Using blockchains to facilitate renewable power generation: forecasting, hedging and tokenisation applications

Project Description

This project will examine how blockchain technologies can facilitate the integration of renewable energy sources into Ireland's electricity system. Prediction markets are proposed to give renewable generators and system operators enhanced foresight of future power output levels and other relevant variables. Prediction markets are known to be best information aggregation mechanism for uncertain events in other business contexts, so their deployment to aid renewables integration seems timely. Additionally, nascent blockchain hosted predictions markets are flexible and transparent enough to permit this topic to be researched empirically. Beyond predicting uncertainties, this project will also articulate how blockchains can be used to hedge against volatility. Modern blockchains have introduced flexible functionality, known as smart contracts, which trustlessly and autonomously control cryptographic assets according to rules of arbitrary complexity. For instance, this allows two parties to commit money to an escrow facility embedded in a smart contract, which will only release the funds when some pre-agreed condition is met. There is an untapped potential for new smart contract instruments to allow frictionless and dynamic hedging of electricity price and resource risks for renewable generators. Tokenised, peer-to-peer electricity trading schemes will be explored, to allow renewable generators to meaningfully differentiate their offerings, to foster organic price-responsive load shifting and to tangibly engage citizens in renewable projects. Blockchain technologies are well-suited in this role as they allow the tokenization of specific, metered units of electric energy from identifiable generators, and these tokens can be used by consumers to credit special blockchain meters.