Blockchain in the energy Industry; transforming the globe directly

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  • In Africa, Blockchain has led to an increase in financial inclusion from 40% to 77%  in the last decade.
  • Ethereum yielded an estimated range of 46.31 terra-watt hour to 93.98 TWh per year in their operations.
  • In 2019, EDP Group and El Forte Inglés launched a blockchain energy project to offer real-time validation for the origin of renewable energy.

Blockchain technology is the fundamental component that will one day run the entire Web3 ecosystem. Currently, there are numerous applications of this technology. They range from using technology in hospitals to supply chain management. Although many are concerned as to how this broad use of this concept will affect the general energy industry. Crypto mining, one of its first applications, has proven its disruptive nature to the energy sector. As true as that may be, blockchain in the energy industry has led to a significant turn that has led to numerous blockchain energy projects.

Indeed, as technology advances, blockchain developers and innovators have found a way to incorporate it within the energy sector. This article will highlight the good, bad and ugly of blockchain in the energy industry.

The revolutionary concept of blockchain and the Web3 ecosystem

Blockchain technology is steadily ushering in a new age of technology. It is an essential element in building the Web3 ecosystem and eventually replacing Web2, known as the Internet. The concept dates back to the 1990s. However, it first gained public recognition after one of its applications completely redefined the financial system; Bitcoin.

The concept of cryptocurrency challenged the nature of the traditional financial service; banking. It represented an entirely new form of currency, and many individuals were initially puzzled about its concept. Some even went as far as dubbing it a scam. Fortunately, after mass adoption and consistent improvements, cryptocurrency is one of the most lucrative ventures known in Africa.

Blockchain developers isolated the technology from its initial applications to continue building the Web3 ecosystem. Blockchain technology has three core factors; decentralization, immutability and transparency. These three factors soon led to the re-application of blockchain technology in different industries. Today blockchain technology is used to create decentralized databases for hospitals which can easily be managed and maintained.

Also, Read The contradictory relationship between Blockchain technology and privacy.

Various blockchain applications

In Africa, innovators were able to merge its top economic activity; agriculture with blockchain technology. This led to the creation of a sophisticated system that would alert farmers of the likelihood of a good or bad harvest. Blockchain in education also became a typical application in Africa. However, its most prominent application is within Africa’s fintech industry. The concept of a decentralized and immutable system that would automatically govern transactions was revolutionary in Africa.

Aside from crypto mining blockchain has numerous applications in other industries.[Photo/Medium]
It led to an increase in financial inclusion from 40% to 77% in the last decade. Today Africa’s fintech Industry is by far the most lucrative franchise known on the continent.

All these applications and more are each tailor-made to eventually aid in building the Web3 ecosystem. Unfortunately, many individuals were concerned about the energy consumption blockchain technology brought with it. Unfortunately, its initial debut brought in the concept of crypto mining. This new activity resulted in profit and chaos for the global energy industry.


The rocky start for Blockchain in the energy industry

When cryptocurrency first debuted, the option o crypto trading was virtually unheard of. The first crypto enthusiasts had to earn crypto coins through a process called crypto mining. Crypto mining is the process of generating, verifying and validating crypto transactions by using one’s resources.

The crypto miner receives compensation in crypto coins with every verification and validation. During its debut, it was a very efficient method of building the Web3 ecosystem. Crypto miners did not have to pay any amount. They only used their resources within the blockchain network to manage and technically expand the network.

However, soon it became clear that crypto mining had an unforeseen major flaw; its energy consumption. Due to the complex process involved within the mining processes, most devices expended plenty of processing power. As the web3 community grew, so did crypto mining. The increasing number increased the complex computations for each block which meant more processing power.

Also, Read How Blockchain Technology Could Help Energy Transitions in Africa.

Creation of ASICs

To keep up with the complexity of the processes, miners had to revert to more powerful, sophisticated and dedicated systems; mining hardware. Thus the rise of ASICs became, leading to continuous energy consumption. These energy-intensive crypto-asset technologies brought harsh backlash from environmentalists and Eco-friendly organizations. Soon many began to see how blockchain in the energy industry could potentially lead to the pollution of the environment.

Ethereum yielded an estimated range of 46.31 terra-watt hour to 93.98 TWh per year. This amount of power could essentially run a small country alone. This reflected the fears of most environmentalists. These figures meant that crypto mining could potentially cause local noise and other impacts, electronic waste, air and other forms of pollution.

This constant fear led to the creation of the proof-of-stake algorithm that could potentially address the misuse of blockchain in the energy industry. Fortunately, when Ethereum launched its PoS version, it attracted various new crypto enthusiasts. However, this marked the potential end of crypto mining. Thus blockchain developers had an opportunity to think of new blockchain energy projects that would cover up the mistakes of crypto mining.

The potential of Blockchain in the energy industry

The distributed ledger technology has proven its worth by steadily building the Web3 ecosystem in different sectors. Fortunately, developers soon discovered that blockchain energy projects offered peculiar solutions. Legacy energy solutions have powered the world for some time now. Their straightforward processes made it simple to extract and use. When renewable energy solutions such as sunlight and wind were, the world shifted once more.

Today more organizations have opted to turn to renewable energy solutions due to their efficiency and vast availability. Soon after, complex systems with multiple actors took advantage of the steady developments of the energy sector. As a result, people discovered new ways to use energy, and this advancement created the perfect environment for blockchain energy projects.

Below are the various examples and use cases of blockchain in the energy industry that have the potential to redefine its use.

P2P Energy trading

Trading will forever be a consistent economic activity in the world. The exchange of goods and supplies has governed the world since time immemorial. Today there are various commodities traded. They include; currency, services and even energy. Several economies conduct P2P energy trading allowing consumers to buy and sell excess energy produced within their country. Blockchain in energy provides greater efficiency and control over any system and product. This fact also significantly contributes to its vast adoption within supply chain management.

P2P energy trading is among the few tactics that will lead to the establishment of a Web3 ecosystem.[Photo/Nature]
Today companies invest millions in building proprietary trading systems tailor-made for the unique specifications of energy trading. Remember that this trading involves huge energy levels distributed between two or more entities. Thus having a massive ledger that has s secure, automatic and immutable enables proper management.

Blockchain in the energy industry allows instantaneous records and transfers with little to no need for reconciliation. This is because all platforms will reside in the blockchain network. Furthermore, the use of smart contracts brings in the aspect of automation. This renders third parties obsolete, significantly saving the amount invested in facilitating energy distribution.

In 2021, Mitsubishi Electric Corporation and the Tokyo Institute of Technology announced a collaboration to develop a blockchain energy project optimizing P2P energy trading. This program facilitated more effective use of surplus electricity and thus created flexible and efficient trading environments. Other blockchain projects include Power Ledger, Greeneum and Rowan Energy. Each of which found a way to utilize blockchain in the energy industry.

Regulation and Certificate management

There is an increased need for regulatory bodies within the energy industry. Moreso, it is steadily expanding due to the emergence of renewable energy solutions. It involves the analysis of vast amounts of data to detect any compliance and other regulatory issues. With the current technology and methods, data analysis is plausible but not efficient. Various factors hinder the progress of regulatory bodies such as the significant amount of data. In addition, security is also an issue. Despite the several achievements of Web2, alteration of data is still very possible.

Also, Read about The environmental impact of cryptocurrency adoption and usage.

Blockchain in energy mitigates this need by providing immutable and sophisticated analysis tools. As mentioned earlier, to aid in building the Web3 ecosystem, blockchain employs its automation features. These same features can relatively quicken the process of data analysis. In addition, implementing blockchain in P2P transactions applies transparency. Any error or fault can be easily detectable. 

In addition, its immutable nature makes it impossible to alter any datcha. This last feature led to the development of a venerable energy certification system. Through smart contracts, regulatory bodies can automate the handing of certificates. If a renewable energy solution meets the various criteria smart contracts define, it can automate the entire certification process. As the world seeks to provide more renewable energy solutions finding a way to create immutable, traceable and transparent records to prove their authenticity is a must-have factor.

In 2019, EDP Group and El Forte Inglés launched a blockchain energy project to offer real-time validation for the origin of renewable energy.

Creation of sophisticated micro-grids

Microgrids are essentially small-sized energy stations that provide electricity to a specific community. These stations operate independently from the primary grid and are earlier to manage and maintain. This new form of energy inclusion is a new way of distributing energy in various African communities.

Most Microgrids often use renewable energy solutions such as solar and wind combined with other factors such as batteries and small meters. Essentially it is a new form of decarbonizing an economy, and many Green Energy organizations are using it. This is an initiative to increase energy distribution within Africa’s borders.

An illustration of a blockchain energy project that involves the use of technology and renewable energy solutions.[Photo/MDPI]
Blockchain in energy provides the necessary means of handling increasingly complex and decentralized P2P energy transactions between two entities. Its immutable and transparent nature allows different entities to transact. This relative means that residential areas and small-scale businesses can transact directly with microgrids without distributors.

This enables communities to exchange energy in real time without incurring the additional cost of distributors. Their electricity transactions would be legal, transparent and secure. Aside from increasing the implementation of microgrids in different African communities, it can also enable African communities to access renewable energy solutions easily.

Also, Read Addressing humanity through blockchain technology.

Electron, a renewable energy company, has received several blockchain energy projects to connect renewable generators to local energy assets to build real-time distribution. This blockchain application in energy has garnered various crucial players such as Community Energy Scotland, CGI, EDF, Elexon and more.


Blockchain energy projects have gradually grown over the past decade. Its numerous benefits have soon outshined the dark past of crypto mining. Building the Web3 ecosystem will not be a simple task. Although with blockchain in the energy industry, this dream is slightly closer than we all think.



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Ken Mutuku
Ken Mutuku
Your Guide to the Future of Tech, Web3, and Digital Storytelling. With a keen eye for detail and a knack for concise communication, Ken Mutuku is your go-to professional for decoding the next wave of technological evolution. Whether through captivating videos, insightful articles, or engaging presentations, he masterfully crafts messages that deeply resonate with his audience, setting him apart in the digital landscape.