This research is answering to the question, if blockchain technology can decrease the payback times of solar energy investments. Theoretical background for the research includes blockchain technology, sharing economy studies, PV systems and p2p energy trading. The results are put into 2x2 matrix created by Roland Berger. This research is merely a one piece of bigger picture; therefore, its results cannot be implemented alone. However, these results can give insight for different stakeholders, because this research have lots of assumptions for different events.
Also, the results found in this research can be implemented to other countries too, if that country’s conditions are similar, or the numbers are changed to cover that country’s numbers.
Theoretical framework for this research is comprehensive, and it is possible to apply in Finnish conditions. It has not been tested in Finland, and there are questions to be answered. Most of the questions are related to legislation and regulation. For this reason, lots of assumptions are done in scenario analysis. If Finland wants to achieve its goals on sustainable development, something must be done. Then, the question is, whether to build centralized or decentralized systems, or combination of these. Lots of power is in the hands of politicians. Markets will most likely evolve and accelerate the adoption of PV systems.
The results have proven the blockchain based p2p trading as sufficient way to create framework for true sharing economy. It is a way to have working markets for energy trading, and it would cut the middleman out, thus leaving approximately 10,30 percent margin for peers. This research suggests, that is it not enough alone to accelerate the adoption of decentralized PV energy systems. However, this true sharing economy model will create new business opportunities, which could have significant impact on the markets. According to existing knowledge collected in this research, blockchain technology is able to produce secure, trustless network for national to global level actions. It is disruptive innovation, and its full potential is not tested yet. From environmental perspective, PoS seems to be the right solution for consensus mechanism, but more research must be done. In conclusion, it seems
that blockchain is key element in creation of true sharing economy, which could disrupt the markets all around the world.
This research suggests that persons who are willing to invest on PV systems, would invest on full potential rather than calculating the optimal solution to meet self-consumption and self-production. This is based on evidence, whereas system size increases, the price of single unit of energy falls drastically. With bigger PV system, prosumer can fulfill him/her energy need with self-consumption during more than one month, which is the model where optimization would lead. In this system, the working p2p markets are crucial, because there will be more surplus energy. If the price for surplus energy remains low, there is no pressure to sell this surplus energy.
In this case, there is no energy consumption optimization, which leads to increase in overall energy consumption. But, if there is attractive price for surplus energy, most households will probably optimize their energy consumption and sell the surplus energy.
If nothing happens in the markets, it is most likely to stay similar to current situation, where is no p2p trading systems, but energy infrastructure is well organized and mostly centralized production. In this case, discussion will remain about implementing net-metering system, or other system, which could be blockchain, to achieve better conditions to invest on PV systems. As mentioned earlier, net-metering systems have advantages and it has proven itself, for example in Denmark in prosumer perspective. However, since it is artificial system to benefit prosumers, there are obvious disadvantages, such as price difference between winter and summer, where prosumer ultimately wins and energy providers loses. It seems that is could work in small scale, but mass adoption will eventually lead to huge governmental costs in taxes and subsidizing traditional energy providers. Therefore, net-metering has unsolved issues too. If net-metering nor blockchain is adopted, then the markets will remain centralized. In this case, there will most likely be huge centralized PV plantations in Finland in future. Automatization and cheap price of land will make PV solar energy one the cheapest energy forms, and definitely cheapest during summer season. Evidence from historical data suggest that Swanson’s law will continue working, since it has almost 50-year track record
already. This would mean, that every tenfold of cumulative installed capacity leads to halving in price of PV solar cells.
If blockchain system is widely adopted, and this does not need any significant requirements from existing infrastructure basically, it will decrease the payback times of solar energy investments, but more importantly, it will create innovative markets to work within. In the beginning of the adoption, the movement is quite slow probably, since there is no proper legislation and regulation yet. This would mean, that blockchain technology would only create true sharing economy on energy markets, but the market evolution is not strong enough to accelerate the development yet. This scenario would lead to approximately 10,30 percent increase in price of surplus energy for prosumers. It is not much, since it affects only for surplus energy, but it is a starting point. This is the main results for the research, since the research question is whether or not the blockchain technology can decrease the payback time of solar energy investments, and how.
There is strong evidence, that global market forces will impact strongly on the development of PV systems, especially decreasing the prices. Also, there are new innovations coming, which is not considered profoundly in this research. Even though the markets will develop, it is in political hands whether it will develop to centralized or decentralized form. There is clear need for new legislation and regulations, or in some cases, deregulation. Single biggest impact could be achieved, if apartment buildings would be deregulated, and transactions within that microgrid would be tax-free and with grid costs that reflect the amount accordingly.
Today, it is not possible to sell solar energy in apartment building’s microgrid money-wisely, even if the energy is produced on top of that building rooftop. That energy can be only used to common space, since otherwise taxation is applied. This deregulation would be significant, and most likely will lead to utilization of every rooftop with proper conditions in Finland. This research suggests that in this kind of use, the PV system would benefit the most, since apartments has the relatively biggest price for consumer energy, and in addition, apartment building is already microgrid connected to each other, therefore it would be proper marketplace. Also, it has been suggested that apartment building could direct energy to every
apartment energy unit for one unit of share method. However, if there is proper p2p markets, there could be much more complicated market systems, such as few internal investors, or even external investors. This would probably lead to maximal utilization of rooftop capacity in Finland, since most likely every apartment owner does not want to invest on solar energy by themselves. This research suggests that PoS mechanism is used, if it can prove itself in near-future. Otherwise, PoW will be sufficient enough, even though it uses enormous amount of energy.
In conclusion, if the political environment is suitable for this type of development, most likely market evolution is strong enough to achieve scenario, which is called green revolution in this research. This would mean strong adoption of decentralized PV solar energy systems. PV systems alone would not be sufficient in true sharing economy, and to be more accurate, in working p2p markets. There would be need for other renewable sources, such as decentralized and/or centralized wind plantations. Also, storage battery system will most likely be crucial, since renewable energy forms tends to be quite volatile in their energy production. In future, the problem is not about estimating the energy production, but how to balance it. Also, energy grid needs to be in balance all the time. For this reason, storage batteries seem to be crucial. This research did not focus on this, but solutions could be electric vehicles, which will most likely displace petrol engines within next decades. For example, if there would be one million electric vehicles, it would most likely be enough to balance energy grid. This would mean, that Finnish energy grid has reached a state called internet of energy. In this system, old traditional business models are questioned. This research suggests that in future, it is probable that consumers will get paid by not using energy during peak consumption. This, and also other new models would be revolutionary in energy markets. For these reasons, research on game theory must be done, to see what happens when different players in field decides different things.
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APPENDICES
Appendix 1. Weekly average spot prices of electricity (10.12.2018). Source:
Nordpool (2018)
Appendix 2. Yearly average spot prices of electricity 2000-2017. Source:
Tilastokeskus (2018)
0 10 20 30 40 50 60 70
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
€/MWh
Week
WEEKLY AVERAGE SPOT PRICES OF ELECTRICITY 2018
0,00 10,00 20,00 30,00 40,00 50,00 60,00
200020012002200320042005200620072008200920102011201220132014201520162017
€/MWh
Year
YEARLY AVERAGE SPOT PRICES OF ELECTRICITY
2000-2017
Appendix 3. Monthly price of electricity for different customers including taxes, grids and electricity, 2017. Source: Tilastokeskus (2018).
0,00
Monthly price of electricity for different customers including taxes, grids and electricity, 2017
K1: Apartment, no electric sauna heater, main fuse 1x25A, electricity usage >2000kWh/year L1: Small house, Roomly heating, main fuse 3x25A, Electricity usage >18000kWh/year
0,00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
snt/kWh
Year
Yearly average of consumer electricity prices including taxes, grids and electricity 2000-2017
K1 L1
Appendix 4. Yearly average of consumer electricity prices including taxes, grids and electricity 2000-2017. Source: Tilastokeskus (2018).
Appendix 5. Monthly energy production of LUT solar panels (208,5 kW) in 2018 (December 2017*) in kWh. Source: (LUT, 2018)
Appendix 6. Monthly energy consumption in Finland in year 2017. Source:
Tilastokeskus (2018)
Mothly energy production of LUT solar panels (208,5kWp) in 2018 (december 2017*) in kWh
Montly energy consumption in Finland in year 2017
Appendix 7. Comparison of three selected Finnish solar panel companies’ offerings.
Source: Vattenfall, 2018; Helen, 2018; Lappeenrannan energia, 2018.
Appendix 8. Total consumption of electricity in Finland 2000-2017 in GWh. (Source:
Tilastokeskus 2018)
72000 74000 76000 78000 80000 82000 84000 86000 88000 90000 92000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GWh
Year
Total consumption of electricity in Finland 2000-2017 in GWh
Appendix 9. Small-size solar energy life cycle calculations.
Appendix 10. Large-size solar energy life cycle calculations.
Appendix 11. XL-Size solar energy life cycle calculations.