How blockchain can handle Austria’s energy crisis

Climate change has become one of the biggest global challenges for humanity. At the same time, dependence on hydrocarbon energy sources such as coal, oil and natural gas is still strong.

Supply lines around these energy sources are further vulnerable to geopolitical tensions. Due to the current sanctions against Russia, experts now expect rising electricity prices and negative effects on the energy market in Europe.

The Austrian government understands the urgent need for the energy transition and has set the ambitious goal of being climate neutral by 2040. Alternative solutions to fossil energy have been slow to emerge and are mostly not yet effective enough on a large scale. But there are promising approaches – especially in the form of decentralized renewable energy or blockchain technology in peer-to-peer (P2P) energy trading.

There are already pilot projects in Austria dealing with P2P trading on the energy market. At the forefront of blockchain scaling are Riddle&Code and Austria’s largest energy supplier Wien Energie, which founded a joint venture in 2020 called Riddle&Code Energy Solutions.

From 1 April this year, Kai Siefert is the new manager of the joint venture company. He was previously an IT strategist at Wien Energie and worked on the energy tokenization platform MyPower in Vienna. Cointelegraph auf Deutsch caught up with Siefert to ask how we can combat the energy crisis using blockchain.

From pilot project to solar tokenization

Wien Energie and Riddle&Code have worked together for a long time. Back in 2017, the companies launched the first project called Peer2Peer in Quartier where they tokenized solar plants so that consumers can participate in energy production.

Later, at the end of 2018, when Siefert was still Wien Energie’s IT strategist, his team developed a blockchain strategy together with Astrid Schober, IT manager of Wien Energie, focusing on the topic of energy tokenization with security tokens and utility tokens.

This resulted in the MyPower platform. First, Wien Energy and Riddle&Code tested the decentralized trading of self-generated solar energy via blockchain in a smart city project with 100 participants. Everything went smoothly, and in 2021 a tokenization platform for solar plants was launched. Riddle&Code tokenized the largest solar plant in Austria and got 1,000 customers who, as part of their advertising campaign, bought energy coupons issued by Wien Energie in the form of tokens, which could be used to pay electricity bills.

Now, MyPower is tokenizing solar plants across Austria, allowing consumers to benefit from partial ownership and invest in renewable energy sources.

The demand for renewable energy is enormous

According to Siefert, the concept of energy sharing is currently in high demand. Due to Russia’s invasion of Ukraine and the coronavirus crisis, electricity prices are skyrocketing. Rising energy prices can be mitigated with cheaper renewable energy, smart information technology and energy sharing.

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With blockchain-based energy sharing, jointly generated electricity is fed into the grid, distributed and sold directly to apartments – all without intermediaries. Kilowatt-hours that are not consumed can also be sold to other energy communities, and thus consumers earn or save money.

Energy sharing can enable direct energy trading between energy consumers (energy producers and final consumers), who can use this approach to take control of their production and demand. People who rent instead of owning their home can actively participate in the energy transition and benefit from the income. This involves consumers more in their own generation and puts local value creation at the centre.

“You don’t need to buy natural gas from Russia or oil from Saudi Arabia to create energy here in Europe,” said Siefert. “The sun comes practically for free and produces electricity reliably. But many people cannot participate because they do not have their own house, but live in a rented apartment or simply do not have the funds to buy a large solar system. However, we can divide these facilities into small digital assets, so that private investors with little capital can also participate.”

Renewable energy “comes into focus”

In Austria, there are already small renewable energy associations such as Erneuerbare-Energie-Gemeinschaften (EEG). Such energy societies (in Austria and according to the Renewable Energy Expansion Act) are non-profit legal entities that intend to decentralize the generation, distribution and consumption of renewable energy mainly for the benefit of the general public. Such EEGs still play a small role in the production, local and regional distribution and consumption of renewable energy and are often unprofitable.

But things are starting to develop. According to Siefert, the demand for EEGs has already increased tremendously due to rising energy prices, and Riddle&Code Energy Solutions offers technical solutions for the setup and onboarding of such EEGs. “We can also connect them to decentralized marketplaces with our system,” Siefert said. This is already possible with the law on the expansion of renewable energy, which has been in force since 2021 and is an EU directive that has been transposed into national legislation.

Siefert noted a “growing interest in interesting renewable energy” – in Austria, Europe and worldwide. Companies working in renewable energy “are now coming into focus” as they benefit from “the large investments favored by climate policies around the world,” Siefert said.

Real-time data signed and encrypted on the blockchain

At the moment, P2P energy trading is not yet allowed in Austria. Everything works based on the current electricity market infrastructure, and billing data is made available by the grids 24 hours after they are measured.

But Riddle&Code Energy Solutions can already capture this data in real time. A dongle that can be connected directly to the smart meter reads data live from the customer interface and sends it via a trusted gateway – signed and fully encrypted on the blockchain. From there, this data can be read out immediately. Every quarter, customers can see how their credit grows in kilowatt-hour tokens.

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This data cannot be used for invoicing yet, but it helps to stimulate the right consumption behaviour. Thanks to such data, the customer can see how much green energy they have online from the joint installation and, for example, use this time to switch on the washing machine or charge an electric car. This in turn has an indirect effect on the bill because customers then pay less if they use more electricity from their own shared forms.

“Our goal is that everyone can participate in energy sharing,” Siefert said. “However, private P2P trading is currently not possible in Austria until legal regulation is established. That is why I would like to see more freedom here from the government and more speed in the development of renewables. Austria can become one of the leading nations in the EU and worldwide the world in terms of P2P energy trading and the development of energy societies.”

This is a short version of the interview with Kai Siefert. You can find the full version here (in German).