As we said in the conclusion of the last blog post, over the last year and a half, blockchain has flooded the news trends and R&D departments of every single industry. Let’s just simply take a look to some news headlines.
- “Monaco launches a new Ethereum and Bitcoin Debit Card based on the VISA circuit” [source]
- “From Bitcoin to puke-tracking: Walmart uses blockchain to monitor food” [source]
- “Walt Disney Company Goes Big On Blockchain With Dragonchain” [source]
- “Estonia to protect patient records with Guardtime blockchain technology”[source]
- “Corporate support for the Enterprise Ethereum Alliance (EEA) is growing after 86 firms including Microsoft, Intel, State Street, Toyota, Merck, ING, Broadridge and Rabobank joined the collective” [source]
- “RWE Germany’s Energy Giant Launches 100s of Ethereum Based Electric Cars Charging Stations” [source]
So, blockchain has started to grab large attention in other industries rather than finance at the same time as the power industry is facing a different transition, the Energiewende. In this context, many industry players and some researchers have started exploring whether blockchain may one day replace a portion of utilities’ businesses by replacing intermediaries and offer a reliable, low-cost way for financial or operational transactions.
However, as argued by James Basden and Michael Cottrell ["How Utilities Are Using Blockchain to Modernize the Grid”], this view is too extreme and simplistic. What they state it is more likely to happen is that “blockchain will become part of the answer to updating and improving centralized, legacy systems with a distributed hybrid system made up of a patchwork of both large power plants and microgrids powered by distributed energy resources such as solar power. Such a decentralized energy system would be capable of delivering efficient, reliable, and, in many cases, renewable energy.”
So now we will present some studies that can be found in literature and the most prominent projects in the private sector to better understand the current state of the art of blockchain applications in the energy sector.
Mihaylov et al., 2014 ["NRGcoin: Virtual Currency for Trading of Renewable Energy in Smart Grids"] and Mihaylov et al., 2016 [“Smart Grid Demonstration Platform for Renewable Energy Exchange"] propose the novel concept of NRGCoin, “a mechanism for trading of locally produced renewable energy that does not rely on an energy market or matching of orders ahead of time”. In the proposed model, energy generated by prosumers is continuously fed into the grid and payment (in NRGcoins) is based on actual usage by the other participants of the market as consumption is measured by the DSO and billed in near real-time. This approach aims to incentivize self-consumption and limit grid injection which could stress the distribution grid. The value of 1 NRGcoin is bound to the value of 1 kWh in EUR cents. They can be kept and used later in time to buy equivalent amount of renewable energy or can be traded for fiat currency on a currency exchange market by prosumers/consumers, whichever is more profitable.
Tanaka et al., 2017 [“Blockchain-based electricity t rading with Digitalgrid router”] propose to use Blockchain-based electricity trading system with Digitalgrid router, a back-to-back bi-directional digital inverter with software-based control, as an underlying platform to realize a decentralized power exchange transaction with secured and cost conscious system.
Finally Imbault at al., 2017 [“The green blockchain: Managing decentralized energy production and consumption”] explore the implementation of blockchain technology on an Industrial operating system (Predix) for a use case of green certificates and they demonstrate its application within an eco-district. As the other researchers, Imbault at al., 2017 conclude the following: “Blockchain is a promising technology for a trusted measurement and monitoring of energy related assets, […]. Much research remains to be done both on the theoretical foundations of the blockchain and on the relevant business applications for energy management. More experimental settings are needed to fully envision how the direct use of real-time measurement data from “Internet of Things” sensors or from other embedded instrumentation can be achieved.”
In Germany, the subsidiary company of the utility RWE, Innogy is extremely active in the sector of blockchain and e-mobility. It has deployed 100 Ethereum Based Electric Cars Charging Stations with the aim of creating a fully automated, worldwide authentication, EVs (electric vehicles) charging and billing solution with no middleman . Innogy has also launched the startup Share&Charge, which provides a central registration platform for electric car owners and charging station operators and they are currently running a pilot testing car eWallets to see if blockchain technology can authenticate and manage the billing process for autonomous electric-vehicle charging stations.
TenneT, Sonnen, Vandebron and IBM are developing a blockchain-based solution for managing the electricity grid (video) in the Netherlands and Germany, investigating the use of a permissioned blockchain network that uses Hyperledger Fabric to integrate flexible capacity supplied by electric cars and household batteries into the electrical grid . Similarly, the British company Electron is building a blockchain-based flexibility trading platform.
Also, the Austrian startup Grid Singularity, co-founded by Gavin Wood (Ethereum CTO and co-founder), is using Ethereum to develop a decentralized energy exchange platform that can host applications ranging from validating electricity trades to monitoring grid equipment.
Grid+, a start-up supported by ConsenSys and based on the experience of previous Ethereum-enabled smart grid pilot projects TransactiveGrid and Co-Tricity, has built a platform that uses the Ethereum blockchain to give consumers direct access to wholesale energy markets, responding intelligently to changes in energy prices, in order to decrease consumers’ costs while increasing consumption form renewable energy sources and efficiency.
With the same objective of revolutionizing the retailing sector, the Australian company PowerLedger is creating a peer-to-peer energy trading platform which ,gives retailers the ability to empower consumers (or in an unregulated environment, the consumers themselves) to simply trade electricity with one another and receive payment in real-time from an automated and trust-less reconciliation and settlement system
Finally, the last example we want to give of the traction that blockchain is currently having in the energy sectore, is the Energy Web Foundation, a global no-profit organization involving nearly all the big players of the energy industry (and not only) focused on accelerating blockchain technology across the energy sector.
In conclusion, despite the traction and the large attention dedicated to it by large companies, as also argued by James Basden and Michael Cottrell ["How Utilities Are Using Blockchain to Modernize the Grid”] and by Imbault at al., 2017, blockchain remains a largely unproven technology, and significant barriers remain. Governments and regulators will need more highly developed use cases in order to be convinced to back and adopt this new technology and common industry standards will also need to be established.