HOW BLOCKCHAIN CAN BE USED FOR CREATING A MARKET FOR ENERGY SAVINGS CERTIFICATES

Abstract

The goal of this project is to provide recommendations for the design of a blockchain ecosystem that can be used for creating or supporting a market for energy efficiency certificates, a trading commodity for packaging energy savings. There are examples of government-created and administered markets for energy efficiency credits in France, Italy, India, and Connecticut, but trading volume is thin. Four of the main challenges such a market must contend with in design are: (1) the measurement and verification of energy savings poses a large cost, (2) confirming that the energy efficiency project is additional is extremely challenging, (3) setting a target that is aggressive enough to make an impact is a difficult feat, and (4) defining the geographic boundary of the program is important to avoid leakage. The project team investigated blockchain methodologies, such as transactions, tokens, smart contracts, permission levels, and consensus mechanisms, to provide recommendations on integrating the desired functions of a blockchain ecosystem for energy efficiency certificates. The project team also reviewed in-depth research into blockchain technology and drew on applications of blockchain in the broader energy industry and the supply chain industry to inform the recommendations. Using this information, the team proposed a design for a blockchain ecosystem to support an energy efficiency certificate market.