The ongoing surge in record-setting corporate renewable energy procurement continues. Recent market research by the Business Renewables Center at Rocky Mountain Institute (RMI) suggests that corporates are on track to surpass 5 gigawatts of new renewable energy deals by December in the United States alone. That’s close to double the 2017 year-end total in the U.S. and roughly equal to last year’s global total, according to Bloomberg New Energy Finance.
Embedded within those numbers is an important development in renewable energy procurement: a growing number smaller corporate buyers are getting in the game and making deals. While massive multinational global corporations are still making announcements for hundreds of megawatts of new wind and solar at a time, we’re now also seeing much smaller deals like the 5 MW wind power deal between Iron Mountain and Renewable Power Direct.
Plus, beyond corporates, a clear majority of households favor clean energy—and nearly half still want clean energy even if it includes a modest price premium.
Could a blockchain-based renewables market go even further?
Meanwhile, major players in renewable energy markets are starting to take a serious look at how blockchain technology could enhance the tools used to trade, track, and report renewable energy purchases in order to further accelerate renewables investment growth.
For example, just weeks ago, EWF and PJM-EIS announced a landmark collaboration to develop and test a market-wide reference implementation of the open-source, blockchain-based Energy Web Origin toolkit. The collaboration is aimed at providing advanced capabilities for renewable energy certificate (REC) trading, tracking, and reporting in the PJM territory, one of North America’s biggest and most-active REC markets. Likewise, EWF Affiliate SP Group also recently announced a blockchain-based solution for renewable energy in Singapore.
Blockchain’s automation, disintermediation, transparency and verifiability, and other attributes make it well-suited to renewable energy markets. This is especially true of EW Origin, which runs on the Energy Web Chain.
8 reasons blockchain matters for renewables markets
Corporate buyers should take notice of applications built using EW Origin toolkits for various reasons:
1. Aggregation: These applications will make it easier to aggregate and coordinate matchmaking between smaller renewable energy and/or smaller buyers without intermediaries—enabling, for example, more deals where multiple aggregated buyers serve as offtakers for new large renewables projects.
2. Increased Granularity: These applications can offer and leverage more-granular electricity production and consumption data at the kilowatt-hour (kWh) rather than megawatt-hour (MWh) level—empowering more buyers and sellers to participate and pool their respective demand and supply of clean energy.
3. Enhanced Choice and Transparency: The expanded attribute tracking and application functionality incorporated into these applications will allow corporate offtakers to more-easily filter and find projects that meet exacting criteria, such as location, price, avoided emissions, etc. Buying the right RECs (or their equivalent in different markets, such as guarantees of origin in Europe) becomes more like buying the right airline ticket or hotel reservation online compared to today’s user experience.
4. Consumption-linked Purchasing: New features become possible with these applications, such as automatically matching REC purchasing on a daily, weekly, monthly, or annual basis to a corporate’s metered electricity consumption—per facility or in aggregate.
5.Automated Reporting: The ability for corporates to use these applications to support their green claims and automate reporting to reporting entities like CDP and Green-e will allow corporate sustainability officers and energy managers to spend less time with REC reporting and more time on other sustainability goals.
6. Affordability: Because these applications reconfigure the REC process from start to finish by streamlining and automating each step, they should help remove some “soft costs” from renewables markets. This benefits both buyers and sellers of unbundled RECs and the economics of large projects with power purchase agreements (PPAs) that are getting increasingly price-competitive.
7. Linkages to Other Use Cases: It is no longer just companies and households who want to capture green claims for their renewable energy purchases and improve the process for achieving this. There are exciting related use cases, such as electric vehicle (EV) owners who want to know their EVs are powered by renewables and energy performance professionals who want to better track and monetize “negawatts” from energy savings. EW Origin toolkits can directly or indirectly support the development of applications that deliver solutions in these related use cases.
8. Open-source Innovation and Competition: Given the fast-evolving nature of investment opportunities and business models in clean energy markets, EWF thinks it is important to enable innovation and competition among application developers through continued advancements in feature offerings that solve problems for market participants. For example, consider how Microsoft is assessing the role of volume-firming agreements (VFAs) to address certain risks inherent to PPAs. Application developers can build on the consistent user experience offered by EW Origin toolkits and build new applications that offer market participants valuable new, advanced “dream” features.
EWF believes that the combined ability of EW Origin toolkits to promote soft cost reductions, the development of dream features, and greater market access for buyers and sellers, including those small- and medium-size enterprises (SMEs) normally excluded from the headline-grabbing huge corporate renewables deals, will motivate certificate of origin issuing bodies, registries, and market participants to demand new blockchain-based applications running on the Energy Web Chain.
Application developers who want to get a running head start with developing applications on the EW Chain that meet the needs of market participants—from corporate buyers to SMEs and households—should consider developing and testing new applications on the Tobalaba test network and becoming an EWF Affiliate. Corporate buyers who want to advise and test the development of the dream features that EWF incorporates into EW Origin toolkits should contact the author directly.
Doug Miller ([email protected]) is the Origin Market Development Manager for EWF.