BLOCKCHAIN USE CASES FOR THE ELECTRICITY INDUSTRY
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- Sep 21, 2019 12:31 am GMT
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DISCLAIMER: The viewpoints in this article are the personal opinions of the author and are in no way meant to represent any of the firms mentioned in the article. The list of firms discussed in the article is not meant to be comprehensive, but to highlight the application of use cases in the electricity industry.
Blockchain technology has found several use cases providing communication, cybersecurity, and transaction support in several industries, including finance, healthcare, and supply chain applications. As utilities grapple with understanding its value, blockchain technology offers clear benefits to the electricity industry as well. Several blockchain uses cases have been demonstrated across the globe:
- Secure Communication Platform
- Renewable Energy Tracking & Certification
- Energy Transactions
This article discusses each of these demonstrated use cases and identifies firms that have demonstrated them. The websites for the identified firms are provided at the end of the article. Note that all blockchain offerings are not the same, as they may differ many aspects, including speed of transmissions, bandwidth, energy consumption, and security; these differences are not discussed in this article.
SECURE COMMUNICATION PLATFORM
Blockchain allows for the creation of immutable records stored in blocks. Records are verified and then copied from node to node across the blockchain network. Because there is no singular centralized database, blockchain records are tamper proof and self-healing. Blockchain networks can be public or private. Because the electricity industry is data intensive with centralized data bases, utilities are vulnerable to cyber-attacks. Blockchain solutions allow utilities, retailers, and energy service companies to protect, create, and transmit data efficiently on a secure platform, while helping to reduce operational costs.
Several companies have demonstrated their blockchain solutions for different electricity industry applications:
- Based in Spain, Klenergy-Tech1 developed its Pylon Network for the electricity industry to provide near real-time data transmission, communication, and consumer engagement outreach for utilities, energy service companies, and their stakeholders. The Pylon Network has been demonstrated since the Spring of 2018 at the GoiEner Energy Co-op, bringing generators, prosumers, consumers, and the Co-op on the same platform sharing data in near real-time, and is now used with energy communities in Valencia, Spain, to transmit data of complex energy flows from generation, prosumers, battery storage, imported electricity, and consumption while ensuring data privacy. Klenergy-Tech has also used the Pylon Network to extract energy usage data for energy service companies to support energy efficiency and renewable energy objectives. The Pylon Network is compliant with European GDPR cybersecurity requirements.
- Based in Estonia, WePower2 demonstrated the ability of its blockchain technology to securely transmit energy data. In 2018, 24 TWh of Estonia’s energy consumption data from smart meters were transmitted from WePower’s blockchain platform to Estonia utility Elering.
- Based in Massachusetts, Via Science3 created the Global Data Asset Collaborative (GDAC) connecting utilities with vendors on a secure blockchain platform so that utilities can predict the status and maintenance needs of their assets. Hawaiian Electric has joined as a founding member of the GDAC.
- Based in California, Xage Security4 developed its blockchain technology to enhance security for several industries. Xage Security developed Security Fabric to provide secure communication and data transmission for utilities and was awarded a DOE grant to demonstrate Security Fabric in July of 2019.
RENEWABLE ENERGY TRACKING & CERTIFICATION
Because the blockchain creates a historical, immutable record, it can be used to trace the type of energy consumed. Borne out of concerns of climate change, many consumers want to know if the energy they consume is renewable to inform future purchase choices. Moreover, with many countries and many US states regulating the renewable energy content of their electric grids, tracing and certifying energy consumed is necessary in situations where carbon credits are generated. While this is fairly straight forward for stationary renewable energy plants, it is complicated for electric vehicles (EV). Depending on where and when the EV is charged, the renewable energy content may vary for each charge. Blockchain can be used to trace the energy charged to an EV battery when it is charged, allowing the renewable energy content to be known, providing a basis for carbon credits.
Two companies use their blockchain technology to provide utilities and retailers the capability of tracing and certifying energy consumed as renewable energy:
- Based in Spain, FlexiDAO5 began providing digital energy services to renewable energy project developer ACCIONA Energy in 2018. Under their agreement FlexiDAO provides the software tools that allow ACCIONA to allow its clients to check the origin of the energy they purchased.
- Spanish firm Klenergy-Tech1 has demonstrated the traceability of energy consumed on it Pylon Network platform with the GoiEner Energy Co-op in a demonstration that began in the Spring of 2018. Any GoiEner consumer can see where the energy they consume is coming from at that moment.
In addition to being a distributed database of records, blockchain forms basis for cryptocurrencies recording transactions of goods and services sold using cryptocurrencies. Since the blockchain network can cross international boundaries, transactions on the blockchain are efficient, eliminating the need for currency exchange and transaction fees. Blockchain allows generators to sell electricity efficiently to energy buyers, though local regulations may restrict who can procure electricity. The use of blockchain auctions can ensure that the electricity bought is at the lowest possible cost.
Several companies have used the blockchain to conduct energy transactions to buy power, to fund new projects, and to generate and monetize credits:
- Based in Australia, Power Ledger6 developed software to conduct peer-to-peer (P2P) energy trading on the blockchain. With P2P trading, a neighbor with excess power can sell electricity to neighbor that needs electricity. Power Ledger launched their energy trading offering in 10 sites in Western Australia where feed-in-tariff regulations provide no incentive to sell excess power to the grid. Power Ledger has now expanded with trials in Thailand, Japan, and Austria.
- Based in New York, LO3 Energy7 developed the Exergy Platform to provide P2P transaction capability to residents to sell excess power in near real time to other consumers on the blockchain platform. LO3 demonstrated the Exergy Platform in the Brooklyn Microgrid in partnership with Con Edison in 2016.
Fund New Projects
- Based in South Africa, Sun Exchange8 developed a crowdfunding platform with blockchain to launch small and medium size solar projects. Investors bid to buy solar cells, which they then lease back to the project. Sun Exchange has used their crowdfunding platform to fund 14 solar projects from 15kW to 473kW throughout South Africa.
- Estonian firm WePower2 advanced development of its blockchain technology to include funding of new energy projects. With active operations in Estonia and Spain, energy buyers purchase WePower energy tokens that represent one kW of electricity from a future energy project, as funds received are used to develop the project. Energy buyers are expected to get energy at a significant discount.
- Based in California, PickMySolar9 developed a bidding platform based on blockchain for project developers to find and solicit bids from solar installers. PickMy Solar launched the platform in New York for a community solar project within Con Edison territory.
Generate and Monetize Credits
- Based in Canada, ReWatt Power10 uses the blockchain to aggregate data from small renewable energy producers to generate a sufficient quantity of Renewable Energy Certificates (RECs). The RECs are then sold on the blockchain, with proceeds distributed back to the producers. ReWatt Power demonstrated this approach for generating and monetizing RECs with the Alberta Rural Electrification Association in 2018.
Around the globe, there are many successful demonstrated use cases of blockchain technology in the electricity industry. These use cases include:
- Creating a secure communication platform for near real-time data transmission and customer outreach
- Tracking and certifying renewable energy for consumers and validating carbon credits
- Facilitating energy transactions to buy power, fund energy projects, or monetize carbon credits
Each of these use cases has been successfully demonstrated. One or more blockchain firms have experience implementing these use cases. In many cases, these firms are solely focused on delivering blockchain solutions designed specifically for the electricity industry. Depending on one’s own economics, the value proposition for the uses cases can be significant, reducing operating costs (secure communication platform, energy transactions), retaining customers (tracking and certifying renewable energy), or developing new revenues through enhanced customer outreach (secure communication platform) and monetized carbon credits (tracking and certifying renewable energy, energy transactions).
BLOCKCHAIN FIRMS DISCUSSED IN THIS ARTICLE
- Klenergy-Tech, www.pylon-network.org
- WePower, www.wepower.network
- Via Science, www.solvewithvia.com
- Xage Security, www.xage.com
- FlexiDAO, www.flexidao.com
- Power Ledger, www.powerledger.io
- LO3 Energy, www.lo3energy.com
- Sun Exchange, www.thesunexchange.com
- PickMySolar, www.pickmysolar.com
- ReWatt Power, www.rewattpower.com
- DEX, www.energyxchange.io