It is often said that energy is the “lifeblood” of modern societies. From the central heating that keeps us warm in the winter, to the internet networks that connect us with people across the world. More so today than ever, life without electricity would be unimaginable. Yet, paradoxically, our demand for energy could be putting us out of a home.

According to Our World in Data, 73.2% of global carbon dioxide emissions come from generating the world’s energy supply. However, despite the urgent need to curb emissions fast, this figure is growing year on year as more and more countries follow the development pattern set by industrialised economies. After a COVID-related dip in 2020, there are estimates that fossil fuel energy emissions have risen again by 4.8% in 2021. 

Access to energy is such a crucial ingredient for a good standard of living that many have argued that it is a basic human right. As world leaders meet in Glasgow for COP26 this week, facilitating a global shift away from fossil fuels should be high up the agenda, and one of the biggest challenges of this century — both for curbing emissions and addressing global poverty. In the face of this extreme challenge, a growing number of experts in the energy sector believe that decentralised energy grids could be one solution to transitioning energy systems and meeting increasing needs in a sustainable way. 

Decentralising the energy grid involves creating smaller, localised “microgrids” in which every household produces a portion of what is consumed. As well as increasing the share of the energy supply that is provided from renewables and offering an affordable alternative to fossil fuels, this would ensure that the overall energy grid is more flexible and adaptive when relying on intermittent sources, such as the sun and wind. 

Solar panels on residential houses have become relatively ubiquitous in the past decade. However, scaling this to a level that would actually provide a viable alternative to the current system brings with it many legislative, infrastructural and technological challenges. According to Friends of the Earth Europe, 83% of the EU’s households could potentially become an “energy citizen” and be able to contribute to renewable energy production, demand and/or storage. By 2030, it’s estimated that citizen-led energy communities could own around 17% of wind power and 21% of solar. Citizens could then exchange this locally produced power with one another in peer-to-peer networks, or sell it back to the grid.

Dr Ana Trbovich is the co-founder of Grid Singularity and The Energy Web Foundation (EWF), two technology ventures working to design these smart, green, decentralised energy ecosystems of the future. Both organisations are exploring the use of blockchain as a tool to enable peer-to-peer energy sharing and demonstrate the viability of this model to legislators. In 2018, Grid Singularity was recognised by the World Economic Forum as one of the most innovative startups globally. 

Originally from Serbia and now living in Lisbon, Ana earned her PhD studying international law and public policy before going on to consult on good governance and innovation policy for international organisations, including the EU and the World Bank.

In this article, Tarn Rodgers Johns spoke with Dr Ana Trbovich about the applications of blockchain technology in energy transition and some of the challenges and obstacles to implementing a decentralised energy system. 

Yes, my book - originally a PhD thesis - explores the concepts of sovereignty and self-determination, and what this means for the individual. This is in part why blockchain appealed to me, because it also questions the concept of sovereignty. That’s in the sense of a person being able to exercise rights over their own data, being able to use that data for their own benefit - or the benefit of their community - rather than being stripped of that right and plugged into a very centralised and one-sided arrangement. The other reason I found this space interesting is its potential for environmental benefit, the possibility of using technology to optimise the use of limited resources, and motivate people to take a more concerted action on energy transition. As a result, although this was not the initial plan, I left my also very rewarding work as an innovation policy advisor to focus on a start-up and create a platform that is based on open-source development, and that allows people to pool resources and own them together. That start-up eventually became two, the Energy Web Foundation - which is registered as a non-profit entrepreneurial foundation - and Grid Singularity. 

The Energy Web Foundation is the core platform, a decentralised operating system supporting different applications of blockchain technology in the energy sector, notably by operationalising the concept of decentralised identities. Grid Singularity - the endeavour I am more involved with at the moment - is developing the technology infrastructure for peer-to-peer energy exchange. We are trying to bring the market to reflect the reality of life on the ground. Many small ‘prosumers’ today produce energy using their own solar panels or heat pumps, but there is not yet an efficient mechanism by which they can share or trade the energy they produce with each other. That’s a problem we’re trying to fix. We have shown that the technical concept works and are now in a phase where we are undertaking a number of pilots to demonstrate to regulators that indeed this is a more inclusive and effective way to facilitate energy markets, manage the use of the common grid and ensure better security of people’s data. It’s a long journey, shared with a talented and diverse team specialising in a number of disciplines, coming from across the globe, and working in a distributed way.

This is an extremely challenging field, not only due to the new technology but also regulatory oversight. At the moment the regulations are heading in the direction of decentralisation and individual-centric market design, but very slowly. What we wish to implement is not per se illegal, but it’s not legally clear how one can do it in a compliant fashion. This is why pilot projects matter.

Yes, so essentially the legislation says you can trade, but to do that you practically need an energy license and that’s a complex procedure. It requires a certain volume of production, which a household alone cannot meet. There are new legal concepts arising, such as energy communities in Europe, but Germany for instance still has not developed the relevant legislation for energy communities. Other countries have legislation that they have rolled out and are further clarifying. But most still aren’t allowing the next step which is to go beyond one closed community and allow one energy community to trade with one another.

Yes and no. There is recognition that the sector needs to manage distributed resources better. There is recognition that the market is already distributed, and that the way it is managed needs to adjust to reflect this. There is also recognition that roles are shifting. For example, in the energy market you have roles related to who the energy suppliers can be. Prosumers with solar panels, pumps and electric cars are now considered to be part of the energy market and seen as a possible solution in cases of shortages. There are a number of new companies that are so-called aggregators, helping smaller consumers and producers connect and access the market and be a resource for the rest of the market. This can sometimes pose a management challenge as there’s not always sufficient data about how much energy will come in, and when, so there are a number of new business models for analysing the related data. We’re looking to go one step further and take management to the asset level, to give people the tools to create their own energy choices. This is very disruptive and likely to be implemented in stages when the regulators become comfortable with this new concept, because after all they have the serious task of ensuring energy security.

Going back to the topic of blockchain, there are no issues per-se of blockchain implementation. Regulators always aim to be technology agnostic in that they will never prohibit or endorse a specific technology, but instead look to reduce waste or protect data rights. There is no legislation that regulates the use of blockchain; regulation only defines its applications in regulated industries such as energy - and blockchain is just one of the tools and technologies in that final application.

For Grid Singularity, the main advantage of blockchain is the level of transparency that it brings to market access and operations. It’s also a very efficient clearing mechanism, and those are the functionalities that we integrate into our solution. Other companies in the energy market use it for other functionalities, such as tracking provenance.

There’s currently a heated, often poorly informed general discussion about how energy produced from wind is a problem because we’re relying on something that is unpredictable, which is the wrong way to look at the energy crisis. The issue is that we need to diversify and increase our investment in renewables, and use those resources more efficiently. If you look at the past year, wind has been an important supplier for Europe and renewables satisfied a significant part of the demand for renewable energy in several countries. 

We still don’t have the mechanism to efficiently plug small “prosumers” into the energy market. We’re not sufficiently using the individual’ resources, whether that be a person’s solar panel or their car, to make the energy market more efficient. The question that is posed is always whether renewables can support an increasing demand, and the assumption is that we need to invest more in cables to facilitate increasing demand. Yes, we do, but the infrastructure investment can be reduced if we truly encourage energy communities and microgrids around the world, because then more of what is produced locally is consumed locally and more effectively, reducing grid congestion as well. Those are the angles to look for a solution to any questions around the reliability of renewable energy supply, rather than saying we should go back to coal. I believe that the share of people denying climate change is sufficiently reduced so that we no longer have to have that discussion. But then I am always an optimist!

The cost of renewables has gone down significantly, but yes we also need to think about how we travel, if we use an air conditioner, if we need a car and if yes, what type of car, etc. All of these personal decisions affect one’s own personal energy use, even more so when taken at a building or business level which many businesses now consider. There is also a place for people to invest in renewable energy resources, which needs to be made easier. It should be easy for you to be able to invest in renewable energy resources, whether you own where you live or rent, and that is currently not the case. If we develop the concept of energy communities further then that could be a framework for many to get involved. 

Most people want to sustain the environment and get the economic benefit of reduced energy bills. At Grid Singularity we have created a free, web-based simulation tool where anyone can simulate a local energy community, with peer-to-peer trading, and understand how that would reduce their reliance on the grid, how local trading affects their energy bill and increase their level of self-sufficiency.

We’re not talking about the distant future, the legislation is already going in the right direction, it’s just a matter of the pace of change.

The energy future is one where new, asset- and individual-centric business models are allowed to fully operate, where every individual becomes aware of their impact on the environment and has a choice to act, with sufficient information about the choices they can make if they wish to positively participate. Just as we have apps on the phone, we should be able to have easy solutions to invest in renewables, to share renewables and to adapt energy use based on information we receive.