CEOs around the world are being asked by their shareholders to explain what they’re doing about climate change.
And children are asking their parents the same thing.
The result is a growing number of people looking to switch to clean electricity. But how? For many, installing solar panels isn’t an option.
Now blockchain technology is being deployed to provide new ways to go green. It’s not about cryptocurrency, it’s about trading clean electricity tokens.
Blockchain makes buying small or large quantities of clean electricity as simple as online shopping. And it’s just gone live in Australia.
The problem with electricity
When it comes to energy, most of us would prefer to use electricity from renewable sources rather than fossil fuels.
However, regardless of its source, all of our electricity goes into the same central grid, mixing together the renewable and non-renewable generation.
You can’t separate the renewable electrons from the non-renewable electrons, so it’s not possible to specifically buy renewable energy to be used directly in your home or business. However you can buy the equivalent amount of renewable energy and have it added to the grid on your behalf.
So how do you ensure your electricity usage is being matched with the same amount of new renewable energy generation and added to the grid?
Renewable energy certificates
The government’s first solution was to issue certificates (such as LGCs and STCs) when renewable energy is generated. Representing 1MWh of renewable generation, businesses can buy these certificates in an equivalent amount to their energy usage.
But think of our electricity grid as a big swimming pool. The water in the pool represents the electricity in our grid and buying renewable energy in the form of LGCs is like pouring a jug of water into the pool. It’s completely anonymous and untraceable.
The next generation: blockchain tokens
Using blockchain technology, instead of creating a certificate to trade, we create a blockchain token for every MWh of renewable energy generated. This offers a big advantage over certificates: the renewable energy you buy using blockchain is completely traceable and auditable.
Blockchain is essentially a type of database that stores data in groups, or blocks, that are linked together. As new data is added to the blockchain “database”, it’s added to a new block which is added onto the end of the previous block. This means the data is always chained together in chronological order.
Think of blockchain like a railway. Each block is like a section of train track that is clipped together to make the overall railway - the blockchain.
Tokenization is the process by which a physical or non-physical asset (in this case, energy) is converted into a digital token that can be transferred, stored or recorded on blockchain.
So, in our analogy above, the tokens are like the trains that run on the blockchain railway.
One of the great things about the blockchain format is that it creates a permanent, uneditable timeline of data. When added, each block is given a timestamp and is set in stone. This means, when tokenized, you can easily and transparently trace token ownership.
So by utilising this blockchain technology, a renewable energy token is completely traceable and auditable. It’s like dropping a Lego block into the pool instead.
The benefits of blockchain tokenization to your business
As a business, you have a responsibility to perform your business activities ethically and sustainably. Many businesses have CSR and ESG commitments and using renewable energy is a big part of fulfilling your environmental obligations.
Through our Mojo Marketplace platform, we can link your company’s energy consumption to the renewable generation projects of your choice. The electricity generated by these projects is tokenized so we can prove how much renewable energy each project sends to the grid and match this to your business’ energy usage.
So you get genuine, matched renewable energy from your local generator that is easily traceable and auditable.