Bioenergy, Geothermal, Grid Scale, Hydropower, Solar, Storage, Wind Power

Will ‘Blockchains’ Inspire the Democratization of Energy?

In Germany and the Netherlands, pilots are underway to explore how vehicle-to-grid electric cars, home batteries, smart meters, and solar PV panels could bring them to the cutting edge of the “prosumer” era, where “passive” users become actual “producers” at the edge of the grid.

The challenge is that democratized energy supply chains are highly complex to manage in terms of energy assets, transformers, transmission networks, distribution lines, end users, metering entities, system operators, policy makers, and myriad new technologies.

This complexity means flatter, peer-to-peer environments will be needed to foster visibility and transparency into how energy assets are traded, delivered, consumed, metered and billed.

“In countries that can embrace flat, peer-to-peer environments, the convergence of energy and information technology [IT] can knock down barriers to entry for entrepreneurs so that the market emerges almost self-organized,” Stephen J. Callahan, vice president, Energy and Utilities, IBM, said. The company is providing IBM Blockchain technology to TenneT (transmission system operator), sonnen (energy storage solutions) and Vandebron (renewable energy marketplace) for what will be the first blockchain distributed database designed to integrate dynamic capacity in the Netherlands and Germany.

“The blockchain technology will serve as a proxy for large metering infrastructure, eliminating the enormous operational and IT infrastructure that would otherwise hinder important energy transitions and innovations,” Callahan said.

The hope for the two pilots is to foster a demand-response (load balancing) that ultimately transitions the industry from being “supply biased” to “demand biased.” As a distributed database, IBM Blockchain would act as a ledger for relevant components of the grid, helping to automatically reconfigure them according to real-time storage or capacity needs. As owners of electric vehicles make the capacity of their car batteries available to TenneT and Vandebron to better balance the grid, the blockchain would record each vehicle’s availability and the subsequent action triggered by signals from TenneT.

Because the blockchain technology will track how and to whom energy was traded, it would become easier to ensure locally generated power is used locally, as opposed to transmitting energy from longer distances unnecessarily, or from fossil fuels when alternatives exist nearby.

For example, if too much electricity is pumped into a distribution line, that electricity can be diverted to a particular consumer’s electrical vehicle or battery. Conversely, the customer could borrow electricity from a local vehicle or battery during times of sudden demand in a certain area. Some say that with blockchain, there could even be some type of alternative-energy “currency” for each kilowatt-hour of excess power injected into or taken from the local smart grid. That is all yet to be determined.

Because the blockchain can orchestrate this type of give-and-take to thousands or millions of end points, without significant network investments, the “sharing” economy could become more of a reality. Community engagement could become a catalyst for the creation and consumption of local, public renewable energy through decentralized, democratic means.

“Some people complain this is all slow moving, but we have to balance economic, environmental, energy security and geopolitical concerns as we explore peer-to-peer and localized energy generation,” Callahan said, explaining why these types of projects sometimes move at a slow pace in certain areas. “Economies run on energy. Blackouts can cost lives, not to mention billions of dollars. So there is a huge bearing of responsibility for safety and reliability, always the prime directives in energy-related projects.”

The hope is that countries that possess more open, flexible regulatory environments, and broader retail choices can be first movers, demonstrating how energy networks can become more secure and efficient, while simultaneously becoming more sustainable and affordable. If these types of pilots succeed in Europe, the U.S. and other more rigid and heavily regulated environments could perhaps find applications for it as well.

National Grid President Dean Seavers, in his report “The Democratization of Energy: Climate Change, Renewables, and Advancing the American Dream,” talks of decarbonizing energy infrastructure by 2050 through a mix of renewable and hydro power. Perhaps blockchains will be an enabling factor, allowing energy to be traded peer to peer instead of through centralized utilities in areas focused on better leveraging renewable energy sources.