According to Gartner, “Digitalisation is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business” [14]. Digitalisation should not be confused with mere digitisation. This is because digitisation involves the replacement of a physical thing with a digital version, while digitalisation represents a much more fundamental, and pervasive, transformation, one that seeks to create new sources of value by placing digital information at the core of the business; digitalisation moves beyond simply recording data or using digital tools to support existing business; it requires reshaping the business to harvest value from digital technology use [51]. Digital technologies mediation of sustainable energy transitions involves the adoption and implementation of these class of technologies in ways that leverage their unique characteristics to offer new models of production, distribution and consumption of energy. Particularly, digital technologies such as blockchain, smart grids and digital platforms (platformisation) have demonstrated practical capacity for deployment within the energy sector.
5.1 Smart Grid Solutions
The Smart Grid is a concept that has been around for many years. Over time, it has evolved significantly to cover a wide range of technological solution with a broad set of functionalities. As a result of the challenges of electricity grids experienced in countries such as the USA, UK, and across Europe over the last decade, there has been an acceleration of deployment of Smart Grid solutions, which has resulted in increasingly decentralised electricity production systems based on renewable energy sources, more energy-efficient behaviour by consumers, and the recent trend of connecting electric vehicles to the energy grid thereby resulting in significant impact on the energy industry in the coming decades [52–55].
Smart Grids are a direct outcome of the digitalisation of energy systems through the adoption and implementation of digital and other advanced technologies for the monitoring and management of electricity transmission from all generation sources, to meet the varying electricity demands of end users [IEA 2001 as cited in 56]. The Department of Energy and the South African National Energy Development Institute (SANEDI), view a Smart Grid as “an electricity network that can intelligently integrate the actions of all users connected to it – generators, consumers and those that do both – in order to efficiently deliver sustainable, economic and secure electricity supplies”. While Sustainable Energy Africa [57] defines it as "an electricity network that uses digital and other advanced technologies to monitor and manage the transport of electricity from all generation sources to meet the varying electricity demands of end-users." Also, Niesten and Alkemade [52] view a Smart Grid as an electricity grid that integrates information and communication technologies into the existing electricity network to allow for a two-way flow of information and electricity between generators and consumers. In all of the definitions stated, a common feature of Smart Grids shared by all the definitions is the centrality of digital/ICTs in distinguishing the Smart Grids from the conventional grids; hence, the presence of these advanced technologies in the grid is what makes it ‘smart’.
How does a Smart Grid work? It employs innovative products and services that are combined with intelligent monitoring, control, communication, and self-healing technologies to: achieve better facilitation and management of the connections and operations of all sources of energy; provide consumers with more choices that enable them optimise their energy usage and consumption; enable consumers to have access to more information and choice of supply; significantly reduce or eliminate the negative environmental impact of the whole electricity supply system; and deliver improved levels of reliability and security of supply [52, 58–60]. Sebitosi and Okou [60] lists some of the benefits of smart grids to include the exploitation of dispersed resources (human and natural) through local exchange and storage of surplus electric energy, thereby leading to minimised transmission and distribution costs and losses as well as improved resilience to disruptions through self-sufficiency; they argue that there would also be greater end user engagement in energy investment and management as well as increased potential for more energy efficient social practices. There are several initiatives across Africa that aims to leverage the benefits and advantages of Smart Grids in improving access to electricity and overall efficiency of the supply system, prominent examples exist in South Africa spearheaded by agencies such as the Department of Energy and SANEDI.
Smart grids are widely recognised as an enabling technological component required for achieving sustainable energy transitions. However, such transitions have given rise to more complex government-utility-consumer relationships as evidence from field deployments in various jurisdictions have shown [53–55]. Milchram et al. [53] found that investigated the proposition for smart grid systems in the United Kingdom and the Netherlands in relations to concerns that affect social and moral values such as privacy and justice, they found that smart grids have the potential to effectively address justice issues, for example through the facilitation of small-scale electricity generation and transparent and reliable billing. However, they also found that while the current smart grid designs contribute to cost and energy savings, advance a more equitable and democratic energy system, they may also reinforce distributive and procedural injustices. While investigating stakeholder relationships by examining the role of incumbent utilities for sustainable energy transitions through the use of smart grid in China, Ngar-yin Mah et al. [54] found that China has developed an incumbent-led model for deploying smart grids; also, the major-state-owned grid companies, act as enablers of smart grid deployments; and finally, the two main grid companies also act as a fundamental block to structural changes in socio-technical regimes. Hence, issues identified from previous research efforts into the deployment of smart grids, it is imperative that conscious efforts be made by relevant stakeholders in ensuring that deployment pitfalls are avoided if the full benefits of smart grids would be harnessed for successful sustainable energy transitions particularly across sub-Saharan Africa.
5.2 Blockchain Technology in the Energy Sector
Blockchain technology occupies a prime position among digital technologies, it is used to power decentralised storage and sharing of transactional data across a large peer to peer network, where non-trusting members are able to interact with each other without an intermediary, in a verifiable manner [61]. Blockchain technology is presently broadening borders and expectations due to its characteristics of immutability, decentralization, and time-stamped record keeping. Blockchain also has potential for adoption within many areas across several industry segments. The technology is a distributed ledger that may be anonymous and permission-less. It is a time-stamped tamper-proof ledger that has the benefit of being able to remove the need for middlemen thereby eliminating friction and trust related issues among parties involved in transactions executed through a Blockchain ledger [62]. Disintermediation associated with Blockchain technology leads to cost reduction associated with certain business processes since they now become automated and independent self-executing processes as encoded in the smart contracts stored in the ledger.
There are basically three types of Blockchains - public, permissioned, and private [63–65]. The blockchain ledger is not stored in a centralised server, but copied and synchronised among parties of the network in a disintermediated fashion which eliminates the need of a middleman, thereby protecting the ledger from being a single point of failure, which deters any illegitimate tampering, the records stored in the blockchain database is protected by cryptography [62, 63, 66]. Blockchain technology is of particular interest because of its unique features some of which includes immutability of data recorded on it, and its ability to remove the need for a middleman from transactions involving two or more parties [64, 65]. There are three types of Blockchains: Public Blockchain, Private Blockchain, and Consortium or Federated Blockchain.
Table 1
Types of Blockchain networks.
Public Blockchain
|
Private Blockchain
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Consortium or Federated Blockchain
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Permission open to anyone to run Bitcoin/Litecoin full node
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Permission not open to anyone to run full node
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Permission only opened to selected members of the consortium to run full node
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Rights to conduct transactions is granted to anyone
|
Rights to conduct transaction is not granted to anyone
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Rights to conducted transactions is only granted to selected members of the consortium
|
Permission to review/audit the blockchain is granted to anyone
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Permission to review/audit the blockchain is not granted to anyone
|
Permission to review/audit the blockchain is granted to only selected members of the consortium
|
Public Blockchain allows everyone to participate with no need for trust relationships among the nodes. Transactions recorded on a public blockchain cannot be altered or cancelled, and the following types of Consensus algorithms are used in the public Blockchain: Proof-of-Work (PoW), Proof-of-Stake (PoS), and Delegated Proof-of-Stake (DPoS). Participation in a public Blockchain is open to anyone without permission. The codes are open to be downloaded by anyone and they can start running a public node on their local device, participate in the consensus process by validating transactions in the network.
Anyone can also read and send transactions on the public Blockchain. Notable examples of public Blockchains include: Bitcoin, Ethereum, Dash, Dodgecoin, and Monero. Public Blockchains have the potential to disrupt current business models through disintermediation, and removal of infrastructure costs which radically reduces the cost of developing and operating decentralised applications (dApps). For Private Blockchain networks, write permissions are centralised to one organisation. Only the owner of the Blockchain reserves the rights and authority to modify the information, with the rest of nodes having only limited access. Practical Byzantine fault tolerance (PBFT) consensus algorithm is used in the Private Blockchain. Examples include database management and auditing applications that are meant for internal use of a single business entity. The Federated Blockchain is set up to be operated under the leadership of a group. Unlike the public Blockchain networks, the process of verifying transactions is not opened to any person with access to the internet. This type of Blockchain network has a higher scalability (faster) and provides more privacy for transactions. Federated Blockchains are mainly used by companies within the financial services industry [61, 66, 67].
In relations to sustainable energy transitions and digitalisation of energy systems, blockchain technology is currently being applied in several business use cases that facilitates exchange of assets, resources and value. The most common use case applications of blockchain technology includes tokenisation of energy; disintermediation through peer to peer (P2P) energy trading; rewarding renewable energy adoption; accelerating adoption of electric cars; and reduction and tracking carbon emission. The table below gives a summary of these use cases and companies trying to solve the corresponding problems.
Conjoule is a platform that offers P2P trading among rooftop photovoltaic cell owners and interested public-sector or corporate buyers; Greeneum is a decentralised and blockchain-based P2P platform for renewable energy, it’s GREEN token is a utility asset that incentivizes users to reduce carbon emissions; Grid + facilitates energy asset tokenization, it is a retail provider (i.e., buys on behalf of its customers at wholesale prices from outside) and also offers a P2P trading platform among its customers; LO3 combines smart meters with blockchain at micro-grid levels that aims to revolutionize how energy can be generated, stored, bought, sold and used, all at the local level; Drift is a start-up working to digitize, decentralize, and decarbonize energy systems; Veridium Labs aims to create a new asset class that tokenizes natural capital, each token represents the removal of 1 ton of greenhouse gases from the atmosphere, or equivalent natural capital preservation activities (e.g., conserve 1 sq. meter of biodiverse tropical forest), tokens will be issues for validated projects to be used by firms to conform with environmental impact mitigation regulations, and more generally embed environmental replacements into the cost of their products; WePower is a platform for P2P trading of renewable energy, as well as fund raising for renewable projects by pre-sale of energy to be generated in the future; SolarCoin Foundation aims to foster solar energy generation installations; it awards crypto-coins (for free, similar to air miles) to registered and verified solar energy producers. Each coin represents 1 MWh of produced solar energy [68]; OneWattSolar pays for, installs, owns and operates solar residential energy unit at zero up-front investment by home owners [69]; and Sun Exchange operates a peer-to-peer solar leasing platform through which anyone, anywhere in the world, can own solar energy-producing cells and earn returns by leasing those cells to power businesses and organisations in emerging markets, with installations and maintenance taken care of by Sun Exchange’s selected installation partners [70, 71].
In bringing Blockchain technology and Smart Grids together, Alessandra et al. [72] proposes an innovative application of the Blockchain technology in operating a Smart Grid. They demonstrate how the Blockchain may play an important role in facilitating communications, transactions and security among the stakeholders involved in a Smart Grid, thereby providing an enhanced system. Their proposed solution permits for the creation of a decentralised energy market that can lead to significant displacement of the balance of expenditure towards energy investments of distributed resources, while creating a potential redistribution of electricity to new energy market stakeholders, differently from the way the electricity is currently distributed and regulated. They cite the example of TransActive Grid, a New York based energy start-up that created and currently operates a similar peer-to-peer energy sales network based on Blockchain technology in which homes with solar panels on their roof are able to sell energy to neighbours on the same road not having their own solar systems. This is a classic example of the social and solidarity economy model powered by Blockchain technology [72].
Wu et al. [73] adopts a different approach in exploring the role of Blockchain technology in operationalising Smart Grids by proposing a method to use Blockchain technology in managing the demand and transaction of electricity supply and consumption within a decentralized power market framework in what they referred to as a "machine-to-machine" power demand response management powered by Blockchain technology. Their proposal explores Blockchain technology in relation to demand side management of a Smart Grid and it presents an example of how blockchain can be used to facilitate machine-to-machine (M2M) interaction by framing an electricity market in the context of demand request. They used Blockchain technology to record data derived from power flow calculation model and electricity price customization and applied smart contract to store transaction data and transfer assets automatically. There is no evidence of a commercially available implementation of their proposed solution which would provide an opportunity for comparison with the approach proposed by Alessandra et al. [72].
In another test implementation of Blockchain Technology on Smart Grids documented by Pop et al. [74], they investigated the feasibility of using decentralised blockchain mechanisms to deliver transparent, secure, reliable, and on-demand energy in producer-consumer setting within a Smart Grids distributed energy network. Their approach employed a blockchain based distributed ledger which stores the energy production-consumption information collected from Internet of Things (IoT) smart metering devices in a tamper proof manner, while the smart contracts defines the expected energy flexibility at the level of each producer or consumer, the corresponding benefits or penalties, and the rules for balancing the energy demand with the energy production at grid level. Their system used consensus-based validation for demand response programs validation and to activate the appropriate financial settlement for the flexibility providers. The prototype was implemented on an Ethereum platform using energy consumption and production traces of several buildings from literature data sets. The prototype results show that a blockchain based distributed demand side management was a feasible option for matching energy demand and production in a Smart Grid.