Power Blockchain - Electric vehicle markets
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- Jul 29, 2019 12:36 pm GMT
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In our previous introductory article on the Power blockchain, we discussed the impact of Power Blockchains on the energy markets and identified 5 opportunity themes. This article discusses the Electric Vehicle (EV) markets theme and associated systems.
The global EV stock surpassed two million in 2016– only one year after crossing the one million vehicle mark.
Future growth of EVs is highly dependent on bringing down the costs and improving the performance of the vehicles, as well as more rapid charging and the availability, speed, ease-of-use, and cost of the charging infrastructure. Blockchain can support the infrastructure needed to create and build this critical market. A range of policies exists in global markets to increase the value proposition of EVs. These policies range from funding for RDD&D in batteries to regulatory targets, such as the Zero Emissions Vehicle Program in 10 U.S. states.
The availability of EV chargers remains a key barrier to market penetration. In 2016, the number of electric vehicles on the road outnumbered publicly available chargers by more than six to one, as most drivers rely on their own private charging systems. Estimates suggest that $2.7 trillion will need to be invested in charging stations to enable EVs to reach their forecast potential of over half a billion vehicles by 2040. There are roughly 322,000 publicly available chargers and around 1.68 million private chargers worldwide; more chargers, however, will increase certainty for drivers and add flexibility to the EV market. The predominant approach to addressing this issue is public subsidies for the deployment of more chargers.
Blockchain enables and provides economic incentives for owners of private chargers to bring them online for public use. The vast majority of existing chargers deployed globally remain idle for most of the day. Blockchains are being developed to create simple, peer-to-peer transactions on private chargers so that owners can set their own prices (flat, time-based, or electricity-based) and use the blockchain to handle all billing, payment, and authentication. In most cases, a cell phone app is used to find the most convenient private charging station based on the driver’s needs, such as location, cost, charging station components, etc. According to one estimate for California, with typical charging rates around $5 per hour, a Californian could use blockchain to rent out his or her private charger enough to easily zero-out their annual EV fuel bill.
Blockchain’s core technology – efficient and secure management of large volumes of transactions in distributed networks – coupled with the lack of a robust EV charging infrastructure and no accepted standard for billing, scheduling, and payments software make blockchain a viable solution for EVs to “leapfrog” the build-out of a massive new wires network for managing transactions.
Germany is a world leader in supporting blockchain tools to support EV deployment. Innogy, a subsidiary of Germany’s largest utility, RWE, has already launched over 1,200 charging stations supported by blockchain. The owner of each station sets the price, offering flat, time-based, or electricity price-based rates. The blockchain code lives on the charging station network and is linked to customers via a smartphone app to manage and record all payment and charging data. The application, called Share&Charge, is based on the Ethereum blockchain.
ZF, UBS, Innogy, and IBM are developing a blockchain platform that automates and integrates a range of mobility services including electric car charging and billing, as well as parking fees, highway tolls, and car-sharing service fees.
Blockchain-based tools for supporting EV deployment offer unique benefits to grid operations as well. Current approaches use smart meters, intelligent endpoints, and behind-the-meter learning to create disaggregated load profiles. While many of these tools rely on statistical methods, blockchain-enabled EVs offer actual load measures, providing greater certainty to operators to drive down operational costs, reduce energy use, and better target technical issues (e.g. maintenance, cyber attacks, etc.) throughout their networks. The data collected by the blockchain can help utilities and operators manage the power quality and system adequacy issues associated with the growth of EVs. The blockchain can also interact with smart meters, enhancing their role in managing information related to charger rates, locations, and usage data.
Challenges for Blockchain-Based EV Infrastructure
There is a significant amount of hype surrounding the ability of blockchain technology to transform EV markets. Challenges to blockchain applications for EV infrastructure at the consumer, household, and local levels remain, for the widespread deployment of blockchain-based EVs.
At the consumer level, only active consumers or “prosumers” may see the full benefits from the blockchain. The additional cost of blockchain could otherwise outweigh the benefits unless consumers closely monitor the market and respond to price arbitrage opportunities to ensure a return on investment. This may require additional time and resources for consumers, which also may reduce the net benefits of blockchain.
At the household level, hosting EVs on private property may cause issues related to privacy and zoning. These could result in high barriers for the use of blockchain by owners of private charging stations who wish to offer charging services to a broader public (although this is a general problem as well). While services such as Uber, have shown that consumers are becoming more comfortable with the growth of the “sharing economy,” the location of chargers, e.g. in a garage, coupled with long charge times (minutes to hours) may limit rates of adoption. The associated security, liability, and zoning issues will likely need to be addressed at the household level.
At the local level, private charger-associated vehicle congestion at homes, offices, parking lots, or on local streets may present logistical challenges to blockchain deployment. Addressing these issues may be difficult due to their cross-jurisdictional nature. Also at the local level, blockchain offers a technology solution to improving situational awareness for distribution utilities, but this requires active engagement from the utilities themselves. Without utility buy-in, blockchain-based chargers may not be completely valued.
Atlantic Power exchange is building a multichain platform with interoperability that can help the EV market accelerate its market penetration and further reduce the carbon footprint form the transport sector.