Peer-to-Peer Energy Trading

Renewable Energy on the Blockchain

As we grow increasingly conscious of our energy usage and the price of it, the search for new energy solutions has never felt more important. Enter Rowan Energy, a pioneering venture crossing blockchain technology with green energy trading. I came across them while attending the The Second National Energy and Sustainability Conference and Exhibition 2024, organised by the IGPP. I was slightly surprised to be hearing about blockchain at the event but in my opinion this tech isn’t going away, so why not learn about it. The question really is whether this is a good application of it.

CEO, David Duckworth, was talking about the business and his vision. In this piece, I’ll try and capture the headlines without going too deep into the blockchain stuff.

The Vision

Rowan Energy aims to empower households and individuals to become both producers and consumers of renewable energy, creating a community-fed ecosystem that rewards sustainable practices. It’s really an enhanced version of ‘selling back to the grid’.

So the model is designed to disrupt traditional energy trading, bypassing the energy suppliers. Households with rooftop solar panels can trade excess energy directly with their neighbours, avoiding the supplier’s often hefty margins. This peer-to-peer energy trading model aims to increase the profitability of installing renewable energy sources, whilst also making green energy more accessible and affordable for the wider community.

The Basics

Imagine you're a household with rooftop solar panels. Through Rowan Energy's platform, these panels become a mini green energy station. It’s similar to selling back to the grid… but you have more control, transparency and, according to David, should make better returns.

1. The (blockchain) Miner: Alongside your solar panels, a very small, low-powered device called a Rowan Miner is installed. This device connects your solar setup to the Rowan network (no need to understand blockchain). Think of this as your meter and account management all in one.

2. Energy Production and Consumption: As usual, your solar panels generate electricity. You use what you need, and any excess is where the magic happens. Instead of this surplus energy going to waste or selling it back to the grid for minimal returns, Rowan's platform steps in.

3. Energy Tokens: Any excess energy is converted into digital tokens by the Rowan platform. Think of these tokens as virtual credits representing the green energy you produced but haven't used.

4. Trading: These tokens can then be sold to neighbours or anyone on the Rowan network looking to buy ‘green energy’. Transactions are facilitated by the platform, making it as easy as paying a bill online.

Technology and Tokens (“Tokenomics”)

David explained that the Rowan blockchain operates as a Layer 1 chain¹, specifically tailored for the energy sector. It employs a Proof of Authority (PoA) consensus mechanism², meaning transactions are both secure and not energy-hungry, aligning with the company's sustainability ethos. But while this approach enhances scalability and efficiency, it does introduce a level of centralisation - just something to be aware of (there is always a trade off with blockchains).

The financial model revolves around the Rowan Coin (RWN). Just over 20% of the total supply of coins have been allocated for public investment, with the remaining coins earmarked for operational costs, transaction fees, and rewards within the ecosystem.

🚨 Warning - use of tokens to facilitate energy transactions might be innovative and commendable, but investors and participants should seek clarity on the distribution and control of the tokens. As they say in the blockchain space… “Do Your Own Research”.

A Look Ahead

Rowan Energy's ambitious roadmap and the initial traction with a decent user base paint a promising picture. However, as with any new technology, potential limitations and areas for growth exist. The balance between decentralisation and efficiency, the scalability of the PoA blockchain in a rapidly evolving energy market, and the transparency around token distribution and governance are critical factors that will determine Rowan's place in the future of energy trading.

There’s no doubt though, that fusing blockchain with renewable energy trading is an interesting idea - I think it offers a glimpse into the future when many things, often physical, are ‘tokenised’ to better facilitate transactions and trading. Look out for the term “Real World Assets” or RWAs in the future.

What do you think?

1. A Layer 1 blockchain is the base architecture for a decentralised cryptocurrency network. These blockchains handle the processing and security of a cryptocurrency network through a common consensus mechanism, such as proof of work (PoW) or proof of stake (PoS). A Layer 2 blockchain refers to network protocols that are layered on top of a Layer 1 solution. Layer 2 protocols use the Layer 1 blockchain for network and security infrastructure, but are more flexible in their ability to scale transaction processing and overall throughput on the network.

2. What are consensus mechanisms?