A Conversation With EWF About Blockchain's Utility To The Energy Industry
With its distributed ledger and promises of a decentralized ecosystem, blockchain technology is reinventing industries. Several companies and startups are already exploring the technology’s uses within an energy ecosystem. One of the more prominent initiatives is the Energy Web Foundation (EWF). The foundation, which was started by the Rocky Mountain Institute (RMI) and Austria-based Grid Singularity, describes itself as a “global non-profit organization focused on accelerating blockchain technology across the energy sector”.
To that end, it has partnered with stakeholders (also known as affiliates), such as electric utilities and organizations, to develop test use cases around the technology on its open source platform. In Round B of its fundraising efforts, the organization has included energy service companies and investors in the sector.
After considering about 200 applications of the technology to the industry, the EWF team whittled the list down to four application domains. These are utility billing, demand response programs, certificates of origin (and other, similar market mechanisms), and transactive energy systems that enable peer-to-peer energy trading. A technical team within the organization is working with task forces from utilities to develop applications for the platform.
An alpha version of the platform - codenamed Tobalaba - was made available to affiliates earlier this month. Doug Miller, senior associate and team member at the foundation, said a genesis version of the blockchain platform will be made available during the latter half in the first quarter of 2019. The foundation intends to go in for an initial coin offering (ICO), a system of funding ventures by issuing tokens that can be converted into cryptocurrencies, then. When it is released, the EWF blockchain will have a "major impact", according to Miller.
This is because the blockchain being developed by RMI and its partners is different from other, similar initiatives, said Miller. For starters, the non-profit’s blockchain will function as underlying infrastructure for other, energy-related apps on its platform. Miller says their blockchain project is similar to an open source version of the iPhone’s app store.
Much like Apple’s store, the Energy Web Foundation’s platform will be open to third-party developers to make their own apps with specific features and functionality. Unlike the Cupertino company’s closed ecosystem, the EWF platform will be transparent to all stakeholders. “We are building the highway and they (energy startups and app developers) will play on our highway,” he said.
Blockchain is known for its transparency and decentralized network. The EWF version, however, will feature a governance structure that has been agreed upon by utilities and other stakeholders involved in setting it up. All transactions within the platform will be approved by platform’s stakeholders in a rotating fashion. They will be able to do this through a permissioned set of authority nodes known as “proof of authority” statement. A permissioned blockchain requires participants to disclose their identities versus a typically decentralized blockchain systems which use “proof of work” statements to enable trustless consensus. Miller estimates an ultimate count of 50 nodes. "Our system will help ensure the system can handle very high volumes of transactions every few seconds," he said, adding that the platform will still be open-source and public-read to enable anyone to use it and observe its activity.
In a press release earlier this month, the foundation explained the rationale for developing a permissioned blockchain. “It enables whitelisting of smart contracts and identities, facilitating standardization and maintaining security in an otherwise open network,” wrote the authors. It also increases speed of transactions and “creates enterprise-grade deployment tooling and storage features”. Currently, a mix of technology startups and energy companies have been designated as entities with validated nodes within the system.
Miller said the foundation adopted a consortium-based approach because of blockchain’s novelty. “Because this is a new technology, it is really important for us to learn together, evolve together, along with major energy sector players,” he said, referring to the ten utilities which originally signed up for the initiative. The governance structure will also help flag unusual events on the platform that could compromise security. “Part of the reason why we started exploring blockchain was the added benefit of security because everyone can see what’s happening and can see and respond when something goes off track,” said Miller.
According to him, blockchain’s application to the energy industry could lead to more investment in renewable energy and distributed energy resources. This is because it increases trust by enabling multiple DERs to talk to each other. In the process, it empowers customers by showing them electricity consumption and generation information. In such instances, the role of utilities becomes that of a facilitator and maintaining resiliency into the grid. The introduction of blockchain could also lead to an overhaul of roles and responsibilities for processes within the utility industry. As an example, Miller said brokers for renewable energy certificates will not be needed in the markets, once blockchain is introduced into the process.
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