Blockchain technology to manage the transmission and distribution of power is rapidly becoming more widely used as power companies and consumers alike seek to reap its benefits.
However, compared with other industries of comparable size, the power sector has been slow to adopt blockchain. The main impediments have been structural, rather than technological; the components needed to implement blockchain technology are surprisingly basic, namely computers, smartphones or smart meters, a communication network and a software platform.
The power sector is beset by a legacy of ageing grids and plants – the electricity grid has remained essentially unchanged for more than 130 years. Managing the variability of distributed energy generators like wind and solar has become increasingly challenging as their share of the electricity mix has grown.
Network operators have had to cope with entirely new power flows, while maintaining service levels and rolling out infrastructure improvements. New and increased demands to bolt renewable energy onto the grid and new and increased demands for that power – think electric vehicles (EVs) and heat pumps – require operational and technological innovations.
Disruptive technologies like blockchain, alongside artificial intelligence and the Internet of Things, are unlocking new possibilities in the power sector. A recent report by Power Technology’s parent company, GlobalData, shows how these emerging technologies are “breaking paradigms in the power sector”. They allow for efficient connectivity among smart grids, smart meters and computers, while facilitating communication between utilities and consumers.
Advanced connectivity can make consumer payments easier and give them more control over their engagements with suppliers. Consumers can use blockchain to remove trading intermediaries like banks and engage in local, peer-to-peer (P2P) energy trading, for example.
Access the most comprehensive Company Profiles
on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Company Profile – free
sample
Your download email will arrive shortly
We are confident about the
unique
quality of our Company Profiles. However, we want you to make the most
beneficial
decision for your business, so we offer a free sample that you can download by
submitting the below form
By GlobalData
Blockchain to overcome outdated grid infrastructure
The International Council on Large Electric Systems (CIGRE), a Paris-based global non-profit focused on the electrical grid, has a working group dedicated to blockchain. In April 2023, it released a technical document on using blockchain systems in electricity trading. The paper outlines how ICT and blockchain can help power systems overcome their “outdated architecture” over the next several decades. CIGRE expects blockchain, combined with smart grids, to be the technology with the single greatest impact on the modernisation of the power system.
Blockchain’s decentralised approach can address many of the difficulties inherent in the integration of decentralised renewable energies into the electricity grid, CIGRE suggests. It can help balance supply and demand by the automated verification of grid assets, for example, and by enabling better coordination between high-voltage transmission system operators and medium and low-voltage distribution system operators. By removing the need for intermediaries, blockchain can speed up and secure the cross-border exchange of power system data.
Several blockchain pilot projects have recently been launched in the power sector. One of these is the GridExchange project in Canada, a blockchain-based software platform that enables energy exchange between a utility and its customers. It comes on the back of a successful earlier pilot launched by the Ontario utility Alectra in 2021 and 2022. The goal of that first pilot was to demonstrate the value of blockchain in providing real-time transparency, tracking and management of distributed energy resources, and creating a marketplace for them. The next steps will be to optimise the architecture to reduce operational costs and complexity as well as increase performance and scalability.
Commenting on the results so far, Brian Bentz, president and CEO of Alectra, said in a statement: “The [first] pilot played a pivotal role in supporting consumers by offering them greater control over their energy usage. In alignment with Alectra’s commitment to be net zero by 2050, the launch of GridExchange will help us continue to lower emissions and create value for customers and the Ontario power grid.”
Blockchain is helping India reap solar power benefits
Meanwhile, in India, the Australian technology company Powerledger is taking part in a landmark project with Tata Power-DDL, a joint venture between Tata Power, India’s largest integrated power company, and the National Capital Territory of Delhi. Powerledger’s blockchain technology is being used to facilitate P2P trading of electricity from more than 2MW of solar PV [photovoltaic] in North Delhi. The pilot is expected to bolster India’s adoption of renewable energy, as consumers can now choose which seller to purchase electricity from. It is India’s first P2P solar energy trading pilot.
Ganesh Srinivasan, CEO of Tata Power-DDL, said in a statement: “Today, with growing rooftop solar power being available, we believe that peer-to-peer solar power trading can offer customers the flexibility to buy green power from those who have solar power in excess of their own consumption.”
Powerledger co-founder and chairman Jemma Green added: “India is on a fast track to a greener power mix with aggressive renewable energy targets that include 100GW of solar energy, of which 40GW is to come from rooftop solar.”
In the US, Powerledger has partnered with the Midwest Renewable Energy Tracking System (M-RETS) to launch a Renewable Energy Certificate (REC) marketplace. RECs are tradable commodities that represent proof that one megawatt-hour of electricity was generated from a renewable energy source. The project is part of the first phase of Powerledger’s partnership with renewable energy developer, owner and operator Clearway Energy Group, to develop a platform to trade RECs in the US. M-RETS tracks generation from renewable resources across North America. By partnering with M-RETS, Powerledger and Clearway Energy Group will be able to channel the buying and selling of renewable energy through an integrated online marketplace for RECs.
According to Green: “Powerledger has built a platform that can process high-volume transactions and enable companies to increase their commitment up to 100% green energy through renewable certificates.” In most US states, electricity companies are required to supply a portion of their electricity from renewable sources each year. Powerledger’s TraceX, a digital marketplace for the trading and settlement of environmental commodities, will help reduce the costs involved in buying and selling RECs within M-RETS and make the process more transparent.
The remaining hurdles to blockchain in power
Blockchain is rapidly gaining ground for its ‘elegant protocol’ to enable the verification of information and transactions in the power sector. David Bowker, a member of CIGRE’s blockchain working group, says: “Dozens of companies are now attempting to use blockchain for asset registry, peer-to-peer trading, grid-level transactions, energy financing, electric vehicle charging and renewables tracking.”
Hurdles remain, however. CIGRE argues that the grid itself must become the “internet of energy”.
“A platform based on decentralised control and permissionless innovation, while maintaining the strict reliability and security requirements, is essential to such critical infrastructure,” Bowker says. Blockchain will only become truly integral to a systemic energy solution when the technology is fully embedded into the grid, he suggests. “However, no current blockchain for energy applications yet take this approach, let alone have the capability to deliver upon it.”
