The electric power industry is undergoing rapid change due to increased renewable energy generation and distributed energy resources. In this environment, blockchain technology has become a promising tool to modernize energy markets and grid transactions. A blockchain is essentially a distributed digital ledger that securely records transactions without a central intermediary, enabling direct peer-to-peer exchanges and automated smart contracts. In recent years, many blockchain energy projects and pilot programs have tested applications such as local energy trading, real-time grid management through smart contracts, and tracking renewable energy credits.
————————————————-
No time to read the full article? Listen to Vedeni Energy’s Deep Dive podcast at vedenienergy.podbean.com
————————————————-
These pilot initiatives aim to improve transparency, efficiency, and trust in energy transactions. Advocates also point out that blockchain can cut transaction costs by removing intermediaries, enable detailed peer-to-peer trading within communities, and provide verifiable records that increase confidence among market participants. Utility managers and executives are assessing how these solutions might transform market operations, grid management, and regulatory compliance in the power sector. In fact, a Congressional research report predicted that if peer-to-peer energy trading using blockchain proves practical and cost-effective, it could fundamentally change the relationship between electricity consumers and producers.
Peer-to-Peer Power Trading
One of the earliest uses of blockchain in energy is enabling peer-to-peer (P2P) power trading among consumers. Using blockchain, a homeowner with rooftop solar can sell excess electricity directly to a neighbor, and the transaction is automatically recorded on a shared ledger. This builds a decentralized energy market where participants can buy and sell electricity without needing a traditional utility go-between.
A well-known example is the Brooklyn Microgrid pilot in New York, where residents used a blockchain platform to trade solar energy within their community. Each kilowatt-hour bought or sold was recorded transparently, and payments were processed digitally via the blockchain. Projects like this demonstrate that peer-to-peer power trading is technically feasible and can empower consumers to source local green energy. At the same time, they highlight regulatory challenges – such as the fact that community trading often requires special permission, since retail electricity markets in the United States are heavily regulated. The Brooklyn project underscored that consumers are willing to participate in such local energy markets, and it provided lessons on integrating community trading with the utility grid. Even research organizations like the National Renewable Energy Laboratory (NREL) have run successful trials of P2P energy exchanges on blockchain, proving the concept’s viability. If regulators adapt, blockchain-based P2P trading could give consumers more options and incentivize greater investment in distributed renewable generation.
Smart Contracts and Grid Transactions
Blockchain’s smart contracts can automate complex grid transactions involving many participants or devices. These smart contracts are self-executing code on the blockchain that trigger actions when preset conditions are met. In an energy context, they can streamline everything from demand response programs to ancillary grid services. For example, a utility could deploy a smart contract to automatically pay customers who reduce consumption during peak times, using data from smart meters to verify the reduction. (The California Independent System Operator even tested a blockchain system to log customers’ energy-saving actions during emergency “flex alert” events, creating a verifiable record of who cut usage.)
On a larger scale, blockchain has been used to coordinate distributed energy resources for grid stability. In one pilot, a European grid operator connected hundreds of home battery systems via a blockchain platform to form a virtual power plant. When there was excess solar or wind energy in one area, the blockchain smart contract instructed specific batteries to absorb the surplus; when another area needed power, batteries there discharged to supply it. Every action was recorded on the ledger for all parties to verify later. This demonstrated the potential to enlist many small, independent resources for grid support without a centralized control center. U.S. utilities are exploring similar ideas as they incorporate more rooftop solar, batteries, and electric vehicles. For example, a blockchain platform could record when an EV feeds energy back into the grid during peak times and automatically credit the vehicle owner in accordance with agreed terms. Blockchain-based coordination could help ensure that millions of devices can reliably and securely transact energy or services, with all transactions traceable for settlement and oversight.
Renewable Energy Credits and Blockchain
Blockchain is also being used to enhance the tracking and trading of renewable energy certificates (RECs) and other environmental assets. While RECs verify that one megawatt-hour of electricity originates from a renewable source, traditional tracking methods can be slow and unclear. With blockchain, a REC can be transformed into a unique digital token that is created, bought, sold, and retired on a transparent ledger.
In 2018, PJM Environmental Information Services – a subsidiary of PJM Interconnection (a major regional grid operator) – partnered with the Energy Web Foundation on a pilot to put REC transactions on a blockchain. The goal was to lower administrative costs and increase transparency by automatically issuing and recording certificates for each unit of green energy, enabling peer-to-peer trading of these credits. Similarly, companies are using blockchain to strengthen sustainability efforts. For example, JPMorgan Chase developed a blockchain-based system to verify its renewable electricity use in near real time. Data from the company’s buildings and energy suppliers were logged on a ledger, allowing JPMorgan to match every kilowatt-hour consumed with a kilowatt-hour of renewable generation and to verify that claim in a tamper-proof way.
This ability to verify energy sources in real time is increasingly vital as more organizations commit to 24/7 carbon-free electricity—matching consumption with renewable generation every hour instead of just annually. Similar trials are underway internationally—European utilities have used blockchain to verify renewable power deliveries to corporate customers, and emerging markets are exploring its use for carbon credit trading. These examples demonstrate how blockchain can enhance transparency and trust in clean energy markets. By making it easier to trace the origin and ownership of green energy, blockchain can help organizations meet their renewable targets and simplify compliance reporting.
Industry Adoption and Challenges
The potential of blockchain in energy has sparked a wave of experimentation. In the United States alone, over a hundred pilot projects have been launched by utilities, grid operators, and technology firms. These pilots explore a range of applications – from transactive energy platforms and EV charging payments to supply chain tracking for grid equipment. This high level of interest shows blockchain’s promise, but real-world adoption in daily operations remains limited. Existing energy market systems are strong. The U.S. Department of Energy has also funded dozens of research and development projects in this area, indicating government interest, but utilities remain cautious. Blockchain is even being tested in wholesale electricity markets to reduce trading and settlement times among power producers, although those efforts are still in the early stages. Utilities are understandably cautious about any technology that might impact grid reliability or customer billing.
Several challenges are preventing wider deployment. First, concerns about scalability and speed arise: energy markets and grids operate on rapid timescales with high volumes, so any blockchain solution must process thousands of transactions per second. Early blockchain networks, such as those for cryptocurrencies, were not designed for such throughput, though newer energy-specific designs are improving performance. Second, integrating with existing infrastructure is complex. Utilities have long-established billing, metering, and control systems, and connecting blockchain platforms to these systems often requires significant investment and IT development.
Additionally, the variety of blockchain platforms and the lack of common standards can impede interoperability, though industry alliances are beginning to address this issue. Third, regulatory and market rules need to evolve. Peer-to-peer trading or automated smart-contract payments for energy services frequently fall outside current regulations, which were created for more centralized markets. However, some public utility commissions are exploring “regulatory sandbox” programs to test blockchain-based services under controlled conditions. Cybersecurity is another important factor — while blockchain ledgers are highly secure, the devices and interfaces that connect to them must be well protected against hacking.
Furthermore, utility executives note that data integrity in energy markets is already well managed, so blockchain must offer new capabilities (such as facilitating micro-transactions or cross-company coordination) to justify its costs. Lastly, utilities need a clear business case. Energy blockchain solutions will only gain traction if they can lower costs, enhance reliability, or create new revenue streams compared to traditional methods.
Despite these challenges, the outlook for blockchain in energy remains cautiously optimistic. The technology is evolving quickly, moving toward more efficient consensus mechanisms (avoiding the energy-intensive mining processes of early blockchains) and hybrid models that address speed and cost issues. Industry groups like the Energy Web Foundation are helping set standards and share best practices from pilot projects (the EWF’s affiliate roster includes major utilities like Duke Energy, alongside global energy companies such as oil and gas majors), signaling broad interest. Many experts believe that blockchain will find a strong niche where trust and decentralization offer clear benefits—such as enabling new market models for distributed energy (the core idea of “transactive energy”) or creating verifiable chains of custody for renewable energy and emissions data. Some in the industry say blockchain is still searching for its “killer app” in the power sector. If a widely adopted application develops—like a successful transactive energy marketplace that efficiently balances local supply and demand—we might see blockchain technology become common in grid operations. Meanwhile, utilities and regulators are proceeding cautiously, using sandbox trials and collaborative projects to learn what works best. This step-by-step approach will help ensure that when blockchain solutions do scale up, they meet the strict reliability and safety standards of the electric grid.
Conclusion
Blockchain technology has the potential to become a key part of the electric power sector’s digital transformation. Its main strengths – decentralization, security, and transparency – match the growing needs of a grid that must manage many more distributed assets and data. Looking ahead, as renewable energy sources and smart devices increase, the importance of handling decentralized transactions will only rise. When combined with other digital innovations (such as Internet of Things (IoT) connectivity and artificial intelligence (AI) analytics), blockchain could help utilities run a more automated and resilient grid. By enabling peer-to-peer energy trading, automating grid services with smart contracts, and providing trusted renewable energy tracking, blockchain can help develop more open and efficient energy markets.
Still, realizing this potential requires overcoming technical challenges and updating policies. Early pilot projects show that blockchain isn’t a magic fix, but rather one promising tool among many. Power sector leaders should continue to observe and experiment with blockchain in low-risk environments. If the technology can streamline operations or create new value while maintaining grid reliability, it will likely be adopted gradually. In summary, blockchain could transform energy markets and grid transactions, but its success depends on demonstrating clear benefits and carefully integrating it into the complex power system. Essentially, blockchain offers a new way to conduct energy transactions that aligns with broader trends of decentralization and decarbonization in the power industry.