This blog post was authored by rising sophomore Anuj Thakkar.
A few weeks ago, I came across a SolarCity white paper in which Ryan Hanley (Director of Grid Services, Tesla) and his grid engineering team highlight the promise of distributed energy resources (DERS). (Not familiar with the term? DERs are small grid-connected energy storage/production devices that include solar panels, battery storage, and fuel cells.)
The paper describes how DERs could generate up to $1.4 billion in net societal benefits in the state of California alone. Whoa.
At the same time, the authors emphasize that there are many obstacles to integrating distributed energy resources into the grid.
SolarCity’s paper focuses on the barriers presented by current grid planning strategies. But the paper got me to thinking about another significant barrier to solar installation that I’ve seen in my community: the pricetag.
In the U.S., a standard 5kWh system could cost upwards of $10,000 and homeowners could wait 10 to 15 years to recuperate those costs, which isn’t affordable for most families. Incentive programs exist in some areas to make solar more affordable (but are not available in others).
How could the cost barriers to DER installation be reduced for homeowners?
Here’s what I realized (explained in more depth in this paper). Current energy infrastructure only allows energy consumers to purchase energy from a central utility. However, new blockchain technology could allow clean energy producers to sell directly to other community members.
Blockchain, which is the fundamental technology behind emerging cryptocurrencies like Bitcoin and Ethereum, is a digital record of transactions that can be used to exchange nearly anything of value among various parties. In the case of an energy market, community members could use blockchain to buy and sell energy rather than currency.
Companies like LO3 Energy are already experimenting with using blockchain to exchange energy. They’ve describe particular benefits of this approach: increased energy security, grid resilience, and community engagement with energy.
But this kind of system could have the additional benefit of making DERs more affordable, given the right pricing protocols and conditions. (More on that in my paper.) Community-based energy could pay producers significant sums of money for their electricity, potentially reducing the payback time for solar technology to as low as five years (a reduction of more than 50 percent).
Most simply, if community members demand more clean energy than can be supplied, they could bid up the price of clean energy, ensuring that clean energy producers receive higher rates than utilities can offer for their energy production and making DERs more affordable over time.
Of course, this idea is untested and would require a lot more R&D–and it may be met with resistance from utilities… but I believe that blockchain has quite a bit of potential for the energy grid. Not only could it provide energy independence, grid resilience, and community engagement with energy, but it could make distributed energy resources more affordable. It could lower the barrier to the integration of DERs in some communities, helping more of the U.S. realize DERs’ societal benefits much more quickly.
Bio: Anuj Thakkar is pursuing a bachelor’s degree in mechanical engineering at Duke University’s Pratt School of Engineering. Anuj is a Benjamin N. Duke Scholar who has previously worked on AI tools at IBM and is active with the Duke Smart Home, which focuses on applying cutting-edge technologies to developing energy and sustainable-lifestyle solutions. He is also interested in the use of emerging technologies to improve energy infrastructure and transportation.