The energy industry is undergoing major infrastructure and market transformations due to the growing demand for clean energy, predominantly fueled by attempts to curb the harmful effects of climate change. Blockchain technology can help support the transition to clean energy, serving as backend infrastructure that enables multiple independent parties to track assets via a shared ledger and enforce agreements using cryptographic truth. Through blockchains, the energy industry can better digitize and assign value to clean energy investments, leading to more democratized access to green investment cash flows, greater transparency into the success of clean energy projects, and stronger accountability around stakeholders meeting their stated commitments.
In order for blockchains to provide this support to the energy industry, infrastructure known as oracles is required. Oracles are middleware that deliver off-chain data (in this case energy data) onto a blockchain, perform deterministic off-chain computation, and facilitate communication between different blockchains. As secure middleware, oracles allow smart contract applications deployed on blockchains to seamlessly and securely interact with the traditional backend systems and real-world datasets that currently power the energy industry.
With support from oracles, a plethora of new blockchain-based use cases in clean energy can be unlocked, such as tokenized cash flows for renewable energy projects, trusted on-chain rating systems for green bonds, carbon credit systems derived from measurable carbon sequestration, automated energy conversion contracts tied to renewable performance outputs, and much more.
The combination of blockchains and oracles ultimately presents a new path forward for the energy industry, enabling it to modernize its infrastructure and meet ambitious sustainability goals that are mission-critical for corporations and industries in the 21st century.