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Blockchain technology could potentially be beneficial for Estonia’s green energy solution

by Michael Stark

Estonia Trials Blockchain Technology for Renewable Energy Trading

The Baltic country of Estonia relies heavily on fossil fuels for its energy production, with only 18 per cent of its energy coming from renewables. In an effort to test the limits of blockchain technology and increase the percentage of electricity generated from renewables, WePower’s CEO, Nick Martyniuk, has announced a new pilot project in Estonia.

Making Energy Data Available

The main goal of the project is to make energy data more readily available and to enable people to share their energy meter data with service providers. According to Georg Rute, Elering’s digitalisation development manager, Estonia is the ideal piloting country for this project due to its 100 per cent smart meter coverage.

Overcoming Roadblocks with Blockchain

The sensitive nature of energy data has been a roadblock for innovators, developers, and engineers interested in building new solutions. However, Martyniuk believes that blockchain technology provides the necessary trust for data sharing and creates liquidity and accountability between energy buyers and producers. This makes it easier for people to trade on the renewable energy trading platform that connects energy buyers directly with energy producers.

Focusing on Renewables

Although blockchain technology could theoretically be used for any type of energy transactions, WePower is focusing primarily on renewables. The platform aims to connect the grid, local energy exchange markets, and end users of energy. Stephen Woodhouse, chief digital officer at Pöyry, an international consulting company, explains that the cryptocurrency and tokenization approach offered by WePower provides an alternative to traditional renewable energy power purchase agreements.

Challenges and Concerns

While the pilot project shows promise, there are still challenges and concerns that need to be addressed. One concern is the transaction capacity of the public ethereum blockchain, which mainly uses the energy-intensive proof-of-work (PoW) approach. Fei Wang, senior research analyst at Wood Mackenzie, an energy research and consultancy firm, suggests that this could be a hurdle if the project were to expand to a full commercial deployment.

Looking Ahead

The trial in Estonia represents an attempt to understand the limits of using blockchain technology for renewable energy trading. If successful, the project could be scaled up to create an energy exchange or facilitate peer-to-peer trading. However, the technology’s capacity and scalability remain to be tested and proven. If the pilot proves successful and a significant amount of energy is traded using the platform, there is potential for the blockchain project to be expanded on a larger scale. Only time will tell if this innovative approach to renewable energy trading will be able to overcome the hurdles and challenges it faces.

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