Cryptocurrency as guarantees of origin: Simulating a green certificate market with the Ethereum Blockchain

Abstract

The diversity of energy prosumer types makes it difficult to create appropriate incentive mechanisms that satisfy both prosumers and energy system operators alike. Meanwhile, European energy suppliers buy Guarantees of Origin (GoO) which allow them to sell green energy at premium prices while in reality delivering grey energy to their customers. Blockchain technology has proven itself to be a robust paying system in which users transact money without the involvement of a third party. Blockchain tokens can be used to represent a unit of energy and, just as GoOs, be submitted to the market. This paper focuses on simulating marketplace using the Ethereum Blockchain and Smart Contracts, where prosumers can sell tokenized GoOs to consumers willing to subsidize renewable energy producers. Such markets bypass energy providers by allowing consumers to obtain tokenized GoOs directly from the producers, which in turn benefit directly from the earnings. Two market strategies where tokens are sold as GoOs have been simulated. In the Fix Price Strategy prosumers sell their tokens to the average GoO price of 2014. The Variable Price Strategy focuses on selling tokens at a price range defined by the difference between grey and green energy. The study finds that the Ethereum Blockchain is robust enough to functions as a platform for tokenized GoO trading. Simulation results have been compared and the results indicate that prosumers earn significantly more money by following the Variable Price Strategy.