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Blockchain Technology In The Energy Ecosystem

Blockchains are known for their ability to maintain a secure, autonomous, and decentralized record of transactions. After a party requests a transaction be made, that transaction is assigned to a unique block. This block is then broadcasted across the network of nodes, approved, and added to a larger blockchain. Over time, blockchains will continue to grow since each block can only hold a certain amount of information.

Blockchain Technology in the Energy Ecosystem

Specific to the energy ecosystem, an individual can start a DAO to raise capital, create organization order, and build renewable energy systems that the local community can engage with. These energy systems could include projects such as renewable natural gas development, electric vehicle charging stations, wind or solar farms, hydroelectricity plants, geothermal processing, or nuclear energy setups.

It is these changing characteristics that are exciting the blockchain community. They are drawn by the growing complex web of transactions, the need to balance the geographical mismatch between supply and demand, and significant security and trust concerns given the proliferation in IoT connected devices.

A new ecosystem of energy blockchain start-ups is emerging, and venture capital, so far, has raised over US$1b to scale business models of the future. Aside from some early demonstrations, the applicability of an energy blockchain is largely theoretical. The ability to support a globally connected network of energy transfer, where smart devices will be able to securely send and receive data while autonomously reacting to market signals, is a reality some believe is still 5-10 years away. Smart meter rollout programs are in their infancy, huge investment is needed to digitize the grid, and global battery storage totals in the megawatts rather than gigawatts.

Over 100 blockchain use cases have been identified. Most pilots are still in early stages across the energy value chain, primarily in the area of peer-to-peer energy trading, where owners of small-scale generation can sell excess generation direct to other consumers. These pilots range from microgrids and solar systems to e-mobility and EV-charging.

These smart contracts can be set to allow prosumers to feed surplus energy into the grid through a blockchain-enabled meter. The flow of electricity is automatically coded into the blockchain and algorithms match buyers and sellers in real time based on preferences. Smart contracts then execute when electricity is delivered, triggering payment from buyer to seller. Removing financial transactions and the execution of contractual commitments from central control brings a whole new level of decentralization and transparency that the industry has never had before.

In April 2016, residents in Brooklyn, New York, successfully traded renewable energy using a smart contract on the public Ethereum Blockchain platform enhancing trust and visibility amongst participants. In Australia, several pilots are underway that will allow residents in Perth and Southern Western Australia to buy, sell or swap excess solar energy with anyone connected to the Western Power network. These provide an exciting glimpse into the future of energy blockchain.

But there is a big difference between trading a few spare kilowatt hours between neighbors across a street and a truly autonomous energy system automatically balancing supply and demand, and transacting against a set of pre-coded algorithms.

Understanding how the next generation distributed ledger technology may evolve, and the business models that might be enabled, are a next step. Much as the telecom revolution and the invention of mobile phones and smartphones have reduced the reliance on landlines and phone networks, blockchain technology could revolutionize how the power sector works. Utilities need to decide what part they want to play.

Access more insight on the impact of blockchain technology on the energy sector from Thierry Mortier, our Global Power & Utilities Innovation Leader. Thierry recently attended the EY-sponsored Global Summit on Blockchain Technology in the Energy Sector in February 2017.

Conjoule is beta-testing its blockchain-based peer-to-peer platform with a restricted number of users this year, after developing a simulation based on real historic data in 2015 and creating a minimally viable product for real-world testing in 2016.

Conjoule superficially appears to be very similar to the blockchain-based solar generation rewards program SolarCoin. But Francois Sonnet, co-founder of ElectriCChain, an energy generation data project, said there are differences between them.

What seems to be emerging is a web of different energy blockchains with very specific applications, such as trading electrons with the person next door, helping landowners raise cash for solar panels or making it easier to take advantage of subsidies.

While this arrangement may suit energy blockchain startups seeking a niche in a bustling market, it isn't clear how so many choices of peer-to-peer systems will make things easier for end users, as all the platform developers claim.

IFP Energies nouvelles is a major research and training player in the fields of energy, transport and the environment. From research to industry, technological innovation is central to all its activities.

The news has covered bitcoin, ethereum, blockchain, cryptocurrency for several years now. Digital currencies and more broadly blockchain are innovative tools in the digital age. Blockchain has the potential to be a valuable new tool for many sectors, including energy. So, what exactly is blockchain technology? How can one arbitrate between its different uses? How can blockchain accelerate the energy transition? Is it ultimately possible to ensure a sustainable and green future from this emerging technology?

The rise of cryptocurrencies such as Bitcoin and Ethereum has drawn focus to blockchain, a Distributed Ledger Technology (DLT). It is important to make a clear distinction between cryptocurrencies and blockchain to avoid any confusion. Bitcoin is a cryptocurrency that uses blockchain as its foundation technology. There are now 4,894 cryptocurrencies1 that are based on blockchain or DLT technologies. Technologies that store, distribute and facilitate the exchange of value between users are called DLTs. A distributed ledger is a decentralized database which is distributed across multiple nodes2. Nodes maintain the ledger on which the transactions are recorded. There is no central authority as every node has an equal status which makes the technology transparent. A transaction is verified by the node based on the consensus algorithm or voting mechanism. Nodes which solve the algorithm are able to participate and approve transactions. This technology is tamper-free as it does not involve a central authority.

The application of blockchain in this sector is currently being explored and we are slowly making a move forward to enter a growth phase (Fig. 1). The current market is filled with a number of use cases, pilot projects, and startups which have begun to investigate the possibility of integrating blockchain technology within the existing energy market with the aim of improving efficiency and reducing costs. However, we are yet to see a commercially successful business in the energy blockchain space.

The project (Fig. 4) aims to create a local community market for renewable energy in order to test consumer preference when they are given an option to trade their excess energy locally. Prosumers have the option to market their product in addition to feeding excess energy back to the grid.

A total of 43 projects in our database have been identified within Green/Renewable Energy (Fig. 5) with applications ranging from Green energy transparency and tracking to Project funding, and Clean crypto/mining and Green energy token rewards. Geographically, 47% of the projects are concentrated in Europe followed by nearly 30% in North America16.

In Germany, the utility major RWE along with Ethereum based startup Slock is collaborating on a project to innovate charging infrastructure. This project, named Share&Charge allows private individuals to rent charging stations owned by them in a P2P (Fig. 7) way. This may result in the wider availability of EV charging infrastructure in an immediate vicinity and create access to an affordable and reliable payment solution. The Share&Charge application, based on the Ethereum blockchain, can be downloaded on a smartphone. All transactions can be tracked by any member of the network. The platform achieves automated billing and can incentivize the private building of EV charging infrastructure as charging stations generate a revenue stream for owners through enabling other drivers to charge EVs at their points. RWE has already launched 1,200 stations which are connected via this application. The owner of a charging station can set the price by opting flat, time based or electricity price-based rates. Share&Charge manages and records all payments and charging data and connects customers to the charging station network. The company also plans to facilitate seamless payments by integrating its stable coin22 as part of the payment solution.

To summarize, blockchain can incentivize private individuals via integrating private chargers to the grid for public use and it can assist the operators to better manage the demand. Despite the recent progress, challenges remain for a widespread deployment of blockchain application for EV infrastructure. The challenges range from consumer to household to local level under which offering private charging stations for public use can lead to privacy and zoning issues, creating a barrier to entry. Also, logistical issues arise if a private charger contributes to congestion at its home, office, local street or parking space location.

A total of 21 projects have been identified under Smart metering solutions (Fig. 8) with applications ranging from Smart metering, Smart billing, Cyber security and Payment of bills via cryptocurrency. Geographically, 70% of the projects are concentrated in Europe followed by nearly 12% in North America23.The E-Prosume project is a partnership between Evolvere (Italian aggregator) and Prosume. In August 2018, Mangrovia Blockchain Solutions (a software house specializing in applied cryptography technology) joined the project, which aims to provide prosumers with new services enabled by the platform, such as smart billing and smart payments. 041b061a72


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