While blockchain is being embraced by startups as a technology to enable a whole plethora of transactive and other use cases in the energy sector, ultimately its wider introduction will depend on the uptake by the utilities.
In Engerati’s last update on blockchain we noted the increased utility involvement and this has continued.
Piloting blockchain for network management
In Europe the transmission system operator (TSO) TenneT has been building up to pilot the use of blockchain in network management in its two countries of operation, Germany and the Netherlands.
The first of these, which formally kicked off in early November, is focused on using decentralised home storage to stabilise the grid in Germany.
Due to the increasing decentralised infeed of energy from renewable sources, transmission bottlenecks are becoming increasingly common. In 2016, across Germany the cost of measures to manage such bottlenecks was around €800m, due in large part to the curtailment of wind turbines. As these costs are ultimately borne by electricity consumers through grid charges, any reductions would be beneficial.
The pilot, a first in Europe, is being undertaken with storage company Sonnen using a blockchain solution developed by IBM.
With intelligent management, the energy storage systems adapt individually to the respective situation in TenneT’s grid. This allows the fleet of networked storage systems to absorb or discharge excess power in a matter of seconds when and where required, helping reduce transmission bottlenecks in the grid.
"The project leads the way to the future integration of renewable energy sources,” says Urban Keussen, chairman of the board of TenneT. “We clearly see a potential to develop new possibilities of flexibility through blockchain technology.”
In the Netherlands pilot, which is due to start in late November, the focus is on using a permissioned blockchain network to integrate flexible capacity supplied by electric vehicles (EVs) into the grid. The partner in this pilot is energy supplier Vandebron, which will provide control energy using a pool of EV charging stations and thus compensate for fluctuations of frequency.
Blockchain for services in Dubai
Ever at the forefront of developments, as part of the Smart Dubai initiative the city has launched what is claimed a first – the Dubai Blockchain Strategy.
The aim is for Dubai to become the first blockchain powered government, driving the future economy. The strategy establishes a roadmap for the introduction of blockchain and the creation of an open platform to share the technology with other cities.
According to the strategy, with blockchain Dubai could save 5.5bn dirham ($1.5bn) annually in document processing alone – “equal to one Burj Khalifa’s worth of value every year.”
As part of the strategy Dubai Electricity and Water Authority (DEWA) is developing blockchain. Commenting on the latest technologies being adopted by DEWA, Reem Abdulla Kamil Mustafawi, Senior Specialist, Innovation & The Future, mentions two initiatives under way.
One is a city level project in partnership with other entities focused on the delivery of Dubai’s electricity and water services. The other is for EV charging services as part of DEWA’s ‘EV Green Charger’ charging infrastructure development initiative.
Centrica invests in LO3 Energy
The public appetite for blockchain startups is evident. For example, among recent token sales Australian pioneer Power Ledger raised Au$17m (US$13m) following the raising of a similar amount in its pre-sale.
ConsenSys spinoff Grid+ raised over $45m and the UK home energy assistant startup Verv was almost 150% oversubscribed with its £1.23m crowdfund (target £0.5m).
But so far direct utility investments into such companies have been limited. Centrica, through its Ignite entrepreneurial fund, was an early investor in Verv. Now through its innovation unit Centrica Innovations, the company has invested in the US startup LO3 Energy.
LO3 Energy is one of the earliest blockchain pioneers, introducing it for peer-to-peer trading in the Brooklyn microgrid. The company has subsequently started operations in Australia and also has just launched two projects in southern Germany aimed to demonstrate the potential of community microgrids.
One of the projects is with Karlsruhe Institute of Technology (KIT) and local energy provider EnergieSudwest in Landau. This will develop a local microgrid and transactive energy market with solar PV and battery storage in a 3.8ha community with 130 residences and 19 businesses.
The other is with the energy provider Allgauer Uberlandwerk in the Allgau region. Initially this will be a short-run proof of concept, with some prosumers selected to participate in a ’virtual microgrid’.
With many of Germany’s early adopters of PV technology reaching the expiration of the feed-in tariff, peer-to-peer trading offers the potential to continue to benefit from their renewables investment.
According to a statement, LO3 Energy is now commercialising its blockchain-based platform to enable peer-to-peer energy marketplaces.
Centrica’s commitment is part of an ongoing collaboration that includes two new projects – one with its subsidiary Direct Energy in the US and another being explored in the UK.
“This is an important investment for Centrica Innovations. It demonstrates our commitment to emerging technologies with the potential to disrupt existing energy markets,” says Christophe Defert, Ventures Director at Centrica Innovations.
“We look forward to working with LO3 on blockchain-based projects more broadly across Centrica, and the opportunity to provide our customers with more flexibility and control over how they buy and use their energy.”
EWF test network available
As promised the Energy Web Foundation (EWF) blockchain and application layer test network, codenamed Tobalaba, was made public for use by third parties including startups and developers on 1 November.
According to a statement the EWF is taking “an agile and incremental approach”, and all the developments will be applied “to address specific user needs”.
In this way the network will evolve based on the feedback from users.
The network will enter beta phase at the Event Horizon 2018 blockchain summit (Berlin, April 2018), and will go live with full practical implementation at Event Horizon 2019.
Protecting user privacy is one of the major challenges for a blockchain addressing the needs of the energy industry, according to the statement. In response, the EWF has introduced the concept of compliant privacy, allowing all smart contracts, transactions and transition states to be visible only for recognised authorities, while protecting the private keys of users through its secret store functionality.
EWF affiliates are taking on the role of network validators. The validators can agree upon standards by whitelisting specific smart contracts or power plants eligible to transact energy on the network. This way, a broader scenario is created, where whitelisted smart contracts become valid at a global scale.
Authorities that have set up a validator node on the network are Centrica, Elia, Engie, SempraEnergy, Shell, SPgroup, Statoil, STEDIN, TEPCO and TWL, together with EWF founders Grid Singularity, Rocky Mountain Institute and implementation partners Parity Technologies, Brainbot AG and Slock.it.
The network has been designed with scalability envisaged as one of its core features. Currently, it already surpasses Ethereum main net by one order of magnitude. Further improvements will be brought by embedding solutions such as the Raiden Network, scaling up supported transactions to over 1m per second.