Blockchain could help manage rooftop solar, electric vehicle and energy trades, study says
Energize Weekly, July 25, 2018
Blockchain—the decentralized digital ledger most often linked to cryptocurrencies—could have a major impact in managing rooftop solar, electric vehicle charging and energy trading, according to an analysis by the Energy Futures Initiative (EFI).
The EFI study estimates there has already been $100 million to $300 million invested in more than 100 energy sector blockchain applications. EFI was created by former Energy Secretary Ernest Moniz to promote technological innovation in the energy sector.
“Blockchains are important to the energy sector since they allow for broad participation in business transactions, which is crucial as firms look for new ways to unlock value from the changing system,” the study said.
The distributed ledger system created by blockchain allows all participants to see all transactions. It enables users to record digital transactions without the risk of alteration or third-party interference. New transactions are submitted to a node (a network of independent computers in the system), which then alerts all the computers in the network.
“Blockchain-enabled systems provide businesses with a tool to manage transactions; maintain their economic advantages, privacy, and security; and reduce the costs of each,” the study said.
More and more of the technologies, programs, activities and transactions on the electric grid are digital or digitally enabled. Blockchain could manage large volumes of transaction, settling them quickly and securely and at a “relatively low cost,” the study said.
The increasing use of distributed electricity generation and storage, smart energy devices and electric vehicle (EV) charging all lend themselves to blockchain management.
The EFI analysis looked at five areas in the energy sector where blockchain could be used: rooftop solar and other distributed generation, electric vehicle markets, energy trading platforms, carbon tracking registries and energy transactions for emerging markets.
For rooftop solar and distributed generation, blockchain can help create a framework for better visibility and control of distributed resources, aiding in their management as part of the grid.
A big challenge for the EV market is a sufficient number of charging stations, yet most privately owned charging stations sit idle most of the time. Blockchain could create a “peer-to-peer” market, where private charging station owners set their own prices, and the digital ledger would handle billing, payment, and authentication.
In energy trading, the “process still heavily relies on the manual exchange of goods, multiple interactions between firms, and third-party intermediaries to close deals,” the report said.
A blockchain-based platform could help create some opportunities for new markets, such as the EV market, and new market participants. As for wholesale and large-scale energy trading, blockchain’s role is uncertain.
“Blockchain remains to be demonstrated robustly in most energy trading environments,” the report said. “Existing energy and commodity trading platforms represent significant investments for firms. These systems are becoming more efficient due, in part, to digitalization as firms increasingly leverage big data analysis and near real-time information. While blockchain offers major process improvements, the fully-burdened cost of a blockchain for managing a large-scale trading operation is unknown.”
The effort by the utility industry to reduce carbon emissions has been ongoing, and blockchain could aid in not only keeping a record of reductions, but also verifying them, the report said.
“Blockchain’s core capabilities directly align with the many challenges around developing, deploying, and managing emissions tracking and trading systems,” the report said. “As a trusted repository of transaction data, blockchain can be used to streamline trades, strengthen the verification process, and eliminate the need for costly centralized management.”
IBM and Energy Blockchain Labs are testing a carbon-credit management platform in China using blockchain.
Greeneum has an integrated blockchain application for trading carbon credits and renewable energy certificates. It is currently being piloted across Europe, Cyprus, Israel, the United States and Africa.
For emerging energy markets in Asia and Africa, blockchain could be deployed as a platform handling energy transactions, billing and settlement. Its transparency could also bolster investor confidence in markets “with historically high risk.”
“With half of the global population growth occurring in just nine countries—mostly in emerging markets in Asia and Africa—it will be critical to create sustainable pathways for both economic and energy sector development,” the report said.
Still. The authors of the report concede that there are challenges to blockchain’s use in developing countries in both government and citizen adoption of the technology.