The second-largest power utility in Japan is extending its trial of a blockchain-powered system for transacting renewable energy credits.

According to a press release shared with Cointelegraph on Dec. 9, the Kansai Electric Power Co Inc (KEPCO) is extending its trial of a blockchain-enabled renewable energy trading platform developed by Australian tech firm Power Ledger.

Decentralizing, decarbonizing

In 2018, Japan was the world’s fifth-largest consumer of electricity, yet produced only 17.5% of its energy from renewable sources.

In May of this year, the country’s Ministry of Economy, Trade and Industry decided to continue its sale of non-fossil fuel value certificates (NFVs). These provide energy retailers with proof that the portion of energy under the certificate is generated from renewable energy sources.

They can also be used to assess which power plants are contributing the most environmental value in order to encourage investment in green industries and can be traded, similarly to other forms of renewable energy certificates (RECs).

A local report from EKOenergy in March claimed that existing energy certificates and carbon credit systems in Japan remained “complicated and fragmented at best.”

Under the terms of the new agreement, KEPCO will use Power Ledger to create, track, trade and settle NVAs that are generated by rooftop solar systems.

The system uses blockchain technology’s immutable and decentralized properties to track certificates throughout their lifecycle, thereby reducing the potential for duplicate use. Power Ledger generates REC tokens, which are stored in a centralized KEPCO wallet.

An initial successful trial between KEPCO and power Ledger had reportedly demonstrated that allowing energy producers to trade their surplus energy via the platform was an efficient way for them to monetize their renewable energy investments. This ostensibly helps to provide consumers with lower-cost green energy sources.

The new trial will enable KEPCO clients to use their NFVs against claims by the RE100 — a global initiative led by The Climate Group non-profit organization in cooperation with the global carbon disclosure network CDP. The initiative accepts NFV certificates provided they have tracking information from governments.

The trial is scheduled to commence in December, with results expected in March 2020.

Previous REC blockchain initiatives

In June of this year, South Korea’s largest power provider, Korea Electric Power Corporation, signed a contract with two domestic power suppliers to establish a blockchain-powered system for transacting RECs.

The corporation had also announced in fall 2018 that it would be using blockchain and other innovative energy solutions to develop its next-generation microgrid.