As part of the New York REV proceeding, a pilot program using a blockchain platform has allowed residents within a microgrid to sell their excess power directly to their neighbors without going through the utility. The blockchain technology first rose to prominence in 2009 due to its innovative role in tracking the cryptocurrency Bitcoin.

Key Details

• A blockchain is an open-source database that operates through a network of decentralized computers to anonymize, record, and authenticate transactions as they occur in real time
  • Every transaction made in the network is recorded as an anonymized “block” and linked to the previous block to produce a chain of chronologically ordered blocks; hence, blockchain
  • The blockchain is replicated across the network of computers and updated regularly, which provides a means of redundant authentication and avoids the need for centralized control
  • As the network grows, the redundancy, and thus security, increases at a marginal expense to the network itself
• Together, these properties make blockchains prime candidates to underlie the increasingly complex and distributed systems bourgeoning from the “Internet of Things”
• Two examples of the use of this blockchain technology show how it can enable new distributed markets in the energy industry:
  • In mid-May 2016, Nasdaq unveiled a service that allows internet-connected solar power generators across the nation to sell certificates to anyone in real time using its asset trading blockchain platform, Linq
  • Under the NY REV proceeding, a joint effort called TransActive Grid, struck between LO3 and decentralized applications startup ConsenSys, has allowed residents within a microgrid to sell their auditable excess power without going through the utility by using a blockchain platform
    • For participating prosumers with smart meters, every unit of energy is counted and logged as a token on the blockchain
    • Programmable smart contracts are then used to make those tokens available for sale on the localized peer-to-peer energy market, which is operated as a non-profit public benefits corporation
  • Both Linq and TransActive Grid operate on top of existing infrastructure and can be programmed to charge transaction and maintenance fees to support utility investments in the grid

Implications

• A major barrier to active markets in DER is the investment in large, risky, complex systems to manage transactions. Blockchains offer the promise of a more decentralized approach with its incremental, modular growth which may unleash the power of the market
• The early use cases for blockchains involving solar generation allow rooftop solar owners to sell excess electricity at the retail rate, thus imitating the effect of net metering
• The financial distinctions, if any, between tokens sold using the blockchain platform and Renewable Energy Certificates (RECs) remain unclear; however, in contrast to RECs, tokens are impossible to double count and are invariably kept within the communities in which the consumers live
• It also remains unclear how the necessary protocols will evolve and how the technology will fit within the regulatory model
• What is clear is that as the electric grid grows more decentralized and alternative rate structures that leverage real-time data points become more common, blockchains have the potential to grow in significance as a means of providing secure infrastructures that directly facilitate transactions between millions of consumers and devices daily

More Information

Green Tech Media: The Energy Blockchain: How Bitcoin Could Be a Catalyst for the Distributed Grid

McKinsey & Company: How blockchains could change the world

Deloitte University Press: Beyond bitcoin: blockchain is coming to disrupt your industry

CoinDesk: Nasdaq Explores How Blockchain Could Fuel Solar Energy Market

CoinDesk: New York’s ‘Energy Czar’ Talks Future of Blockchain for Energy Grids

CoinDesk: Ethereum Used for ‘First’ Paid Energy Trade Using Blockchain Tech

SlideShare: TransActive Grid Overview

Wikipedia: Blockchain

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