Concordium and Energinet: An Electrifying Partnership Powering Green Energy Certification

In the face of the global climate crisis, the demand for green energy has never been higher. However, ensuring the authenticity and transparency of green energy consumption -crucial for consumer trust and regulatory compliance- remains a significant challenge.

Energinet, a Danish transmission system operator (TSO) functioning as an independent enterprise under the Danish Ministry of Climate, Energy, and Utilities, is directly addressing this challenge with its groundbreaking blockchain-based solution for green energy certification.

In collaboration with Concordium, a leading layer-1 blockchain, Energinet is developing Project Origin, a system that promises to revolutionize how green energy is certified and traded.

There is no doubt that this project represents a pioneering shift in how state-owned enterprises approach blockchain technology. Torben Kaaber, Head of Commercial at Concordium, reflects:

"It's kind of groundbreaking that you get a state-owned company using something like a blockchain, right? I mean, usually, they're not so keen on doing that, and they're afraid of having stuff out there."

Project Origin contributes to the larger collaborative effort of Energy Track & Trace. The Energy Track & Trace system brings together consumers, energy producers, suppliers, and TSOs from Germany, Belgium, Estonia, and Denmark in a joint effort to create a digital proof that sustainable energy choices make a difference. This international representation underscores the project's groundbreaking scope and potential impact, positioning Energinet at the forefront of innovative energy solutions across Europe.

The Need for Granular Energy Certification

Existing certification systems, such as Guarantees of Origin (GOs), fall short in accurately tracking green energy consumption, largely relying on annual or quarterly certificates measured in megawatt-hours—scales not reflective of individual or even daily consumption patterns. André Bryde Alnor, a former representative from Energinet, highlights this discrepancy:

"The current solution relies on volume-based yearly certificates at a megawatt-hour level, and you would never consume a megawatt-hour in your home and that is where the problem comes in."

Energinet's innovative solution proposes issuing certificates on an hourly basis or even every 15 minutes, offering an unprecedented level of detail that mirrors the actual energy usage more closely. The achieved level of granularity enables consumers to verify the origins of their energy consumption ex-post but with short delay, empowering them to make more informed decisions and potentially influence energy market dynamics.

Contemplating the revolutionary essence of this approach, another representative from Energinet, stresses that closely aligning green certificates with the grid's physical behaviors not only guarantees regulatory compliance but also promotes the sustainable management of energy.

Enhancements in certificate granularity provide substantial benefits for all stakeholders, elevating the transparency, efficiency, and responsiveness of green energy markets.

Energy Track & Trace

Energy Track & Trace is a collaborative effort focused on creating new standards for Granular Certificates. It aims to establish official, secure, and trustworthy registries as issuing bodies. These registries will coordinate with existing Guarantees of Origin (GO) to prevent double issuance and counting, thus ensuring the integrity of the system. This initiative is part of a broader, transnational effort, which includes Energinet’s Project Origin, to enhance the traceability and certification of renewable energy.

A key feature of Energy Track & Trace is its commitment to providing open APIs for users and service providers, enhanced by Concordium's advanced blockchain technology. This approach enables access to regulated and verified data, aligned with the Guarantees of Origin (GOs), thereby enhancing transparency and interoperability throughout the system

Torben Kaaber, Head of Commercial at Concordium, reflects on the shift towards openness:

"So far, this has been a closed environment for a state-owned enterprise, and now it's suddenly out there in the open. So I actually think this is a whole new world that is opening."

His remark highlights the dramatic shift from closed systems to an open, accessible infrastructure, accentuating Concordium's blockchain as a vital catalyst that not only nurtures a collaborative and transparent ecosystem but also safeguards data privacy.

Building a Strong System for Granular Certificates?

The attributes and design principles of the Granular Certificates system are focused on ex-post issuance with short delay, precise location specificity, and integration with existing Guarantees of Origin (GOs). This design ensures that certificates are issued instantaneously, are tied to specific locations, and maintain compatibility with current systems, thus facilitating a seamless integration process.

The design principles give precedence to the consumption of energy from renewable sources whenever accessible, which is essential for managing energy loads and encouraging sustainable usage patterns. The system's capability to ensure timely delivery and maintain connectivity with existing infrastructure not only makes the Granular Certificates system practical but also pivotal in boosting the adoption of green energy.

Concordium’s blockchain underpins the Granular Certificates system with its advanced identity verification at the protocol level, ensuring that each certificate is linked to a verified entity. This feature balances privacy with accountability and is crucial for maintaining compliance with stringent regulations while upholding high standards of data integrity.

The intrinsically regulation-ready and compliant blockchain design enables smooth integration with existing Guarantees of Origin and amplifies the system's utility across diverse regulatory landscapes, establishing the Granular Certificates system as an indispensable tool in the transition to a more sustainable energy future.

The Blockchain Element: Energinet's Cutting-Edge Solution

At the core of the system are Merkle trees and Concordium's zero-knowledge technology, recognized for its best-in-class capabilities. These technologies underscore the robustness and innovation driving the initiative and firmly position the Energy Track and Trace project as the world's most secure and efficient framework for the certification of green energy.

The solution is designed as a federated network of Granular Certificate (GC) registries across Europe. The system is inherently open-source, making it accessible, transparent, and readily adoptable by stakeholders across Europe.

While the system is designed to be blockchain agnostic, Concordium's unique approach using Merkle trees addresses scalability challenges and reduces costs, making the blockchain the perfect base layer to build upon. Torben Pryds Pedersen, the renowned father of the Pedersen commitment, explains:

"Each registry basically batches the registrations and then only registers a batch at a time. A batch could be of a size like maybe a thousand, maybe a million. It can be scaled. It's part of the solution. You can scale this so that it's clear that the larger the batches are, the longer it will take until a transaction is on the blockchain. So there's a trade-off between the size of the batch and the latency, the time you have to wait until the energy certificate is actually registered on the blockchain."

Torben Pryds Pedersen, along with Daniel Tschudi, has played pivotal roles in developing the underlying blockchain solutions, including the creation of Merkle proofs and the integration of zero-knowledge proofs. Their contributions cement Concordium’s reputation as a blockchain built on rigorous scientific research and superior technology.

Concordium's Role in the Project

Concordium is engineered as a next-generation blockchain boasting high throughput and low latency, guaranteeing that certificates can be issued with short delay and managed in real-time, seamlessly aligning with the system's requirement for instant responsiveness to energy production and consumption dynamics.

The blockchain's built-in identity layer ensures that all participants are verified, while its zero-knowledge technology enables the creation of tamper-proof and privacy-preserving certificates. However, the most important aspect is Concordium's modular and unique Web3 ID architecture, which allows all credential types to be seamlessly integrated.

This level of self-sovereign versatility is unparalleled and caters not only to current needs but is also designed to scale dynamically with increasing complexity as decentralized applications (dApps) continue to evolve and expand within the international Energy Track and Trace framework.

Moreover, Concordium takes pride in its industry-leading, ultra-rapid 2-second deterministic finality, which assures swift and irreversible transaction confirmations. Combined with extremely low transaction fees, fixed at 1/100th of a Euro-cent per standard transaction and pegged to the Euro for stability, it opens the door to layers of applications, also enabling the possibility of monetizing certificates through trading.

Concordium has a keen eye on the future and is steadily working towards realizing the potential for post-issuance trading of green energy certificates. Torben Kaaber, Head of Commercial at Concordium, explains:

"These certificates will actually become tradable afterwards. We're still exploring how this will be implemented, but it promises to enhance the utility of the certificates significantly."

The infrastructure, encompassing Concordex—a pioneering institutional-grade decentralized exchange—strategically positions Concordium to effectively support the future monetization of certificates.

With significant carbon credit activity already underway and increasing interest from various players in the energy industry, Concordium and its partnership with Energinet are poised to transform the energy landscape, setting the stage for a future where the Concordium blockchain acts as the backbone for energy innovations.

Key Capabilities of the GC System

The three main functions of the Granular Certificate(GC) system are:

• Issuance of GCs
• Wallets
• Registry

The issuance function involves onboarding assets and issuing certificates based on the energy produced. The wallet function allows for the management and transfer of certificates between different parties. The registry serves as a single source of truth, maintaining a record of all issued, traded, and cancelled certificates. These key capabilities work together to create a comprehensive and reliable system for tracking and verifying green energy consumption.

Concordium has a strong focus on software developer kits (SDKs) for its broad wallet suite, making it easy to build application-specific customizations to fit specific Energy Track and Trace wallet requirements. This highlights the blockchain's adaptability and technical readiness to meet specific operational needs as the solution and its functionalities expand.

Establishing a Network of GC Exchanges?

The Energy Track & Trace system aims to establish a network of GC exchanges across Europe. Trading of GCs will happen between wallets in different registries, enabling cross-border transactions and promoting the international adoption of green energy.

The establishment of a network of GC exchanges is a crucial step in creating a harmonized and efficient system for green energy certification across Europe.

To supercharge the development of GC exchange applications, Concordium offers a dApp (decentralized application) starter template. It contains an easy-to-use scaffold in the development environment, including a simple smart contract and a client for interaction, showcasing how Concordium has the practical tools readily available for developers to seamlessly contribute to the future GC exchange ecosystem.

Significant Potential

Energinet's green energy certification system is not limited to Denmark; it is part of a larger international effort to promote the adoption of green energy. Through the Energy Track and Trace initiative, Energinet is collaborating with other European TSOs to develop a solution that can work across borders.

André Bryde Alnor, who formerly represented Energinet, has emphasized the importance of this international collaboration, stating:

"Designing a solution that is only national might work temporarily but isn't scalable. Therefore, we must extend this approach across borders, as this is how we generally make energy regulations effective.."

The potential for expansion across Europe is significant, with an estimated 500 million electricity meters that could benefit from this system. By working together, TSOs can create a harmonized and efficient system that promotes the adoption of green energy across the continent.

The system adopts an API-first approach and relies on regulated electricity meter data to ensure accuracy and reliability. Currently, several pilot projects are underway, demonstrating the system's potential and laying the groundwork for wider adoption.

The recent native introduction of the MiCA compliant stablecoin EUROe paves the way for Concordium to also become an end-to-end compliant settlement network for the Energy Track and Trace project in fiat-denominated terms.

The next steps for further development in 2024 are outlined above. A key focus area is the automation of the onboarding process. This will streamline the adoption of the Granular Certificates system and make it easier for producers and consumers to participate.

"The most obvious next step would be to move to other types of energy. Initially we are focusing on electricity, but other types of energy, like gas, of course, would be straightforward." - Torben Pryds, Concordium

Future Impact and Conclusion

Energinet's blockchain-based green energy certification system, developed in collaboration with Concordium, has the potential to revolutionize the way green energy is certified and traded. By providing granular, transparent, and trustworthy certificates, the system empowers consumers to make informed choices about their energy consumption and supports the transition to a greener future.

Concordium's role in this project cannot be overstated. By leveraging its expertise in blockchain technology and collaborating closely with Energinet, Concordium is developing a solution that is secure, scalable, and transparent. This partnership demonstrates Concordium's commitment to science and positions the blockchain as a clear leader in the green energy certification space.

Today, I would say that when this is live, public or companies would be able to use these certificates without being afraid of greenwashing. I mean, how about that? That's big." - Torben Kaaber, Head of Commercial at Concordium

By enabling the accurate tracking and trading of green energy, Energinet and Concordium are paving the way for a future where sustainable energy is the norm, not the exception. As the project progresses and expands internationally, it has the potential to become a key tool in the fight against climate change.

The continued shift towards sustainable energy ensures that projects like this one will play a crucial role in ensuring a greener, more transparent future for all.