Between the Poles

Open source blockchain development to enable transactive energy

The world is rapidly developing the technology that allows energy flows to be  determined by market forces.  There is little doubt that transactive energy is in the future of electric power in North America, which already has continental grids, and in the EU with the development of the EU's supergrid. 

The Rocky Mountain Institute and Grid Singularity (a blockchain technology developer) have created the Energy Web Foundation (EWF), a non-profit organization whose mission is to further the development of transactive energy by accelerating the commercial deployment of blockchain technology in the energy sector.  Initial supporters are Centrica plc, Elia, Engie, Royal Dutch Shell plc, Sempra Energy, SP Group, Statoil ASA, Stedin, Technical Works Ludwigshafen AG (TWL), and Tokyo Electric Power Co (Tepco) who have provided a first round of funding of $2.5 million.

Blockchain is a decentralized, distributed database for managing transactions.  Blockchains provide a global infrastructure untethered from the stability or permission of governments and institutions.  It is the technology underlying Bitcoin.   Nasdaq and other financial institutions including banks have been experimenting with and developing applications based on blockchain technology. Nasdaq has opened its blockchain services framework to more than 100 of its market operator clients around the world.  Earlier this year Nasdaq demonstrated a blockchain service that lets solar power generators sell energy certificates. 

Blockchain technology has the potential to play a significant and potentially game-changing role in the energy sector by providing the financial infrastructure for transactive energy. Blockchain technology could provide the transactional infrastructure enabling millions of energy generators (for ex, rooftop solar PV) and energy consumers (HVAC systems, water heaters, electric vehicles) to transact with each other. Blockchain also provides higher levels of cybersecurity.  Grid Singularity with its partner Parity Technologies is leading the development of an open-source, energy-specific blockchain infrastructure that will be maintained by EWF and supporting affiliates.

Distributech2017: Transforming the electric power industry: changing business models, regulation and technology

New York's influential Reforming the Vision (REV) is not only redefining the regulatory model for the State of New York but has become a model for other states.  At this year's Distributech Audrey Zibelman, who was confirmed as chair of the New York Public Service Commission (PSC) on September 3, 2013 and since then has presided over the development of NY REV presented her view of the tranformation the electric power industry is experiencing.   In her view it all starts with the customer who wants more choice, greater reliability and lower rates.  She is convinced that the technology is already there that will enable utilities to  achieve deep decarbonization with improved reliability and efficiency.  The key to all of this is changing the business model for the power network operators.  Distribution companies need to become platform companies (DSPs) that can provide the infrastructure for increasingly dynamic generation as well as demand.  The model has to provide compensation to DSPs who make the network more efficient.  The business model has to encourage innovation that enables transactive energy with technologies such as blockchain and the internet of things.  It has to encourage and attract younger people to the utility industry and encourage third party startups.  In her view being CEO of an electric utility is the best job in the world right now.  Unlike the telecom revolution which led to the digital divide, the electric power transformation has to avoid an energy divide and ensure that lower income folks are included and also experience the benefits of the new power grid.  Very interestingly she said she used to believe this was all going to happen in five to ten years, but with the accelerating momentum in technology and regulation she now believes the transformation of the utility is happening faster than that.  Quite a vision but the NY REV provides a regulatory model that is designed to enable this to happen. New York's utilities are moving rapidly in this direction.

Transactive energy may be based on blockchain

There is little doubt that "transactive energy" is in the future of electric power in North America, which already has continental grids, and in the EU with the development of the EU's supergrid.  The world is rapidly developing the technology that allows energy flows to be  determined by market forces (transactive energy).   By analogy with Uber and Airbnb, Gartner has predicted that by 2020, the largest energy company in the world (by market cap) will not own any network (grid) or generation assets.  It will manage information about energy sources and consumers.  Another option is a decentralized,distributed transaction system that allows generators such as you and I as well as traditional large scale utility generators to sell energy to you and me and other users, but without a centralized transaction manager.

Blockchain is a decentralized, distributed database for managing transactions.  Blockchains provide a global infrastructure untethered from the stability or permission of governments and institutions.  It is the technology underlying Bitcoin. The generalized version is often referred to as blockcoin 2.0.  Blockchain supports smart contracts.  Nasdaq and other financial institutions including banks have been experimenting with and developing applications based on blockchain technology. Nasdaq has opened its blockchain services framework to more than 100 of its market operator clients around the world. The blockchain services are part of what Nasdaq calls its "Core Services" component which serves as a hub for its financial applications.  Late last year an issuer was able to use Nasdaq Linq blockchain technology to successfully complete and record a private securities transaction - the first of its kind using blockchain technology.  Chain.com, a Nasdaq Linq client and blockchain developer, documented its issuance of shares to a private investor using Nasdaq's blockchain-enabled technology.

Earlier this year Nasdaq demonstrated a blockchain service that lets solar power generators sell energy certificates (Nasdaq Explores How Blockchain Could Fuel Solar Energy Market).  The project is part of a collaborative effort between Nasdaq and design firm IDEO's CoLab to facilitate partnerships that take a design-based approach to creating human-usable technology.  Internet connected solar panels have been developed with technology provided by Filament , a Nevada-based blockchain startup. Its technology allows traditional electronic devices to be connected online.  The solar panel is actually hard-wired into the IoT device through a converter which enables Nasdaq to measure the wattage the panels are generating into the grid.  Using the API of Nasdaq's blockchain-based private markets platform, anonymous certificates are created which can be sold to anyone who wishes to subsidize solar energy.  The cryptographically verified certificate, representing solar power generated in the western US, appeared live on the screen in New York City.

Nasdaq is not the only organization exploring blockchain for energy transactions.  Brooklyn-based startup LO3 has partnered with Consensus Systems on TransActive Grid which is combination of ​software ​and hardware ​that enables members to buy and sell energy from each other securely and automatically, using smart contracts and the blockchain.

In Vienna, Grid Singularity is using blockchain to support energy-related transactions. "Damit haben wir (fast) alles beisammen, was in der neuen Energiewelt relevant ist oder kurzfristig wird: dezentrale Energieversorgung, Digitalisierung, disruptive Geschäftsmodelle, Smart Contracts, Blockchain, Kryptowährung.  Als Wegweiser in die neue Energiewelt, haben wir am 23. Mai 2016 den 1. Blockchain-Tag in Deutschland veranstaltet." (We've just about got everything we need for the new energy world, decentralized energy distribution, digitization, disruptive business model, smart contracts, blockchain, and cryptographic security.  As a signpost to the new energy world, we have instituted May 23, 2016 as the first Blockchain Day in Germany.)

Australian startup Sun Exchange has developed a platform that lets investors back small-scale solar projects and receive monthly dividends. 

MIT start-up SolarCoin (SolarChange in the US and EU) pays people with an alternative digital currency for generating solar energy.  SolarCoin is based on Bitcoin technology.  The original concept for SolarCoin required a central bank. Blockchain is decentralized making the central bank unnecessary.  People earn coins as a reward for generating solar energy.  People with solar panels on their house receive solar renewable energy certificates from their energy company in return for feeding a megawatt-hour of electricity back into the grid. These certificates are already traded for cash, but if you present them to SolarCoin you will get a coin. SolarCoins are now given in 23 countries. The SolarCoin market cap is currently estimated to be about $2 million.