Energy certificates and blockchain: tracking where electricity comes from

Why electricity needs certificates

Once electricity enters the grid, there is no way to tell which power station produced a particular unit. If a supplier tells a customer that their electricity is renewable, it needs a separate accounting system to back the claim. That is the role of energy attribute certificates.

In the European Union, the renewable energy directive (Directive (EU) 2018/2001) requires member states to ensure that guarantees of origin are issued on request to producers of renewable energy. A guarantee of origin typically represents one megawatt hour, identifies the source and the plant, and is used to show customers the share of renewable energy in a supplier's mix. Other regions use similar instruments, such as renewable energy certificates in North America.

Double counting and cancellation

A certificate must be used only once. When a supplier or a large consumer claims the renewable attribute, the certificate is cancelled in the registry so that nobody else can claim the same energy. Problems arise when the same generation is counted in two systems, or when a claim is made in one country based on certificates that were not properly cancelled in another. Cross-border transfers in Europe rely on standardised systems operated by issuing bodies and connected through a common hub.

The move towards hourly matching

Most certificate systems match consumption and generation over a year. A company might use fossil electricity at night and obtain enough solar certificates from daytime production to cover its annual total. Industry initiatives and some buyers are now working on granular certificates that match consumption and renewable generation hour by hour, which gives a more accurate picture but multiplies the number of records by thousands.

Where a ledger fits

The certificate lifecycle

A ledger can record each certificate's issue, every transfer between account holders and its final cancellation, all in one sequence that participants can check. In theory this reduces reconciliation between registries and makes double counting easier to detect.

Local energy communities

Another strand of experiments involves neighbours with rooftop solar panels selling surplus electricity to others nearby. A ledger records metered production and consumption and settles the accounts between participants. These pilots raised wider questions about grid charges, consumer protection and the role of the local network operator.

Flexibility and grid data

Some research projects have tested ledgers for recording when batteries, heat pumps or electric vehicles adjust their consumption in response to grid needs, so that different companies can verify the same events.

Limits to keep in mind

Certificates are only as good as the meter readings behind them. A ledger cannot detect a faulty or manipulated meter. Issuing bodies are designated by law, and a certificate recorded on any other system has no official standing. Finally, energy-sector pilots generally use permissioned or low-energy ledgers; the technology choice must not itself undermine the purpose of the system.

Questions to ask about an energy-certificate project

• Is the issuing body involved? Without the officially designated issuer, records on a ledger cannot replace legal certificates.
• Where does the meter data come from? Ask who installs and reads the meters, how often readings are taken, and how errors and estimates are handled.
• How is cancellation enforced across systems? If certificates can move between a ledger and an official registry, there must be a reliable way to stop the same energy being claimed in both.
• Who pays to run the network? The administrative cost per certificate is small in established registries, so a new system has to justify its operating costs.
• What is the ledger's own energy footprint? A system that supports clean-energy claims should be able to show that its own consumption is modest.

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