The way energy is produced and distributed is changing swiftly as the industry moves away from carbon-based energy production. Technological development in the production of alternative energy has also accelerated the emergence of decentralized systems. These build on large numbers of actors who Creat small quantities of energy.

But for a decentralized system to be sustainable, a flexible grid  is required to shelter variable renewable energy sources. A flexible grid also enables operators of the electricity system to balance demand and supply.

A decentralized energy system also needs an exchange mechanism to link buyers and sellers. In South Africa, the state utility Eskom currently fulfills this role. It effectively acts as a central clearing house. It does this by purchasing electricity from renewable power projects, adding it to its own generated energy and selling it to consumers.

But there are technologies being advanced that could do away with the need for a clearing house like this. One is a distributed ledger technology, of which blockchain is an example. The utilisation of this technology would allow small-scale transactions between buyers and sellers to be captured and recorded. In this way, it could aid the development of small-scale electricity trading markets. Blockchain has been recognized as one of the crutial technologies alongside artificial intelligence, Internet of things and Big Data. Interest in applying the blockchain technology to energy markets is slowly picking up.

In South Africa 15.6% of the households are not connected to an electricity supply. This is unlikely to evolve in the near future with centralized power production because it requires major investments to develop power lines to remote communities. For these communities, having their own decentralized grid solutions has tremendous economic potential.