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Blockchain and energy cooperatives vs permafrost: How to keep the Russian Far North warm

, Cities
Translator Maxwell Koopsen

Up to 70 percent of Russia’s territory is covered by permafrost. But the permafrost is home to only 30 percent of the country's population. More than 100,000 small communities are scattered throughout Siberia and the Far North, but every year this number is decreasing. Indigenous communities are vanishing, as are their rare languages and cultural codes. Some of the main reasons for this are the extreme climate, transportation, and energy isolation. The irony is that this area is the most concentrated region of oil and gas production in Russia. Artem Stepanov, a member of the New Normal 2016/17 project Phi – an energy network based on blockchain-technology – told Strelka Magazine about the origins of this problem and how it can be solved through enabling residents to create small energy networks and energy cooperatives.


Twenty-five regions of Russia are territories of the Far North, including the Karelia, Komi, Yakutia, Krasnoyarsk, and Murmansk regions, and others. The economies of these remote regions have nothing to counter the extreme climate; the local residents are cut off from the main roadways and rail lines and are not connected to a centralized power grid. In these places, the heating season can last up to eleven months of the year, and the cost of heating is 3 to 10 times higher than in Central Russia. In the absence of a centralized power supply, residents of isolated communities generate their own electricity by using diesel generators to burn fuel.

The situation is paradoxical, because these are the very areas where 76 percent of Russian oil and 93 percent of natural gas are produced.

Even more surprising is the fact that these northern inhabitants’ energy is supplied with the help of generators, while the oil and gas companies use solar panel farms in order to secure their extraction of fossil fuels. 

In Canada, Norway, and Alaska, energy autonomy is provided to residents in remote regions through the installation of renewable energy sources. In Germany, energy cooperatives are now widespread. Residents buy and use solar panels and windmills collectively. The active development of micro-networks (also called microgrids or nanogrids) means that residents can be both energy producers and consumers. Participants in these networks buy and sell electricity from each other. In addition, by decreasing the length of power transmission lines, there is a significant reduction in electricity loss when compared to a bulky, centralized system. Smart microgrids, which use blockchain technology, are gaining momentum in the US. With these, all of the energy consumption and production data is available to the public. This ensures the security of transactions between network members, and also helps optimize energy distribution. Elon Musk is developing personal, autonomous power-supply systems with the ability of selling excess electricity to the centralized network. 

The small size of each individual power-supply system in the Russian North is an obstacle to the development of autonomous energy production, and the problem is not sufficiently obvious to warrant attention at the federal level.

The emergence of microgrids and energy cooperatives is being delayed due to obsolete laws, which prohibit individuals from selling electricity both to other individuals and to the grid.

Residents of Russia’s remote regions depend on autonomous diesel generators, which do not always take into account their real needs. At the same time, residents living in microgrids in Europe and the US can control the levels of energy production and consumption themselves by selling and buying electricity from their neighbors. Because of this, an energy blackmarket has appeared in Russia: monks from Valaam Island, for example, have installed a wind turbine in their monastery and are selling the surplus electricity to a cellular company that has a station nearby. 

While Russia is making its first timid steps to get off its infamous dependence on oil, researchers say that 139 countries will completely switch to renewable energy sources by 2050.

While there are no specific numbers in the official Energy Strategy of Russia, experts say renewable sources will comprise only about 15 percent of Russia’s total energy production by 2050. 

Germany and Denmark have already begun to pay electricity consumers for absorbing surplus production. The government informs residents in advance about possible overproduction of electricity from windmills and solar panels and asks them to turn their home appliances on for a little while. This is simply because batteries large enough to store all the clean energy have not yet been invented. It seems that the world’s energy supply is beginning to shift from a deficit economy to one of abundance.

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