The T77 development in trendy downtown Bangkok may seem like a typical modern urban precinct at first glance. It comprises a community mall, an international school, a dental hospital and serviced apartments.
What the crowds passing through this area may not realize is that T77 is home to the world's largest blockchain-based peer-to-peer (P2P) solar power trading project. Four of the precinct’s buildings are connected to a P2P energy network. Three of these buildings are equipped with different sized rooftop solar panels totaling 635 kilowatts capacity to meet their own electricity needs, or to trade excess with other buildings within the network. Different building types in the network ensure different electricity use patterns. At times, some buildings would have excess solar electricity to sell, while at other times they may need to buy it from neighboring buildings. A blockchain-based application, using a virtual token to represent each unit of energy traded, allows the buildings within the network to trade solar electricity in real time. This helps optimize the decentralized energy system, matching the different demand profiles to maximize system efficiency.
Presently, the state utility EGAT is the largest power producer in Thailand and, according to the current regulation, the sole buyer of electricity from other producers, which prevents commercial electricity trade among private actors. By developing a decentralized system, with non-monetary tokens, this project is a blueprint for an alternative P2P architecture. The success of the project inspired the Thai Government to consider further opening the country’s energy market to allow private electricity trading. The capacity of blockchain to monetize excess solar electricity could usher in a transition to a production-by-consumer, and attract additional investments into solar energy.
So, what is blockchain and what makes potentially disruptive?
In simple terms, a blockchain is a series of immutable records of digital data that are stored in so-called ‘blocks’. These blocks are bound together through cryptography into the ‘chain’ - providing a complete transaction history of the entire network. The network is distributed over a cluster of computers, providing equal access to all data for every participant and thus eliminating information asymmetry. This data accessibility makes the system transparent and generates trust between participants. In the example of P2P solar electricity trading, data for each transaction – such as the date, time, cost, amount of energy and identities of a buyer and seller - are automatically recorded, verified, and made available to all network participants. This eliminates any financial or utility intermediaries and significantly reduces the transaction costs.
Ultimately consumers benefit from the availability of renewable energy at a lower rate and in an optimized manner. Producers can monetize their excess electricity, which subsidizes their solar investments. Policymakers achieve an increase in local generation, with increasing network effects creating a more resilient and efficient system. These stakeholder benefits are key for accelerating the progress towards achieving SDG7
The T77 is only one example of how blockchain can accelerate the uptake of sustainable energy. There are an increasing number of sustainable energy projects applying blockchain technology across the Asia and the Pacific. In Bangladesh, a blockchain-based P2P energy trading network was developed for rural households to improve the access to sustainable, reliable and affordable electricity.
In Singapore, a blockchain platform registers solar energy production by small producers via renewable energy certificates, which can be purchased by businesses to offset their carbon emissions. Malaysia is piloting blockchain applications for P2P solar energy trading as well as for trading carbon certificates and leveraging investments for energy efficiency and renewable energy projects.
Energy utilities are increasingly considering blockchain’s potential to improve the efficiency of electricity markets. Russia’s national grid operator is testing the technology to improve the efficiency of electricity metering, billing, and payments by end-users. This solution will enable consumers to monitor their real-time energy consumption via a mobile app and automate payments within the network.
Cities are also getting on board. Chuncheon in South Korea is piloting a blockchain platform that provides tokens for the implementation of sustainable energy actions, which can be exchanged for different goods and services.
Despite these promising pilot cases and its obvious potential, blockchain is a nascent technology, constrained by regulatory uncertainty, immature infrastructure, technological limitations and risks. Governments and policymakers are critical for supporting the maturation of blockchain by creating coherent regulatory frameworks. For example, China described blockchain as a "breakthrough technology, making blockchain a national priority by including it in the 13thFive Year Plan.
To accelerate the use of blockchain in support of sustainable energy and SDG7, more quality pilot projects are needed to inform policymakers about benefits of blockchain technology and incentivise more coherent regulation. Over time, the blockchain system at T77 in Bangkok may no longer be an object of curiosity but become the standard approach to combining sustainable energy with new urban developments.