Renewable fuels are expected to be as cheap as fossil fuels by 2020. A 2017 report from the International Renewable Energy Agency (IRENA) says that average onshore wind and solar energy is already at 6 cents and 10 cents per kWh while fossil fuels vary between 5 and 17 cents per kWh [i]. The trend is clear: solar, wind, bioenergy and geothermal are dictating one of the most dramatic shifts in energy generation, pushed by demand from ecologically conscious consumers and emerging regulatory norms.
The good news is that investments made in renewables are already paying off. The New York Times reported that for Christmas in 2017, Germany produced so much renewable power that prices plunged below zero [ii]. However, auditing, tracking, trading and distributing green energy remains an ad-hoc, decentralized and largely manual process worldwide, lending itself to fraud and distrust. “Buyers are never certain if the energy they are buying is in fact green and sellers can never be certain if they are getting the best prices, “says Ravindra Balija, Head of Blockchain for Utilities at Wipro
These are critical challenges around green energy that spell the difference between adoption and rejection. We have addressed these challenges using blockchain. The solution, jointly developed by SAP and Wipro, was unveiled in Lisbon at the International Utilities, Oil & Gas Conference 2018. The co-innovation, says Raik Kulinna, Global Lead for Blockchain for Utilities, Industry Business Unit Utilities, SAP, is cheaper and more robust than existing solutions. Called the Green Energy Tracking and Distribution System (GETDS), the solution leverages SAP Cloud Platform Blockchain and the Leonardo suite of services to ensure utilities can integrate with their backend processes as well as with the processes of the external world.
The solution is already generating interest from producers of renewable energy, utilities, micro-grids, retailers, regulators, and consumers because it has the ability to:
- Onboard market participants such as prosumers along with their green energy generation source, micro-grid providers, energy retailers, consumers and regulators using a self-serve mechanism
- Manage marketplace by providing visibility into the availability of green energy from producers, demand from consumers and regulatory obligations that must be fulfilled – thus simplifying the process of setting up trading agreements, tracking energy source, its location, quantity, tariffs, etc., and making this data available transparently to all market participants.
- Automate tokens/ Renewable Energy Certificate (REC) generation, exchange, tracking and billing using SAP Energy Data Management and Leonardo’s Blockchain services in SAP Cloud Platform Blockchain
- Deliver interactive dashboards tailored for the needs of network participants for on-boarding, status reports, billing and business intelligence using a SAP Fiori-based intuitive user interface
In the existing green energy ecosystem where data availability, transparency and authenticity are major stumbling blocks, the Blockchain-based solution can have a dramatic impact. Blockchain decentralizes data management/ distribution and makes the data immutable, improving trust between stakeholders.
“The solution creates a fully transparent and auditable marketplace which ensures prosumers are assured of appropriate pricing, buyers (such as supermarkets) will have access to multiple channels for procurement to producers/ energy retailers. The solution eliminates the need for third-party manual-verification of green energy source and quantity,” says Sundararaman, Head, SAP Digital Innovation Group at Wipro.
A noteworthy aspect of the solution is the fact that it is automated and data is available readily across the network – thereby ensuring lower costs of managing contracts, transactions, authentication and compliance while maintaining service quality and supply stability. “The overall benefit for utilities is a jump start into blockchain innovations while keeping the integration and implementation cost low,” says Raik Kulinna.
“Among use cases shortlisted for the utilities industry where blockchain could transform the operating model and efficiency, the GETDS use case was selected for realization,” says Benjamin Stöckhert, Business Development Blockchain at SAP, Walldorf, adding “To further shape this implementation SAP and Wipro are currently discussing this scenario with several energy retailers.” As Stöckhert says, the idea is to be able to “support new business models such as local renewable energy tariffs and marketplaces.”