Veronica Garcia: How blockchain technology is improving the energy sector for people living off-grid

Blockchain technology is most famous for supporting Bitcoin, but it has many uses beyond cryptocurrencies in the financial sector.

The various efforts to use blockchain reduce our carbon footprint are particularly noteworthy. As well Thanks to the plummeting costs of photovoltaic (PV) solar power systems and recent innovations with blockchain technology, it is now possible to combine the two to electrify households in places without access to power grids.

As well as providing people living in off-grid areas with improved access to energy, such efforts could also give millions of people access to credit for the first time and save the average consumer hundreds of pounds per year.

Below, we explore how this exciting blockchain project works:

Using the Internet of Things (IoT) and solar power

Bitlumens is developing solutions on a blockchain enabled platform that allows access to zero carbon energy services, in spite of the limits placed on those living in off-grid areas without internet access.

It utilises IoT (Internet of Things) devices, which can connect among each other through a low power area network (LORA) before sending this data to the blockchain. All processing features need to coexist in a platform that allows on and off network connectivity.

Typical solar home systems usually deploy small panels between 20W and 40W, a smart meter and a Lithium Iron Phosphate (LFP) battery. The solar panel absorbs photons from sunbeams and outputs DC voltage. The electrical output depends on the efficiency of the solar panel. Moreover, a solar charge controller is employed to regulate the solar panel output and charge the battery. Using a gateway allows the data coming from the user’s load profile to be tracked and displayed in the blockchain. The latter provides transparency on a peer to peer network allowing among other things remote monitoring of the technology, verifiable machine to machine transactions, visualization of power generation and the credit score of each user in the network. The backend of the software tracks payment patterns, enabling remote lock of overdue accounts.

The battery is designed to give the system a long life and low volume/weight to capacity ratio compared to traditional lead-acid battery technology. Batteries address resilience and integrate energy storage allowing small scale solar systems to deal with intermittency issues. Hence, batteries are useful to mitigate risks associated with cloudy days, providing energy when the sun is not shining. A decentralized market to allow peer to peer transactions in rural areas can exist to efficiently sell power to other market peers and unlock economic opportunities.

The cooperative network enterprise involves decentralized autonomous association of people united voluntarily to meet their common power needs through a jointly owned and democratically controlled enterprise. For this sole purpose, IoT sensors allow communication between the smart meter and the owner. Sensors can prevent distribution losses and theft of electricity. With theft and distribution losses reduced, investments in the supply of power will become more attractive. Like in the kerosene market, users can trade the power existing in their batteries following a dispatch auction model approach to reflect the value users give to power during a specific time of the day.

In this closed economy, devices can have a unique tradable token supporting the payment of an asset or service. The execution of the contract makes every participating ‘device’ react to certain conditions that, if breached, can be locked and stop distributing a specific output. These tradable tokens can use a standard coin API (like Bitcoin) and have rules configured in a Blockchain.

Improved payment systems

Holders of digital currencies can finance solar installations through microcredits. In fact, some companies are already accepting bitcoins for purchase of solar panels. To enforce some of these practices companies can use smart contracts. For instance, what are the actions taken by the system, if a client leasing a solar home system fails to make a payment. A smart contract could revoke the access to the output – in this case the electricity feed coming from the solar panel.

Off-grid energy access using mobile technology and digital currencies is a brand-new channel for microfinance and payments. Payments are transmitted through an encrypted ledger to authenticate and manage the billing process of users.  Blockchain payments are initiated by mobile phones, even in remote areas with no landlines. Thus, transactions that have been traditionally cash based can now be digitized. This will be particularly beneficial in areas such as Latin America, where only 51% of the population have a bank account, and Sub-Saharan Africa where this figure drops to 34%.

First credit agreements

By collecting digital payments, some companies are signing up customers for their first credit agreement. However, financial inclusion is not possible without an ID. The Aadhaar system in India is now accessible to more than 1.1 billion people in the country. Users can open accounts by presenting their Aadhar numbers. Exactly as in many other SHS models achieves this by relying on agents who collect data using a biometric device and installing the solar home system. Agents collect the fingerprints of the clients and store them together with their credit history into the Bitlumens platform. Many studies highlight how reductions in rural poverty were linked to increased savings mobilization and credit provision. Hence, integrating the credit history and the digital identity (Know Your Customer information) of each client and store it in an encrypted ledger will ultimately help underbanked customers to build their first-time credit history and unlock access to other financial services.

How much money can people expect to save?

Access to electricity allows more businesses and people to realize their economic potential. The cost savings with new renewable technologies speak for themselves. In developing regions without power grids, people have to go to a local shop to charge their phone which can cost them up to $0.15 per time or around $50 per year.  In developed countries in turn, a mobile phone can be charged for the entire year with one KWh or for $0.1 to 0.15. Bitlumen research suggests that families spend on average about $15 per month on candles and kerosene and about $10 per month on recharging their mobile phones at local shops. With one of the Bitlumens solar home systems could save up to $5 per months ($60 per year or $300 over a 5 year period).

It is believed that blockchain-based energy reporting could lower the cost of energy reporting across the globe, giving traditional energy companies the opportunity to lower bills. The development of peer-to-peer energy trading is another development currently being worked on by more than 20 different start-ups, which could revolutionise the way our homes are powered, and force energy companies to lower bills.

The impact of these projects in the western world remains to be seen, but it certainly appears that the energy sector in developing countries is ready for a blockchain revolution.

Veronica Garcia

 

About the author

Veronica Garcia is the CEO and founder of BitLumens. Veronica’s research focuses on renewable technologies and on quantifying investment needs for each country’s target for renewable power generation. In 2017, she developed a device that brings solar power and water to women in rural communities in developing countries using IoT and blockchain technology. Bitlumens decreases CO2 emissions and fosters gender equality.

About the author: Andrew Beck