A clear trend in the energy sector is the growing interest from utilities in testing blockchain. This is essential for the future uptake of the technology. Moreover, participation is often by way of a consortium, which on the one hand gives a market boost to the platform in question, but on the other enables the participants to collaborate on its shaping and evolution to meet their specific market needs.
While blockchain still has to be addressed from a regulatory perspective, and also is ensured to meet the increasingly stringent data protection regulations that are emerging, such as the General Data Protection Regulation in Europe and forthcoming Consumer Privacy Act in California, there is little doubt of the market potential. For example, a recent report from Research and Markets projects blockchain in the energy market globally to grow at a CAGR over 65% during the period to 2023.
A Q2 2018 report from Navigant Research considers five use cases – wholesale energy trading, certificates of origin, electric vehicle integration and charging, meter registration and switching, transactive energy – and projects for these 59% CAGR in revenue terms for the decade to 2026.
Utility use cases
Several new utility blockchain projects have been announced in recent weeks, among them Power Ledger’s plan to scale up its peer-to-peer trading platform to 55,000 participants in Japan.
Another is an initiative between New Zealand utility Vector – an early partner with Power Ledger – and the US-based start-up VIA to establish a “secure multi-company database for transformer data”, named the Global Data Asset Collaborative (GDAC). The aim is to use VIA’s Trusted Analytics Chain machine learning-based blockchain application for predictive maintenance of Vector’s transformers and in time expanding it to other participants with additional data contributing to improving the modelling and other assets.
Last September EDF Energy and UK Power Reserve demonstrated a 2MW trade of a capacity market obligation on UK company Electron’s blockchain platform. EDF Energy is now about to embark on another project to trial peer-to-peer trading of solar energy in a south London block of flats.
A similar demonstration was undertaken last year by another UK startup, Verv. Slated as the “UK’s first physical peer-to-peer trade on the blockchain”, the initiative is continuing with British Gas working with Verv to investigate billing in a peer-to-peer scenario. Parent company Centrica is no stranger to blockchain, both investing in and trialling LO3 Energy’s platform for local energy market trading.
Electron has taken a consortium approach to its use case developments and both it and Verv also are members of the Energy Web Foundation (EWF) developing a sector specific blockchain platform.
Energy Web Foundation advances
Since it was established in 2017, the Energy Web Foundation has become the largest blockchain consortium in the energy sector and now counts over 100 affiliate members.
The EWF’s first public deliverable released in November 2017 was an application layer test network, codenamed Tobalaba. Subsequently, other releases have included EW Origin as an open source reference app which records the provenance and automatically tracks the ownership of renewably generated electricity along with an accompanying electric vehicle charging toolkit, EW Link, a set of architectures and standards for securely connecting physical devices to the blockchain and EW D3A, a vision and framework for transactive energy.
A proof of concept has been demonstrated that wirelessly connects physical distributed energy sources to the Foundation’s platform and several projects have been initiated that run on the platform
2019 is set to be a key year for the EWF with the formal launch of the platform, named the Energy Web Chain, due in Q3. With it should come a new wave of innovation as new opportunities are opened up for developers in a growing marketplace and new use cases are investigated. An early German industry survey identified more than 110 use cases of which many still have to be investigated.
The platform is built on the Ethereum technology modified for high transaction capacity and low energy consumption – two critical factors for its wider application.
Some of the ongoing developments include incorporating technologies including Bridges, Raiden and Polkadot for further capacity and performance enhancements, alongside testing and review prior to the launch of the genesis block.
As an example of some of the use cases and challenges for blockchain, at the first sector hackathon in December 2018 three such challenges were presented: from Iberdrola asset device registry, from Swisspower community control of energy assets and trading, and from the EWF carbon emissions monitoring and reporting. And all were met with a minimum viable product within the 48-hour time limit.
“In the spirit of the urgency of the climate change challenge, hackathons like [this one] are about swift action. The hackathon alone – and blockchain alone – won’t solve the bigger problem. But they’re doing what’s needed: making rapid progress to forge workable solutions,” according to Natalija Sandic, part of EWF’s Affiliate Engagement team.