The energy market in the country is currently going through a transition from conventional systems to smart systems. Given the addition of large volumes of renewable energy, grid management has become a bit of a headache. Add to this, the deployment of decentralised energy resources and the emergence of prosumers, and the management of energy systems become bigger. The task of validating and authenticity of these transactions is another colossal task. This is where the application of blockchain, a distributed ledger technology wherein consecutive live transactions are collected together in the form of coded values, can play a huge role.

Blockchain can help in energy management and trading and can also mitigate challenges resulting from the emergence of decentralised generation. This article aims to analyse blockchain technology in the context of the Indian Renewable Energy Sector and look at its possible applications, challenges, and outlook.

What is Blockchain Technology?

A block is a specified number of transactions in highly cryptographic codes. These blocks are then interlocked with each other using hash values to form a chain, thus forming a blockchain. Its interwoven nature makes it unchangeable as tampering with any one code will alter the entire chain from that point onward. Reversing that change will require the help of all stakeholders in the chain. This makes any attacks visible to all users of the blockchain.

Its most popular application was for the digital currency bitcoin network, but the application in the power sector, will be based on the ability of the technology to replace the peer-to-business-to-peer network that is typical of the business model of a utility. Blockchain also can use smart contracts, thereby altering the business processes by introducing contract-based transactions. 

Application in Renewable Energy

Currently, the renewable energy sector is having to deal with the impact of power supply from decentralised assets, prosumers, and microsystems on the existing grid network. 

Consider a solar-based microgrid system, with several consumers carrying out electricity transactions every day through an energy service provider. The main challenges here are to manage and track the transactions to avoid the duplication of contracts, accurate readings, and the billing of energy consumption. Blockchain, coupled with smart metering technology, would be able to facilitate secure transactions and payments among all stakeholders in the microgrid, thereby providing a decentralised marketplace.

Smart contracts can distribute power through the microgrid and smart meters can provide consumption information that is securely verified through the entire blockchain. This will facilitate peer-to-peer energy transactions and can help localise microgrids and off-grid rural areas. Blockchain technology could potentially lead to a change in the current energy market where a large part of power distribution is centralised. By decentralising the market, consumers could look at the localised generation of power.

Further, with better demand-side management, grid reliability and resilience would improve significantly. This will ultimately lead to savings in spending on transmission and distribution infrastructure. Blockchain technology can also enable local generators such as rooftop solar plant owners to sell excess power through peer-to-peer transactions instead of feeding this power back to the grid. This will greatly help decrease DISCOM payment burdens which may lead to better financial performance and increased operational efficiency.


For India’s economy, blockchain can help streamline the market. This, coupled with high-speed communication and smart meters will help the country move towards a digitally-driven future of distributed renewable energy generation. However, the application of blockchain will require significant policy changes that will allow consumers, DISCOMs, and all other stakeholders to adopt it seamlessly. It will also require regulatory intervention for the distribution of power and the operation of financial transactions. 

Provided these regulatory changes are made to support blockchain, it has the potential to disrupt the power and renewable energy market in India. Several examples of the successful application of blockchain can be found across the globe. India should seize this opportunity to move towards more sustainable power production and distribution in rural and off-grid areas with blockchain technology.

Summarized from the article by RenewableWatch.



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