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  • SunContract, A Decentralized Energy Market on the Blockchain

SunContract, A Decentralized Energy Market on the Blockchain

  • by Rok Gornik
  • July 21, 2017
  • 1

A Change for the better

Blockchain technology will probably change a lot of traditional business models. One of those traditional markets is definitely the energy industry. Blockchain technology offers fast transactions between the sender and the receiver without the need for a middleman, this encompasses the true essence of decentralisation. Transactions are irreversible, so once a transaction is conducted it will always stay the same. Blockchain could, therefore, bring transparency and traceability into the energy market sector.

The Vision

The SunContract project that will build a platform for decentralized energy trading wants to diversify and decentralize energy sources and make trading more transparent and simple for everyone.

The Problem

The current energy production model is dependent on fossil fuels and non-renewable energy sources that are very harmful to nature and the ecosystem in general. Electricity is usually produced far away from urban areas or industrial zones, so governments need to build infrastructure such as transformers and power lines to transmit that energy from power plants to consumers.

Building long distance infrastructure is very expensive and time consuming. Long distances create a loss of energy, that´s a major issue. Electricity needs to be transformed to a higher voltage to travel more effectively over longer distances, then once again transformed back to lower voltage for local use. Each of these steps lose energy along the way.

Big power plants that are in the middle of the current centralized system also expose the network to the problem of a “single point of failure”, which describes the possibility of network instability if only a few of the most important power plants go offline. This instability would mean that some households or industrial factories could end up without energy. National grids usually solve that problem by buying more expensive electricity from neighbouring countries. That, of course, results in higher costs of electricity. And there is not much you as a consumer can do about it. Until now!

The Solution

The SunContract vision supports self-sufficient communities based on renewables, and peer-to-peer trading based on blockchain and smart contracts.

By decentralizing energy sources, electricity can be generated in local areas. In these local areas where people live and work, communities try to maintain clean air and protect nature, with SunContract if one would like to produce energy locally, one would need only to use green and eco-friendly technologies like wind, sun, water, bio-mass etc., as the burning of fossil fuels in these areas can damage communities.

SunContract is a decentralized energy market, focused on renewable energy, especially solar, but is not limited to solar alone. Energy from the sun can be generated all around the world. Some parts have more sun hours, some less, but all of us can harvest it. Investment costs into sun power plants have significantly reduced throughout the years and that is why this source of energy is readily becoming more accessible. SunContract wants to make the energy trading platform available for everyone that would be interested in energy production and consumption. On the platform, members will be able to sell and buy electricity directly without the need for a “middleman”.

A simple explanation would be as follows:

Your neighbour will invest into solar panels and produce electricity for himself/herself and will produce some surplus.

Because he/she wants to speak directly to you as a consumer, he/she will join the SunContract pool where you will be able to buy electricity directly from him/her.

A smart contract will take care of merging and trading energy and will publish it on the blockchain. This will make it possible for you to buy electricity from peers in negotiated quantity and price.

When dealing with the supply and demand of electricity, we will use the existing national grid so you and your neighbour need not worry about distribution. Grid operations will still be conducted by the distribution system operator, who normally takes care of electricity distribution and grid maintenance.

By using the SunContract platform it means that there is no longer a need for energy retailers. The result will be lower prices for consumers and higher returns for producers.

This concept will encourage people to invest in small and local power units like solar power plants on the roofs of households, wind turbines, small hydroelectric power plants, CHPs or even biomass power plants. Smaller units will also help to decentralize the system and meet higher standards of electric distribution security. There will be less centralisation, and with that, less chance of a national energy crisis.

Token Generation Event (TGE)

SunContract platform is intended to be built on the Ethereum blockchain that will take care of conducting and writing transactions on a public ledger. The platform will need a dedicated token for its operations that will be created through a Token Generation Event (TGE) and will be called the SNC. The SNC token will be created through the TGE smart contract and will be an ERC20 token. That means that if one participates in the TGE, he will be given a smart contract address where Ether will be sent to. In return, the smart contract will issue newly generated SNC tokens and send them back to the address from where the initial Ether was sent. It is of absolute necessity that contributors send Ether from their private wallet. We advise not to send Ethers from exchanges or other non ERC20 compatible wallets as this may result in a loss of tokens.

SunContract TGE will accept only Ether due to the need for smart contract transparency. The SunContract team will announce all important information and details regarding the TGE very soon. Everyone that would like to contribute in the event has to subscribe on suncontract.org for a newsletter, from where the necessary information will be sent for participation. It is important that you only follow instructions that come from suncontract.org.

SunContract plans to raise approximately 10,000 ETH to build the platform. If the TGE raises more assets, then the SunContract team plans to expand the model through acquisitions, expansions and by increasing market share. You can read more about the SunContract business model on their website or join them via live chat on Slack.

 Photo Credit © Shutterstock

 

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In 2016 Rok received Master Degree from Economical Sciences. He is involved in crypto world since 2015. He is also a freelancer writer for Slovenian version of Cointelegraph.