables, such as tokenization[3] of energy assets, aiming to ease the investment technicalities related to renewables production. All this was happening as the capitalization of major blockchain platforms skyrocketed, and the crucial challenge of sustainable development became recognized extensively.

Now, it might be time to briefly overview what has been achieved in the field since then, and what is the outlook for the future. First, despite the pessimism of the past, the blockchain is still around and stays rather strongly capitalized, although occasionally suffering from high volatility, as well as the other market assets during the COVID-19 pandemic. Importantly, the next-generation blockchain platforms are making a promising appearance. These systems (EOS[4], Cardano[5], Stellar, to name a few) are devoid of the weaknesses that are still plaguing Bitcoin and Ethereum, namely, energy wasteful proof-of-work consensus protocol and low transaction processing capabilities. Some of them do not even charge a transaction fee for handling smart contract operations.  Moreover, Ethereum is also heading towards transformation into a sustainable and performant platform by adopting novel algorithms.

The evolution towards microgrids appears to proceed at a slower pace. While Brooklyn Microgrid[6] has gained technological maturity, it still remains a rather rare phenomenon of the practically deployed blockchain-enabled systems where peers trade electricity amidst each other. Also, Power Ledger[7], an Australian-based company, has recently launched[8] a trial of blockchain-based microgrid connecting over 100 households. What is remarkable, when it comes to peer-to-peer trading, blockchain has retained its attractiveness, and upcoming systems continue to rely on it. In a blockchain-based microgrid, every participant has a complete copy of data, including all transactions from the beginning of the operation. Such a redundancy creates additional security and robustness compared to a centralized database, which, if compromised, can be easily tampered or even destroyed.

While the technology seems to be on the right track, the slowness and flux in microgrids’ proliferation appear to be induced by the scarcity of renewable energy generators in the households. However, the situation is improving now, as many governments subsidize the acquisition of solar panels or even wind turbines. The establishment of a microgrid also involves substantial monetary expenses and, above all, organizational effort. We hope this to be realized by societies’ decision-makers and expect that the introduction of comprehensive support measures would spur the progress towards efficient local energy redistribution, exactly what microgrids provide. Consultative services promoting microgrids and general awareness about this technology’s potential are no less (but probably, even more) important than, e.g., taxation benefits targeting microgrid communities.


[1] http://www.bcdcenergia.fi/blogi-ja-uutiset-blockchain-transient-hype-or-solution-to-energy-crisis/

[2] https://ethereum.org/

[3] https://medium.com/sea-foam-media/tokenization-of-energy-is-the-future-7d09ded60c5b

[4] https://eos.io/

[5] https://cardano.org/

[6] https://www.brooklyn.energy/

[7 https://www.powerledger.io/

[8] https://decrypt.co/26478/power-ledger-rolls-out-blockchain-based-microgrid-in-australia




Alexandr Zavodovski

Doctoral Student
BCDC Cloud Team
University of Helsinki, Department of Computer Science

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