Green certification: the first viable use case for blockchain in the energy sector

FuturENERGY March-April 2020

The increasing pressure of climate change questions the sustainability of current systems. In order to achieve a sustainable balance between production and consumption, a high level of transparency is required, to minimise the asymmetry of information between producers and buyers. Green certification is a useful tool for driving the change towards more sustainable practices. It aims to include sustainability costs in the pricing model, to certify that sustainability standards are met and ultimately, to reduce the asymmetry of information in the market.

The complexity of the energy market, compared to other commodities, also requires a very complex certification system. The problem is that 100% renewable energy production is possible only under specific weather conditions and geographic location, depending on the time of day and on the season. In short, when a unit of electricity is produced by a renewable power plant and introduced to the grid, the producer is awarded with a certificate. This certificate can be sold to the highest bidder, who can then claim the production of a unit of “green” electricity. This means that certificates are a separate commodity that can be traded and sold independently to the energy itself…