ROHSTOFF INTERNATIONAL

0:28 | 13.08.2018
Blockchain Is Not Invincible

No one has ever said that changing the world is a simple matter, and no
one should ever think this way. If one thinks that changing the world is
so simple, then he does not know the complexity of the problem at all.

Over the past few decades, more than one trillion U.S. dollars has been
spent trying to shift the world’s energy structure towards using more
renewable energy. But when we look at where we are in term of the
adaptation of the renewable energy, we shockingly realize that renewable
energy represents only 1% of the primary energy that we consume today.
Why is there so little renewable energy in our daily lives? Are we short
of renewable energy generators like wind turbines or PV panels? The
answer is a very obvious no. Why can’t we utilize more renewable energy
after spending so much money? What can we change so that we can make
significant progress in making renewables our primary sources of energy?

If we examine the wholesale electricity market in United States, the
wholesale price for each megawatt-hour electricity is roughly $21~$23,
but the production cost of gas peaking power plants that deal with peak
electricity consumption are as high as $165 ~ $212 per megawatt hour.
The peak electricity consumption period is from 4:30 in the afternoon to
8:30 in the evening – an interval of 4 hours. There are altogether six
four-hour intervals, or blocks, in each day. If we spread the cost of
peak hour electricity production cost to all six blocks, the unit price
will have exceeded $27.5 per megawatt hour. Why then the wholesale price
is only $21-23 dollars? The reason is simple: government subsidies, tax
refunds, and carbon taxes all help reduce prices during the non-peak
hour blocks. If these subsidies are eliminated or reduced significantly,
almost all wind farms and solar power plants will lose money. In other
words, without government subsidies, it is unlikely that anyone will
invest in these large-scale renewable energy power plants that lose
money, regardless whether they support renewable energy or not.

So, what is going on in the market for so many energy blockchain
projects? Can BlockChain alone make renewable energy profitable? Would
using BlockChain for financing solve the mismatched supply and demand
issues that prevent renewable energy from becoming our primary source of
energy? Or, are these energy blockchain projects just trying to solve
some minor problems in the energy industry so there is no more
comprehensive consideration of their architecture? Whatever they have in
mind, they should never forget what they set out to achieve, even when
they run into issues they cannot resolve because of the poor
architecture.

At ELONCITY, we firmly believe that most people support renewable
energy. This support is however very much conditional. If cleaner energy
is more affordable than ordinary energy, people will certainly use more
renewable energy and make our sky blue. However, since the financial
crisis has significantly reduced people’s disposable income, expecting
them to spend more money to support the development of renewable energy
is very unrealistic. The Foundation strongly believes that the only way
to get renewable energy massively adopted is to make it affordable, if
not free. We therefore believe that simply using BlockChain to crowdfund
photovoltaic or wind power plants is absolutely wrong. This is not a
decentralization at all, nor does it address the basic contradiction of
renewable energy.

While blockchain technology can effectively change our electricity
infrastructure, especially replacing existing electricity infrastructure
with millions of self-sufficient microgrids, transparent transactions
are however only a portion of the solution. We must carefully consider
how energy flows and where the exchange can take place. We also have to
find ways to encourage residents to actively participate in energy
trade, and how to increase the advantages of decentralized power
infrastructure, whether it is to reduce the cost of locally produced
renewable energy or to modify electricity applications so that they can
work better with locally produced renewable energy. The decentralized
power infrastructure needs the support of the people and communities. It
needs to solve the regulatory barriers (especially the franchise law)
and obtain low-interest loans from the financial industry to accelerate
the return on investment of distributed energy resources. Otherwise, the
locally produced renewable energy cannot be used very effectively.

We believe that if we can narrow the gap among community support,
financial solutions, technology and local government support, we will be
able to change our existing power facilities and make renewable energy
our primary source of energy.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180812005032/en/


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