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Japan, Blockchain & Solar Energy

Japanese utility has trialled a blockchain platform for residents to sell excess solar power.

The software allows producers of solar energy to track market prices, and sell at their unused power at competitive rates. Others who don’t produce their own renewable energy would be able to buy this at market rates.

The trial was run at a research lab in Osaka, under a partnership between Kansai Electric Power Company (KEPCO), the second largest utility in Japan, and Australian company Power Ledger. The project is among a host of others that are being run in Asia, with households and businesses able to buy and sell renewable energy at more affordable rates on a digital marketplace.

New model of Japan

The project in Japan was run for five months using data from eight participating electricity meters. If this was expanded to a larger scale, it would have led to savings of US$18.5bn this year as a result of lower renewable energy prices, according to Power Ledger.

“Power Ledger’s trial with KEPCO demonstrated how communities can be provided with cheaper energy systems to offset existing energy costs and allow energy-generating customers to monetise their renewable energy investments by selling their excess energy via Power Ledger’s P2P platform,” Power Ledger’s co-founder and chairman Dr Jemma Green said.

The blockchain-based model could serve as an alternative to the current approach used by Japan and others on renewables. At the moment, Japanese utilities must purchase renewables at a fixed price called the “feed-in tariff” and for contract durations set by the government.

Lower solar prices

But these fees have risen over time as demand has increased and as a result, consumers are paying higher prices for renewable energy. In 2019, Japanese utilities are expected to have paid US$33.2bn in renewables fees, the majority of which – about US$22.7bn – is being passed on to household and business consumers, according to the Nikkei Asian Review.

The feed-in tariff was set up in 2012 to encourage long-term investment in renewable energy. But as the market has matured, the government will phase out the fixed price in favour of a competitive bidding system for renewable energy in 2020 in a bid to keep costs down.

Power Ledger’s blockchain platform would “cut out the middleman”, Green says. “Power Ledger will give users access to cheaper energy prices, incentivising more people to install solar panels and other types of renewable energy generators.”

In Japan, “renewable energy is planned to be introduced significantly”, a KEPCO representative said. The country needs to create “stable provisions” to enable this. “Thus, we need to integrate and control decentralised energy resources.”

The future of power?

Japan’s trial is part of a broader trend across Asia, with other utilities testing blockchain-based marketplaces to trade in renewable energy. In South Korea, the government plans to pilot a blockchain project with three major utilities – Korea Electric Power Company, Nambu Electric Power, and Korea Southern Power.

This is after it ran trials in Seoul in 2017, where residents could sell electricity to neighbours in exchange for “energy points” that can be redeemed for cash or used to pay electricity bills or charge electric cars.

In Southeast Asia, Thailand is one of the leaders. It launched a trial last year between a shopping centre, school, apartment, and hospital in a Bangkok precinct. It used Power Ledger’s blockchain platform to allow participants to buy and sell solar energy, and track payments and invoices.

This approach is called peer-to-peer (P2P) energy trading, which Thailand believes could be the future of the industry. A spokesperson for Bangkok’s electricity utility, Metropolitan Electricity Authority, has said that it “forecasts P2P energy trading to become mainstream for power generation in the long run.”

Singapore’s largest utility, SP Group, has launched a blockchain platform to allow companies to offset their use of non-renewable energy with investment in “renewable energy certificates”.

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