Transactive energy – moving blockchain from pilot to mainstream

Pilots focussed on important energy sector use cases are key for advancing blockchain, experts agree
Published: Wed 18 Jul 2018

With blockchain still in the early stages of development and attracting the interest and hype that it does, it was no surprise that it was a top topic of discussion at the inaugural Engerati Meet on transactive energy.

With the lineup of experts present, the Meet also offered the opportunity to get some critical insight on how blockchain is moving forward and who should most benefit from the technology.

Futurist Tom Raftery describes how blockchain will facilitate transactive energy again

Taking as a starting point a utility CEO keynote quote “Blockchain won’t change the world but it will save us money”, Tom Raftery, Global VP, Futurist, & Internet of Things Evangelist at SAP, reminded that blockchain is an enabling technology.

“It will allow us to completely change how we transact energy, both globally and at the local level,” he said. “It’s going to change how consumers deal with their utilities and how utilities deal with their consumers.”

Oriol Pujoldevall, Head of Business Development at the Energy Web Foundation, agreed, saying that while blockchain won’t provide the solution to all the problems, it will provide a strong foundation for building on top other applications to tackle the sector’s inefficiencies.

As an example, he mentioned the Foundation’s Origin app to trade renewable energy certificates of origin. “By creating a simple app on the blockchain, you eliminate double accountability, brokers, etc. With a little effort one is remodelling an inefficient market and this can be done one by one for the processes in the sector.”

Oriol Pujoldevall, Energy Web Foundation,outlines blockchain technology enhancements

Blockchain advances

Some of the well publicised challenges of blockchain which are key to its larger scale deployment include the energy requirements, speed and scalability. The panel participants indicated that new developments are emerging to address these (see box).

“These are being tackled as we speak,” said Pujoldevall, mentioning the Energy Web Foundation’s adoption of a proof of authority consensus to lower the blockchain energy consumption. In this model, active sector participants undertake the validation of transactions.

However, Gerard Bel, CEO of the Spanish startup Klenergy, offered an alternative approach. The company’s platform named Pylon is focussed on peer-to-peer trading and aggregation and the end customers would undertake validation.

“The main figures here are the end customers – they are the investors in the assets which will offer services to grid,” he said.

Klenergy is among a growing number of companies developing and piloting blockchain initiatives. For Pujoldevall a large number of such pilots, or a large ecosystem, “matters”.

“All the barriers that are encountered when shared can increase the progress exponentially.”

However, Raftery feels that the use cases being investigated are more important than numbers. “I think it’s more to do with the problems they are trying to solve. If the companies are addressing actual problems and have good solutions for them, then blockchain will happen.”

Gerard Bel, CEO of Klenergy, gives insights on the Pylon network

Blockchain in the mainstream

Raftery thinks blockchain will show a slow evolution rather than rapid development and says that the bigger change will come over the next 5-10 years.

“An analogy I like to use is blockchain is now where the web was in mid-1990s. If I had said then you would be able to watch movies online, you would have said ‘I have a 14.4k modem, how will that work?’, but today we watch movies on Netflix or Amazon and no-one thinks of bandwidth.”

Pujoldevall, on the other hand, gives a 2-5-year timescale for blockchain to become more mainstream. “One of the major stakeholders we are interacting with is the regulators. Once they understand and use the technology for their own applications, that will be the perfect environment for it to reach the mainstream in the energy sector.”

Bel adds that from his perspective one needs to have good use cases that can be demonstrated to utilities. “To get there one needs to start with pilots with a small retailer or DSO and then we can demonstrate how it can give value to those players.”