Every day, we are observing some improvements in the renewable energy industry, however, there are some of the challenges standing in its way, as per Eloncity project's founder, Andy Li.
Renewable energy sources such as solar and wind power can be utilized in short intervals of the day. Energy is generally difficult to store for long intervals, and renewable energy is expensive as compared to non-renewable energy sources such as coal and oil.
AI Grid Foundation, a Singapore-based nonprofit organization is trying to resolve some of the challenges in order to launch its new Eloncity project. The Eloncity model unites microgrid technologies and blockchain protocols to store, distribute and reduce the cost of renewable energies for communities around the world.
AI Grid Foundation yesterday raised $20 million in funding for the development of this project, from various investors, along with some blockchain capital groups.
With the help of blockchain, Andy Li is trying to bring energy to a large number of users. He said,
“The AI Grid Foundation’s mission [is] to promote the ELONCITY Model and enable universal access to safe, reliable, affordable, sustainable and equitable energy services for all.”
ELONCITY model is developed in a way to replace fossil fuels with renewable energy sources. But, the platform also consists of an element of decentralization, instead of central power plants, individual power generators will be used to make up distributed microgrids.
Energy Tokenization
Customers will be able to produce their own electricity and trade it, identical to how the customers to traditional power companies can sell electricity back to the grid. However, the main difference here is: Eloncity customers can sell electricity to other customers.
As per the release,
“Currently, Andy [Li]’s team is developing a state-of-the-art blockchain smart contract platform to empower the customers to exchange renewable electricity with each other.”
ELONCITY will also consist of its own token protocol, which will be useful in allowing customers to participate in energy exchange.
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A Wider Aspect
This is not the first attempt to distribute and trade energy on the blockchain. Various other projects which work on the same concept include Enosi, Power Ledger, and Ponton Enerchain. They also provide token incentives to energy producers.
Despite of this, several firms argue that blockchain is too inefficient and too expensive to make peer energy trading possible:
“The need to update a transaction on every single blockchain node creates significant inefficiencies…These inefficiencies are exacerbated by the fact that blockchain’s standard security relies on proof-of-work protocols, which require an increasingly challenging amount of effort as the value of a blockchain transaction increases.”
But, the above argument is not valid if any of these services depend on Bitcoin or any other proof-of-work blockchains. ELONCITY and almost all of its competitors are using custom blockchains especially designed for the purposes.
A substitute to Mining
Energy consumption has been a major issue in the crypto community. Mining requires a lot of energy and some studies have revealed that Mining causes harm to the environment along with being expensive.
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In the future, if crypto mining becomes harder to earn profit from, projects like ELONCITY might provide a substitute revenue model by rewarding users who generate energy instead of just consuming it.