A New Model For Incentivizing Producers of Renewable Energy Via Ethereum’s Blockchain
A group of researchers published a paper to help the US State Public Utilities Commissions (PUC) establish an inexpensive framework that enables them to create a unique system for rewarding producers of renewable energy via “Renewable Energy Credits” REC in the form of a cryptocurrency released on Ethereum’s blockchain. The standards proposed by the researchers reward Renewable Energy Producers QP with REC that is equal to the amount of electrical energy produced from renewable sources including solar, geothermal and wind.
The Renewable Portfolio Standards RPS regulate the system that distributes REC and in many instances, have been described as lacking flexibility, overregulated and imposing inappropriately high transactional fees. The model proposed by the researchers aims at solving these issues via converting REC to a new cryptocurrency that would utilize Ethereum’s blockchain.
The Framework For Issuing Renewable Energy Credits REC as a Cryptocurrency:
The Ethereum platform has an innate object based script known as “Solidity” that can be utilized to issue a new cryptocurrency via a virtual wallet application. It is surprisingly simple to issue a new cryptocurrency via only copying the code from www.ethereum.org/token and then paste it to the wallet. The new identifiers will then automatically point to the address corresponding to the wallet.
Once a smart contract is deployed, a prompt window will calculate the amount of Ether required to deploy this contract according to the size of data it holds and the target speed for execution of the transaction. Once the amount of ether is determined, the smart contract will be sent to miners in order to develop a consensus and the ether reward of the mining process will be delivered to the address of the miner who processed the block containing the transaction. The issued contract will then enable the address that was initially associated with the executing wallet to send its newly issued cryptocurrency to any other address across the ethereum blockchain.
This model can be utilized by the PUC to convert REC to a cryptocurrency (crypto-REC) which could then be sent to the addresses of the renewable energy producer QP who can then transfer it to a cryptocurrency exchange to trade it, hedge it or exchange it to Fiat money. The PUC can buy back the crypto-REC it distributed or it can mint new coins to meet demand.
When the model fully develops, the crypto-REC can be set to be automatically minted and sent to the QP whenever the electrical energy they produce enters the power grid. This will consequently minimize the regulatory burden imposed by the PUC, but the PUC will still possess the ability to freeze accounts of bad actors e.g. those who attempt to execute fraudulent transactions.
Similar Models For Selling Renewable Energy Via Ethereum’s Blockchain:
For the past year or so, two New York residents from Brooklyn, have been already utilizing Ethereum’s blockchain to sale electrical energy they produce from solar energy at the full wholesale premium.
On the other hand, a technology company known as Accenture, is presently working on the development of a similar blockchain based project, known as “Smart plugs”, which can research through the prices of renewable energy from various suppliers and plug to the least expensive ones.
A German power company, named RWE, has partnered with a company to accept Ethereum payments from consumers who charge their electric vehicles.
The researchers see that PUC can follow the model of these companies and utilize ethereum’s blockchain as an inexpensive means for distributing REC to producers of renewable energy. Furthermore, when the model is fully functional, crypto-REC can be minted automatically to reward producers of renewable energy. The crypt-REC will comprise a proof of purchase and will be fully tradable and exchangeable to Fiat money on various cryptocurrency exchanges.
A group of researchers proposed a model to help the US Public Utilities Commission PUC incentivize producers of renewable energy via a releasing a new cryptocurrency on ethereum’s blockchain. The researchers are proposing a model that somehow resembles that of RWE, the German power company. The model is predicted to lessen the control imposed by the PUC on the renewable energy market and to markedly decrease the transactional fees that are in action by the present system.