How Singapore uses blockchain to save the environment
BLOCKCHAIN, the technology behind Bitcoins, has been theorized and explored for utilization beyond cryptocurrencies to bring about positive solutions to some of the world’s biggest problems.
Enterprises have been talking about blockchain for years now, but there’s hardly any real-world enterprise-driven blockchain-first solutions out there.
However, Singapore may have figured out a way to harness the true potential of the technology. Companies in the city-state can now trade renewable energy certificates (RECs) on a blockchain powered platform.
One REC represents one unit of green energy – produced from wind and solar power- and companies seeking to offset their non-green energy production buy them from firms producing excess green energy.
It is similar to the practice of carbon trading that takes place around the world.
Utility provider SP Group, which launched the system believes that the exchange will enable increased transparency and lower the costs in energy trading.
Without the need for a centralized entity to verify transactions, cross-border trading is also possible.
“A consumer in Singapore who wishes to buy green energy can now, through blockchain-powered REC trading, purchase a REC from a hydro-producer based in Laos,” SP Group CEO Wong Kim Yin was quoted as saying by CNBC.
High verification cost has dampened REC tradings in Singapore and created an absence of a market.
However, blockchain is expected to change that, and spur a vibrant marketplace.
This is in line with the future of energy trading envisioned by Wong – decentralized, technology drive and consist of consumer empowered to make sustainable energy choices.
He said, “In the past, you have big power stations in the centralized model, and you would transmit power to the households. In the future, you would have solar panels, and you would have batteries. In that model, the power system would be a lot more robust.”
Due to its limited land area, large-scale wind farm construction and on-the-surface solar panels are not viable in Singapore, which limits the options of green energy in the country.
Innovative solutions such as solar panels that float on reservoirs could solve the problem of spatial constraints, but the jury is still out on how far will these technologies go to satisfy the demands in Singapore.
According to APX, a global issuer of REC, the demand for renewable energy Singapore is significant, while the supply is minimal.
With blockchain, the demand could be met with supply from abroad.
APX MD Lars Kvale said, “The true promise of blockchain and distributed ledger technology in the context of environmental commodity platforms is allowing these platforms to establish trusted relationships with upstream information sources without having to revalidate it.”
It may be too soon to be optimistic, but with its decentralized, distributed peer-to-peer and autonomous decision-making constructs, blockchain may be not only the much-needed solution to energy trading but also a catalyst that will transform the industry altogether.