In a six-part blog series, InEExS spotlights solutions to help accelerate Europe’s transition to a smart, resilient, competitive and more efficient energy system. Each blog will explore the solutions, technologies and approaches, from energy communities to the role of blockchain in energy management, that can make our homes and buildings smarter and more energy-efficient.
The promise and pitfalls of a hyped technology
In the summer of 2018, during the height of the cryptocurrency boom, blockchain was heralded as a technology that would transform everything from banking to agriculture. The energy sector was no exception: start-ups promised peer-to-peer energy trading on blockchain platforms, and utilities began experimenting with blockchain-based renewable certificates. Several years and numerous pilot projects later, the hype has faded, and work continues to identify meaningful applications of distributed ledger technology (DLT) in energy.
Today, blockchain in energy is progressing beyond speculative applications. Projects like the EU-funded InEExS project (Innovative Energy Efficiency Service Models for Sector Integration via Blockchain) are examining the practical use of blockchain to support energy efficiency and integrated energy services. Rather than mining cryptocurrencies, the focus is on using blockchain’s core attributes—transparency, security, and decentralisation—to facilitate cooperation between diverse energy actors and to tokenise energy savings in new ways.
As the sector matures, it is important to assess the real promise of blockchain in the clean energy transition, as well as the challenges that still need to be addressed.
From Cryptocurrency Hype to Practical Energy Use Cases
Blockchain is essentially a decentralised ledger, allowing multiple parties to maintain a shared, immutable record of transactions or data without central authority. As the energy system becomes more decentralised—with millions of small producers and consumers—blockchain’s features are increasingly relevant.
Initial applications focused on peer-to-peer trading and renewable energy certification. Some pilots, such as the Brooklyn Microgrid in the United States, enabled residents to trade solar power locally using blockchain. In Europe, initiatives like Vattenfall’s Powerpeers and the Enerchain consortium explored wholesale energy trades on blockchain platforms. Meanwhile, energy certificates and Guarantees of Origin were trialled on blockchain to enhance security and trust.
However, early pilots encountered technical and regulatory hurdles. Peer-to-peer energy trading often clashed with market regulations requiring licensed intermediaries. Blockchain’s complexity and transaction overheads could outweigh its benefits in contexts where simple databases sufficed.
As a result, attention has shifted to more concrete applications where trust, automation, and multi-party coordination are critical. Organisations like the Energy Web Foundation (EWF) have developed sector-specific blockchains for decentralised asset identity and data exchange.
The InEExS project, launched in late 2022 with the support of the EU LIFE Clean Energy Transition programme, fits into this more grounded second wave of initiatives. Rather than promoting blockchain itself, InEExS uses blockchain as a reliable digital backbone to enable energy efficiency and integrated service models across Spain, Germany, Greece, Finland and Sweden.
Tokenising Energy Savings
A key innovation of the InEExS project is the tokenisation of energy savings or a change in energy usage behaviour. When an action—such as a smart boiler adjustment in Greece or tenants shifting their electricity usage in Berlin—results in measurable changes, these changes like e.g. energy savings are recorded as tokens on a public blockchain.
Each token carries metadata, for example: amount of energy saved, time, location, CO₂ avoided, and responsible parties. This record is immutable and transparent, enabling stakeholders to verify that an energy saving occurred.
Tokenised savings could be traded or aggregated. For example, under energy savings obligation schemes, utilities must achieve a set amount of energy savings. By tokenising savings, surplus savings achieved in one area could be traded to another party that falls short. InEExS envisions a concept known as the Decentralised Energy Efficiency Power Plant (DEEPP), where aggregated small energy efficiency and flexibility actions are treated as a virtual asset in the energy market.
Blockchain supports transparent measurement, reporting and verification (MRV) processes essential for financing models like Energy Savings Agreements (ESAs), where payments depend on actual performance.
In the Berlin demonstrator, smart meters provide data on solar production and tenants’ consumption. This data is registered on a blockchain platform, ensuring that performance guarantees under Energy Performance Contracts (EPCs) are tracked transparently. The project uses the Energy Web Chain, a blockchain specifically designed for energy applications, which operates on an energy-efficient proof-of-authority model.
In the Spanish pilot in Crevillent, blockchain underpins a token-based rewards system. Cooperative members receive tokens for adjusting energy usage to coincide with solar generation peaks, thereby boosting community self-consumption. The blockchain ensures transparent, tamper-proof tracking of contributions, reinforcing trust among cooperative members.
Trust, Transparency and New Market Models
Blockchain technology in InEExS pilots offers several clear benefits:
First, it enhances trust in performance data. By providing a shared, tamper-proof ledger, blockchain makes it easier for different parties—ESCOs, landlords, tenants, regulators—to agree on energy savings achieved, reducing disputes and transaction costs.
Second, blockchain empowers prosumers and communities. It enables decentralised management of energy systems, allowing cooperative members, for example, to transparently share solar production and track participation without depending on a central authority.
Third, tokenisation of energy savings creates new value streams. If verified savings can be traded, utilities and ESCOs have a financial incentive to deliver and document savings.
Finally, blockchain’s decentralised nature aligns with the decentralisation of the energy system itself. As more energy comes from small-scale, distributed sources, decentralised digital infrastructure becomes increasingly advantageous.
Regulatory, Technical and Operational Pitfalls
Regulatory uncertainty is significant. It is often unclear whether energy savings tokens are classified as financial instruments. Blockchain-based peer-to-peer trading still faces restrictions in many European countries. The InEExS project wisely avoids public cryptocurrencies and ensures compliance by using permissioned, energy-sector-specific blockchain frameworks.
Technical complexity is another hurdle. Blockchain systems add layers of technology compared to conventional databases, and inherently face scalability challenges when handling large volumes of data. To avoid bottlenecks with transaction throughput and processing speed, InEExS employs a hybrid approach: detailed data is often stored off-chain, with only verification hashes recorded on the blockchain to ensure scalability. The verification hashes provide cryptographic proof that off-chain data hasn’t been tampered with, as they make it mathematically impossible to alter data without detection
Interoperability with legacy systems poses additional barriers. Energy companies operate on mature but inflexible IT infrastructure. Integrating blockchain platforms with existing billing, control, and customer management systems requires careful planning and resources. In the U.S., Grid+ used an Ethereum-based platform to enable real-time pricing and automated billing, while in Europe, FlexiDAO and Microsoft implemented blockchain for hourly renewable energy certification, Also, the Chilean National Energy Commission adopted blockchain to enhance the integrity and public trust of national energy data. Meanwhile, platforms like Power Ledger have enabled peer-to-peer energy trading by integrating with smart meters and utility data.
Data privacy must also be safeguarded. Energy usage data can reveal intimate details about consumers’ lives. InEExS applies privacy-preserving techniques such as anonymisation, encryption, and permissioned data access, ensuring GDPR compliance.
The initial hype around blockchain has made some stakeholders sceptical. Demonstrating tangible benefits—such as reduced transaction costs, faster contract settlement, or new revenue streams—will be essential to secure wider adoption beyond pilot projects.
Bridging Energy and Digital Sectors
One of the unique aspects of blockchain projects in energy, including InEExS, is their bridging of traditionally conservative energy companies with innovative digital actors. InEExS brings together energy cooperatives, utilities, technology firms, legal experts, and public agencies in a collaborative framework.
This multi-actor engagement is crucial. Blockchain in energy is not about disruption for disruption’s sake; it is about creating secure, efficient systems that work within the highly regulated energy sector.
The European Union supports this direction. The EU’s Digitalisation of Energy Action Plan and the European Blockchain Services Infrastructure initiative both emphasise the need for interoperable, secure, decentralised energy data systems. The EU’s forthcoming Markets in Crypto-Assets Regulation (MiCA) will provide further legal clarity on tokenised assets.
Importantly, InEExS ensures that blockchain’s energy footprint remains low. The project’s blockchain platform consumes minimal energy, addressing concerns that blockchain applications could undermine climate goals.
Towards Mainstream Adoption
The real test for blockchain in energy efficiency lies beyond pilot projects. For blockchain-enabled solutions to scale, they must demonstrate clear economic advantages. InEExS pilots, by providing transparent MRV and enabling tokenised energy savings, lay the groundwork for new business models such as integrated energy services, pay-for-performance contracts, and decentralised energy communities. Applications such as blockchain-based Guarantees of Origin tracking, cross-border energy savings trading, and automated settlement of demand response events could become common in the coming years.
Nevertheless, scaling will require standardisation efforts to ensure different blockchain platforms and energy systems can interoperate. It will also demand sustained regulatory support and industry collaboration to ensure consumer rights, data privacy, and market integrity are protected.
If successful, blockchain could become a quiet but vital enabler of the clean energy transition: ensuring that the decentralised energy system of the future is not only sustainable and efficient but also transparent, trustworthy and inclusive.
Through the InEExS project, Europe is taking concrete steps to explore this potential, building the foundations for a more integrated and participatory energy landscape.
Read more about the InEExS business cases:
Improved self-consumption of DER in Energy Cooperatives (Crevillent, Spain)
Recommendations for innovative energy contracts with Pay4Performance guarantees (Berlin, Germany)
DEEPP-Decentralized Energy Efficiency Power Plant
