NFTs for renewable energy certification — A solid use case

FlexiDAO
3 min readJan 20, 2022

Have you ever wondered if NFTs will also appear in the energy sector? Well, they are already here. Learn about how we are bringing the world’s first NFTs to the renewable energy sector to accelerate the energy transition.

Despite the criticism of being the post-Bitcoin, unsustainable, digital gold rush, Non-Fungible Tokens (NFTs) represent today a $22bn market in which Hollywood, sports celebrities, and big brands like Coca-Cola, Gucci, Nike, and Adidas are already carving their space.

The icing on the cake, NFTs became Collins Dictionary’s word of the year for 2021. Given all this hype around this topic, at FlexiDAO’s headquarters, we felt the urge to provide you with the clearest answer to the question “Will NFTs also appear in the renewable energy sector?”.

Spoiler alert, they are already out there.

NFTs: a brief introduction

NFT stands for Non-Fungible Token, a term used to define digital assets with unique characteristics. From digital art, fashion items, collectibles in the metaverse, and memorabilia, non-fungible is just the technical term to say “unique” and “irreplaceable” as opposed to fungible assets like dollars or Bitcoins (BTC). The main difference is pretty straightforward: if you exchange a one-dollar bill for another dollar bill with a friend, you will end up with the same exact thing. The same would apply to BTC. On the other hand, trade a real Picasso for a replica, and you will regret it for life.

Thanks to blockchain’s intrinsic ability to transfer ownership of assets without having to rely on traditional systems and/or third parties, NFTs provide a digital standard for ownership of unique physical and digital assets.

NFTs for Renewable Energy Certification

Due to the nature of the electrical grid, it is physically impossible to claim that an electron coming out of a socket is produced by carbon-free sources. To solve this issue, Energy Attribute Certificates (EACs) were introduced around two decades ago to label the physical flow of electricity with unique characteristics (attributes) and enable consumers to choose their preferred energy source.

In short, each EAC is a digital attribute that specifies and certifies for a one-megawatt hour of electricity the production site — which implies location and technology type — and the month when it was produced. EACs are traded on a yearly basis across market participants up to the final consumer that can use them to prove to sustainability standards (e.g. CDP, GRI) its carbon-free energy achievements within 16 months from the creation of the EAC.

During the past year though, more and more players within the energy sector have started to face the harsh truth about renewables: sometimes the wind doesn’t blow and the sun doesn’t shine. Relying on monthly EACs doesn’t do the trick anymore if the goal is running on carbon-free energy every hour of the day, every day of the year. For this reason, regulators are being asked to refine the granularity of EACs (links provided at the end of the article) to make sure that EACs have a one-hour granularity in order to accurately represent the way power is produced and consumed across the electrical grid.

Keep reading the article in FlexiDAO’s blog.

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FlexiDAO

FlexiDAO is a software provider in the energy sector aiming to accelerate the transition toward a decabornised world, leveraging on blockchain applications.