Adopting Blockchain for Alternative Energy access slides
Adopting Blockchain Technology
Financing Alternative Energy Access
Presented at the:
Nigeria Alternative Energy Expo (NAEE2018)
Author: Victor Alagbe
VP Operations & Blockchain Technology, OneWattSolar
The International Energy Agency (IEA) submits that about 1.2
billion people lack electricity globally – 95% of these people
are in sub-Saharan Africa and developing Asia. Large
swatches of the population are entirely off-grid or
underserved by unreliable electricity.
Renewable energy is a viable solution, but the systemic
bottlenecks in the centralization of government agencies,
NGOs, and financial institutions are making it hard for the
alternative energy industry to actualize its potential in
providing energy to unserved and underserved
About half the global population growth is being recorded in the emerging
markets of Asia and Africa and it is becoming more necessary than ever before
to create sustainable pathways to develop the energy sector.
In Nigeria, there’s an annual energy demand of about 98,000 MW but the
traditional grid only has an installed capacity of 12,000MW. Much of the
energy deficit is being supplied by generators running on fossil fuel and a
smattering of renewable energy projects.
This paper provides insights into how Blockchain technology could unleash an
era of decentralization to unlock the rapid growth of renewable energy projects
across key verticals.
What is Blockchain Technology
Blockchain technology in practical terms is a decentralized
network on which users can transfer unique pieces of digital
property to other users with the guarantee that the transfer
is secure, visible to everybody on the network, and such
that the legitimacy of the transfer cannot be challenged.
Functionally, a Blockchain is a record of digital transactions
that that is immune from alteration, third-party
interference, and data breaches.
A Blockchain provides a fool-proof measure of digital
interactions without a centralized control/server/database
that could be targeted as a point of failure.
How does a Blockchain work?
1. Someone requests a transaction/data stream/file
2. The request is broadcasted to a P2P network of computers called nodes
3. The network verifies the authenticity of the transaction required using cryptography
4. If the transaction is successfully verified, it is added to other transactions to create a
block of data in the ledger
5. The block of data is now added to an existing chain of blocks to be a permanent and
unalterable record of data
For context, you can’t get rid of an information stored on the Internet by destroying the computer in
your home or office; likewise, you can’t alter any record stored on the blockchain by attacking any one
node that has a copy of the ledger.
Blockchain is not Bitcoin
Most people get their first interaction with Blockchain
technology from hearing about Bitcoin or one of the many
other cryptocurrencies in the market.
While Bitcoin is mostly responsible for bringing Blockchain
technology into the limelight, Bitcoin is only of the many
applications of Blockchain.
Bitcoin and cryptocurrency in general, is essentially digital
money based on cryptographically defined trust to enable
counterparties engage in a transaction without a financial
The key elements of cryptocurrency – being peer-to-peer,
transparent, fast, and with low/zero transaction costs would be
valuable in catalysing access to renewable energy financing.
Decentralizing renewable energy projects with Blockchain
Blockchain technology provides a means for the industry to transition from the current
centralized models into a decentralized models. Decentralizing the markets will in turn
optimize energy generation, transmission, storage, consumption, and transparency.
The deployment of decentralized energy systems – (SHS systems in clusters and Minigrids)
– could create the pathway for unlocking sustainable growth. Many emerging market
countries have limited infrastructure and institutional capacity to meet the fast-rising
energy demand that is required to keep their economies afloat.
Decentralized models could enhance the growth of solutions that fix the energy deficit
without incurring huge infrastructure investments that have delayed the development of
the energy industry.
It might be easier to build a microgrid to reach 100 homes and scale the process 10 times
than it is to build a l power plant to reach one thousand households in one fell sweep
Enabling the growth of the prosumer alternative energy economy
Blockchain technology is a transparent and
tamper-proof system of records—it is becoming
increasingly reliable as a transactional platform
for energy prosumers: people who produce, use,
and sell their energy.
Households who generate renewable energy can
easily convert their surplus energy to tokenized
energy credits, the surplus flows into the
transmission system, and other consumers have a
choice in buying their energy on the P2P market
from their neighbour or from corporate utility
The Blockchain provides reliable data about how much energy is produced, how much of
the surplus energy was traded, and how much the prosumer earns in energy credit among
other things. More pointedly, we can leverage Blockchain to manage energy transactions,
billing and settlement.
LO3 Energy is running the Brooklyn Microgrid to reimagine the traditional energy grid
model with the concept of a communal energy network. In the Brooklyn Microgrid, the
utility provider still maintains the electrical grid that delivers power, however, the actual
energy is generated, stored, and traded locally by members of the community, for a more
resilient and sustainable clean energy model.
The TransActive Grid project in New York currently has more than 130 homeowners with or
without solar photovoltaic (PV) systems who are already buying and selling power from
each other on a blockchain.
Increasing investor confidence
Cryptocurrency for instance provides a secure way to track the
disbursements and utilization of funds for accountability on funds
Smart contracts can guide the disbursement of funds against
predefined milestones. Smart contracts can also ensure the
prompt and accurate disbursement of returns/dividends to
investors without much FX volatility and transaction costs.
Supply chain management solutions being built in the blockchain, when
adopted for renewable energy projects, can help investors track the
system components across the value chain to prove that a Minigrid
project approved for Potiskum has not been diverted for installation in
Crowdfunding investments in renewable energy
Tokenization provides an incredibly way to crowdfund
investments in renewable energy projects. If you need $5
million to execute a renewable energy project – you might
find it easier to find 10,000 people to invest $500 each than
it is to convince 5 investors to give you $1 million each.
For one, many people who are interested in clean energy
do not necessarily have the deep pockets necessary to fund
green energy projects.
Blockchain powered crowdfunding could allow them to risk
smaller amounts directly to the project without necessarily
going through intermediaries.
OneWattSolar is leveraging the crowfunding feature of blockchain to provide
an innovative Energy-As-A-Service solution that bypasses the initial
reservations that people have towards paying upfront to install solar home
OneWattSolar pays for, installs, owns and operates the Solar Home Systems
in off-grid and unreliable-grid markets of sub-Saharan Africa through
We are using a blockchain-powered solution to crowdfund (using our OWT
token) the financing of solar home systems – so, our customers don't have to
pay upfront for the SHS systems or commit to unfriendly loan offers.
Our customers only pay a monthly access fee to use the Solar Home Systems
which has the capacity to supply most of their energy demand based on the
energy audit of their property.
Blockchain technology helps us provide transparency in financing,
generation, and consumption along the value chain. Token holders
can see exactly how many systems we have installed because each
SHS has an internet-enabled OneWatt Meter that feeds data back to
The blockchain-powered tokenization of renewable assets also
provides liquidity for investors by allowing fractional
investment/ownership in renewable energy projects to create a
secondary market for the exchange of such investments.
Hence, the partners who buy the OWT token can liquidate their
positions at any time by selling the OWT tokens on an exchange for
other cryptocurrencies or their preferred fiat currency.
Challenges of adopting blockchain for energy financing
• Knowledge gaps
• Lack of skilled blockchain developers with
interest in the energy space
• Unclear regulatory environment
• There are not many proven use cases
Blockchain outside cryptocurrencies
Many people still confuse Blockchain technology with
Bitcoin and cryptocurrencies.
Hence, the first mention of Blockchain technology often
causes many people to put up walls of scepticism because
of the stories they’ve heard about the volatility of Bitcoin
and other cryptocurrencies.
There needs to be an ongoing concerted effort to provide
product education on how Blockchain technology could
solve the transparency bottlenecks hampering the growth
of the renewable energy industry.
Lack of skilled blockchain developers with interest in the
Another challenge hampering the adoption of Blockchain
technology is the fact that the industry is still young and Nigeria
still has a talent gap of skilled blockchain developers who can
create localized applications. For the most part, local blockchain
developers are focused on cryptocurrency applications or working
with foreign teams on applications in other markets.
Renewable energy firms that want to leverage Blockchain will be
ready to put in a lot of hard work in finding local developers that
want to work on their project or be willing to pay top dollar to
outsource to foreign developers
Unclear regulatory environment
Many governments are choosing to err on the side of caution in
relation to cryptocurrencies – and understandably so because
cryptocurrency is digital money operating outside the control of
However, the strong connotations between cryptocurrency and
Blockchain means that the regulations around how Blockchain
could be applied are unclear.
Of course, regulations tend to catch up with innovations, but it will
be reckless to ignore the fact that a ban on cryptocurrencies in any
country will limit the direct applications of Blockchain technology.
Not many proven use cases outside cryptocurrencies
Blockchain is great but it is still hard to point to its
widespread applications beyond cryptocurrencies.
Many of the other applications of Blockchain especially in
the energy space such as OneWatSolar, LO3 Energy,
SunPower are still in pilot phases.
Other companies in the renewable energy space are still
watching out these pilot programs will turn out before
they make a final decision on whether it Blockchain is a
solution worth exploring or not.
The original debut of digital disruption birthed the Internet of
information. We are witnessing a second wave powered
blockchain technology as the Internet of value gains mass-
Renewable energy companies that are proactively exploring how
to leverage blockchain technology to improve their competitive
advantage will most likely be better off than companies that are
ignoring this disruptive force.
Start disrupting today.
VP Operations & Blockchain Strategy, OneWattSolar
Email: email@example.com, firstname.lastname@example.org