Blockchain in sustainable energy transition

Location

Virtual

ESCWA is undertaking a project on the role of blockchain, as an emerging digital technology, in accelerating progress on sustainable energy development within the Arab region. As part of this project, ESCWA is organizing an expert group meeting to highlight promising case studies, identify key barriers and discuss pathways to adoption within the region. These insights will be integrated into a report to be published in 2023.

Blockchain technology can help to harness the region's vast natural resources and accelerate the integration of renewable energy while increasing access to affordable, reliable and modern energy services. Innovative ways to finance projects, manage electricity grids, process payments and manage data are being developed, trialled and implemented globally. These innovative solutions for the energy sector can be studied and applied in the Arab region.

Outcome document

Meeting outcome

Increased energy sector complexity requires new digital tools to manage distributed energy resources (DER) while increasing flexibility and transparency, blockchain is already playing an important role
Traceability and transparency via blockchain is enabling consumers to ensure the energy they consume is sustainable, including for things like EV charging
Energy Attribute Credits on blockchain give companies an opportunity to participate in the sustainable energy transition even if they don’t have access to renewable energy locally, and offer additional revenue streams for generators while minimizing friction
The sustainable energy transition is one of the most important opportunities for blockchain implementation, we need to ensure we are using the technology to place people at the heart of the energy transition
DER adoption is accelerating, introducing new challenges and opportunities for grid operators
To unlock maximum value from DER, grid operators need new tools to coordinate complex DER activity among many stakeholders
Decentralized project finance can now increase efficiencies and reduce risks for investors in terms of foreign transaction fees and ROI
Timelines depend on market readiness; the technology is here in terms of traceability and decentralized project finance; the pace of progress is slow until it’s fast
Within the region, blockchain can address the inability to attract finances and collect data
Regulations within the region are needed to create the enabling environment to accelerate blockchain adoption within the region; lack of infrastructure is a key barrier

Discussion

Expert presentations

Distributed energy resource management and trade (Energy Web)
- Relationships between DER, aggregators & OEMs, customers, distribution utilities, and smart meters can be verified and tracked using a DER data hub built on blockchain
Energy attribute certificate issuance and trade (Reneum Institute)
- REC marketplaces on blockchain enable the redistribution of capital from energy polluters to clean energy developers. Expanding consumers clean energy choices and supporting renewable energy development. Acting as bridge to finance, subsidizing existing operations and stimulating new development.
Decentralised solar project finance (Engie + Energy Web) and energy transparency platform (TEO by Engie)
- Blockchain enables tracing renewable electricity production and consumption and lets consumers target green energy consumption 24/7

Interactive panel moderated by ESCWA

Some of the unique challenges and opportunities related to blockchain adoption by enterprises in the energy sector include deciding if blockchain is appropriate for the business, strict IT policies on legacy technologies, capacity building and training required, different mindsets between divisions within a company
In terms of timeframes, crowdfunding on blockchain is ready technologically but just requires more funds, implementation can be quick once market identification and development is complete (which takes more time)
Blockchain can send price signals to the market to help spur RE development, through enhanced EAC issuance and trade
In the Arab region, blockchain can enable increased competition and thus lower costs for consumers as well as more efficient data collection and use
Key barriers to blockchain implementation in the Arab region include:
- Different laws for data management between IT and power sectors
- Lack of infrastructure, communications networks and capacity building
- Lack of regulations for the expanded use of smart contracts in the energy sector
- Lack of awareness about the potential use cases from consumers and decision makers