Written by Natalia Rialucky and Henning Huenteler
In the centralized grids of the last century, baseload plants, often fired by nuclear rods or coal, provided the energy that was required 24 hours per day, 7 days a week and 12 months a year. Flexible facilities like gas-fired or hydro power plants provided short-term peaks during summer (higher demand due to air conditioning) or in the evenings (high demand from TVs). However, with the intermittence of solar and wind energy, these concepts are becoming obsolete. In modern electricity grids with a high, and ever-growing share of renewables, flexibility becomes much more important than large capacities.
In response to an intermittent power supply, flexibility is king, both supply side, and demand side. In its application to energy systems, blockchain technology could be used to manage and store all energy transactions made between the individual nodes at real-time without an overlooking entity. Each power suppliers will become a blockchain node that will be integrated and able to share supply and demand data at real time.
In developed economies, the blockchain technology has the potential to revolutionize electricity grids. Modern grids are systems with millions of nodes that extract and insert energy in variable patterns. This usually happens through a centralized controlling entity that constantly collects production and consumption data and tries to adjust power plant output based on 15-min predictions. In recent years, however, the growing number of small solar and wind power units have imposed enormous technical difficulties on grid operators. The blockchain technology would allow all these nodes to talk to each other without middleman and trade energy in real time[4]. Not only could this make the central control unit redundant, it would also allow the system to work much more efficient by controlling uptake and output of connected nodes automatically.
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An example for that could be electric vehicles that purchase or sell electricity based on real-time price information and restrictions programmed by its owner. They could sell electricity high when the owner does not need the car and buy it low during off-peak hours at night, without the active control of the owner.
Although it may take more time for emerging markets to have more solar and wind power units to mushroom, blockchain is expected to alleviate the problem of intermittence. Government and private contractors will be able to build more renewable capacity and integrate it with their main grid. With real-time information regarding supply and demand of power, the national electricity agency should become better in distributing power. Such technology will shift national agendas from thinking about producing more power, to producing more renewable-energy based power and realizing economies of scale to reach the most rural parts of the country.
In the long run, it is expected that blockchain technology will reduce transaction cost since we will ultimately replace the role of intermediary[5]. Such move will invite a lot of debate and regulation as most utility providers are government-owned, however, it will still take some time until the first blockchain node is implemented and for the whole supporting ecosystem to build up. [6] (800)
[1] http://www.djk.esdm.go.id/pdf/RUPTL/RUPTL%20PLN%202016-2025.pdf
[2] http://www.rappler.com/indonesia/117323-jejak-pembangkit-listrik-tenaga-surya-di-indonesia
[3] https://www.agora-energiewende.de/de/themen/-agothem-/Produkt/produkt/76/Agorameter/
[4] https://hbr.org/2017/03/how-utilities-are-using-blockchain-to-modernize-the-grid
[5] https://www.pwc.ch/en/2017/pdf/pwc_blockchain_opportunity_for_energy_producers_and_consumers_en.pdf
[6] https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/energy-resources/deloitte-uk-blockchain-applications-in-energy-trading.pdf
Super interesting read, it is amazing to read about the numerous applications of blockchain. I’m still a little puzzled on the technical details of blockchain in utilities and would be interested to learn more. Would the blockchain technology actually control the activity of power plants and turn them off in case of low demand and high supply?
I agree, I had not yet heard about the use of blockchain to improve communication between the different nodes of production as we move towards “smarter” grids, it’s an interesting proposition.
Are there any examples of this working in a real setting? I think this would have an even greater affect if it could include users (demand) to simultaneously balance the supply/demand discrepancy issue!
I haven’t heard about this application of blockchain before, although it sounds like it has significant potential. If you consider the implications of adding batteries and modern network balancing software, it is conceivable that electricity networks and markets may be run at a micro level in the future. It is exciting to imagine the energy markets of the future; where a consumer can add their own production capacity and effectively capture the economics of the asset through using their own power and trading excess or shortfalls in their own production. This market design would provide an excellent foundation to achieve the environmental and social outcomes that are required of an energy system; abundant, clean electricity.
Also interesting to hear of the idea of electric cars as a means of smoothing out electricity supply/demand. Regarding Blockchain however, in most countries the underlying challenge seems to be much more the stability of the grid to deal with volatile supply sources, a problem which Blockchain does not seem to address in my understanding?