Blockchain is decrypting Africa’s future in renewables

Just a few years ago, the notion of a consumer-driven energy sector was unheard of, much less within the African context. Fast-forward to 2019, and blockchain is opening a new energy chapter, driven by smart technologies. Africa is a bustling hive of activity. From the vibrant creative cosmopolitan hub of Cape Town to the cultural and industrialised centre of Cairo, the continent is alive with infinite possibilities. Yet to a large extent the continent remains without sufficient access to electricity. The figures for Africa’s energy insecure vary depending on whose data you are looking at. Some sources put the number at approximately 42% of the entire African population.

Africa’s energy security goes far beyond just access to electricity. It also touches on socio-economic complexities, such as the right to choose cleaner energy alternatives; the right to a safe hygienic environment for those who live near power plants and also access to economic activity within the energy sector, to name just a few. Such ideas challenge neoliberal capital systems that have dominated energy and shaped our social systems. A new renewable energy regime gives us the opportunity to reconfigure society in ways that are more just and blockchain may offer some viable solutions. Start-ups such as the energy marketplace Sun Exchange are integrating cryptocurrencies and blockchain technologies to harness the bountiful African sun.

At first glance, Africa appears to be ill-disposed to technological change, especially when considered against its substantially “backward” agrestic settings and the complex social challenges that characterise the continent. Granted, Africa is replete with archipelagos of development, however, technological shifts in Africa, are often slow. The underlying challenges vary from political instability, corruption, an unpredictable environment for investment, weak policies and the lack of political will. This is without taking into account the unscrupulous extraction of resources backed by foreign interests.

The African predicament is intensified by traditional notions of energy and the predominant models of utility-based fossil generation, which are centralised and require very deep pockets. It, therefore, comes as an eye-opening bombshell, when seemingly change-averse socio-metabolic norms are disrupted. Investors from all over the world are being coupled to African communities that are energy insecure, including those that desire alternatives to fossil fuels. Crowdfunded cryptocurrency investments are helping to fund small-scale plants, that are leased out to schools, businesses and other entities, such as the Knysna elephant park in South Africa, which was retrofitted with a 60-kilowatt system. The platform provides an alternative energy source at a cheaper rate, without the prohibitive capital costs. It also provides access to good clean energy, while creating responsible investment opportunities, with returns for up to 20 years.

Blockchain is providing a distributed ledger across multiple networks, recording online transactions for the crowdfunding platform. The ledger promotes transparency through its decentralised data logging process, which safeguards against unauthorised manipulation, making it incorruptible. The use of cryptocurrencies simplifies international monetary transactions and physical administrative work.

Anyone around the world, including Africa, can purchase a solar cell. In the case of the elephant park, 13,248 cells were sold and the project was deployed. The elephant park pays for each kWh consumed. Purchases are processed using cryptocurrencies or regular legal tender, subject to foreign exchange regulations. Investors receive their rental revenue in cash or cryptocurrencies for the duration of the rental period.

The obvious benefits include access to good, cleaner energy that does less harm to the environment. There are also other socio-economic benefits that are being derived from a decentralised funding model for the similarly decentralised energy system. The dismantling of energy strongholds, previously considered the exclusive domain of large capital is making way for peer-to-peer participation. This form of energy democracy is benefiting consumers and funders alike.

The previous energy model excluded ordinary individuals and small businesses from the sector, entrenching capital interests and control. Renewables coupled with blockchain are disrupting this status quo, investors big and small can now determine their own responsible investments. This model provides for equitable wealth distribution from a reconfigured energy regime. Capital interests are curtailed and a different economic model may even emerge on the back of renewables.

With any irruption there are drawbacks. The downside of blockchain, according to a white paper released by the World Economic Forum, is an excessive appetite for energy, an obvious upshot of background “proof of work” computations to add rigour and secure the system. This may be counterproductive and lead to a high carbon footprint, which undermines some of its own goals, as well as efficiency and demand management.

Another challenge affects mostly poorer consumers who remain on the grid. The cost of grid energy is based on the levelised cost of electricity, which factors in the capital costs against the life expectancy of the powerplant. This cost is spread across all active grid consumers, however, when some entities go off-grid, it leaves the remaining clients exposed to the possibility of increasing costs of electricity, as the pool of grid paying clients shrinks. This constitutes elements of an unjust transition. While the described scenario only presents a challenge in those archipelagos that are tied to the grid, for the rest of Africa’s energy insecure, it is an unencumbered new lease on life.

A renewable energy revolution coupled with blockchain innovation presents some exciting possibilities for Africa to reconfigure its energy profile. Perhaps less apparent is the idea that the solution cannot just be tech-based. Beyond the powerplant and the marvels of blockchain lie complexities of social injustice which require recourse. If renewables and blockchain fail to deliver a just transition, then the old structures will continue unabated, reinforcing neo-liberal capitalist systems, energy injustice and an undemocratic renewable energy system.

Andy Muranda is captivated by wicked problems, particularly issues around injustice. He is passionate about shared wisdom in matters of sustainability, life and other mysteries. He has worked in the TV media space as an independent content producer since 2002, slowing down along the way to start and manage a collection centre for recyclable waste. Andy is currently completing his masters in sustainable development at the CST. When he is not zooming in on the complexities of the world, Andy delights in life, family, people, culture, and the outdoors, in all their enchantment.