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Use of Blockchain can Revolutionize Energy Sector in Africa

In the African continent, the demand for electricity is more than the supply. Many countries of the continent are dependent on artificial means of generating electricity, such as power generators which cause alarming damage to the environment.  Take the example of Nigeria where the electricity shortage is up to the tune of 173,000MW as the country’s total energy requirement is about 180,000MW. A similar situation exists in the sub-Saharan African nations where people are experiencing a severe shortage of electricity. In the rural areas of Rwanda where 80% of the population lives, only 18% have access to electricity. Some households and organizations are not connected to the state power grid, and even those that are connected (urban population and medium enterprises), are not getting electricity regularly. Keeping these issues in mind, the Government of Rwanda has chalked out an ambitious plan of achieving full electrification target by 2024.

Reasons behind Energy Shortage

One of the reasons behind energy shortage is the high cost associated with electricity generation and its distribution. On top of that, the various economic, political, and social reasons make it difficult for communities to get access to electricity. Along with other international agreement, the sustainable development goal No. 7 of the United Nations which is aimed to make the energy accessible universally is putting the focus back on renewable energy. In many African nations, the focus of electrification strategy is on renewable energy. Many international organizations like the World Bank, the African Development Bank, and Overseas Private Investment Corporation are investing in wind energy, and solar energy and their efforts have just started to see the results.

Renewable Sources in Focus

Wind energy and solar photovoltaic (PV) energy are one of the easiest and effective decentralized energy sources to achieve electrification of villages. By connecting the villages and societies which are not attached to the State Power Grid will also ease the burden on the government to invest in large-scale power for meeting the demand for electricity. Many countries like Nigeria, Democratic Republic of Congo, and Togo have laid out a proper policy framework in the power sector for the generation of wind and solar energy.

The African Development Bank is also investing to achieve the aim of generating 160GW electricity from the African continent by 2025. Having said that the experts are of the viewpoint that penetration of renewable energy in Africa is quite low and the success of any electrification program is measured by some connections given and megawatts capacity installed rather than the end users using that power. However, the trend is witnessing a steady shift towards the new ways of measuring the electrification success. In African nations, now the measurement of electrification success depends upon the boost in the productivity owing to electricity access. Even the World Bank is adopting the same measurement criteria with the aim to expand decentralized energy, and thereby improve the lives of the people.

Blockchain Role

The access to decentralized energy is largely dependent on distribution and demand management with data and connectivity playing a major role in accomplishing the task. With the evolution of blockchain technology, it is now possible to construct auditable open access ledger which can help to record the energy consumption, the credit histories, and more importantly, allow for energy trading between the households, enabling them to have more control over the energy demand and consumption. The use of blockchain in the energy sector started in 2017 when a non-profit organization, Energy Web Foundation, developed an open source, scalable blockchain platform which can be used by the other companies to develop and run their own blockchain solutions. The company initially created Marketplace for all the Solar PV players where they can communicate with each other and exchange the data and other relevant facts. The platform also records and communicate provenance of the generated electricity with the detail of the source, location, time, and carbon dioxide emissions. These things also help to track the development in the renewable energy sector universally along with the consumption record.

In a related development, Brooklyn Microgrid recently came up with an app which allows their users to select a preferred energy source locally. The app named, Exergy, is used to connect residents with Solar PV panels having an excess of solar energy with residents without solar panels who are connected to the microgrid. The former can sell the excess of solar energy to the latter with the guarantee of secure trading owned by the blockchain technology.

In order to achieve global electrification with excess to power for all requires a comprehensive partnership and collaboration between all the related stakeholders including the private and public entities. The success of these collaborations will depend on open innovations, innovative solutions, mutually-beneficial relationships, and active participation of the general public. More importantly, to change the energy scenario of Africa, a primary shift in the attitude is required. Besides, technologies like blockchain which provide a shared platform in a transparent and secure manner are equally important for achieving electrification success. Blockchain will help in faster adoption of a decentralized electricity system and help to enhance productivity while suggesting new innovative ways of defining the end-usage.

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