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Blockchain’s energy industry applications range from highly speculative energy trading – think peer-to-peer energy trading using the cryptocurrency raised in initial coin offerings – to more incremental efforts, based on the real-world challenges of running a network. increasingly decentralized electricity.
The latter describes how utilities and energy market operators are applying blockchain as a distributed ledger technology to monitor renewable energy from the point of generation to the point of exchange. This can bring new levels of visibility and efficiency to the complex processes that govern the multi-billion dollar trade in renewable energy certificates.
Leading European utilities and grid operators are already using blockchain to track and certify megawatt hours of clean energy, and some in the US are testing it. But the same approach could be applied down to the kilowatt-hour scale – or at least, that’s what NV Energy hopes to demonstrate.
Last week, the Nevada utility announced a pilot project with Las Vegas-based Blockchains LLC and the Swiss-based nonprofit Energy Web Foundation. It will start with a handful of homes equipped with rooftop solar meters and blockchain-enabled, which “will accurately track energy produced and transformed into wallet energy credits,” or PECs, said Amy Lahav, NV Energy’s senior project manager for renewable energy and smart infrastructure.
PECs are Nevada’s version of renewable energy credits and are used to meet the standard requirements of the state’s renewable portfolio. Most of it is generated from industrial-scale renewable energy, but NV Energy also obtains it from a subset of PV customers as part of its solar incentive program.
Today, such PECs are accounted for by state regulators through a process that relies on monthly meter data and engineering calculations to certify them with the Western Renewable Power Generation Information System operated by the Western Electricity Coordination Council. It works, but it takes time and work, and all in all, “just old school,” Lahav said.
Adding decentralized digital identifiers at the level of individual meters could produce a much more accurate, verifiable and efficient process, he said. NV Energy’s proof-of-concept project, approved by the Nevada Public Utilities Commission, will allow the entity to test that proposal “from registering a PEC generation system, to PEC withdrawal and everything in between.”
A blockchain built for distributed energy
Blockchains LLC provides the software for specialty meters, and the Energy Web Foundation, co-founded by the Rocky Mountain Institute and blockchain technology firm Grid Singularity, provides the underlying Energy Web Chain system. Unlike compute-intensive, energy-intensive proof-of-work blockchain systems such as Ethereum, used for Bitcoin and other cryptocurrencies, it uses a proof of authority mechanism that uses two to three orders of magnitude less energy. , according to EWF.
This is a key feature for a system intended to accelerate the decarbonisation of global power grids, said Jesse Morris, EWF’s chief commercial officer. “Something like 90 percent of the blockchains we’ve seen out there in the energy space have been advertised,” he said. EWF’s mission, on the other hand, is centered on “one thing and one thing only: establishing trust with energy sector devices”.
With NV Energy, “it’s about making it … ultra affordable and reliable for solar systems that produce energy credits,” he said. According to Morris, other partners are using the same underlying open source architecture to certify renewable energy credits in Europe, South America, Africa and Asia.
Rooftop solar, behind-the-counter batteries, electric vehicle chargers and other distributed energy resources (DERs) are particularly well suited to a technology that can replace the dedicated wired equipment traditionally used to measure and verify the production of large generators, has observed. “There is a big gap between all of these assets that people invest in and the grid operators” and the utilities that are trying to integrate them into their grid operations, markets and energy tariffs.
Europe has led blockchain energy projects, with increasingly widespread use in clean energy certification and a limited but growing number of efforts, supported by EU mandates, to enable peer-to-peer energy trading. Earlier this month, the German federal energy agency DENA chose EWF to enable a digital register of DERs across the country, from solar and battery installations to thermostats and smart appliances.
In the United States, the technology is largely limited to utility and grid operator testing and a handful of local energy market projects from startup LO3 Energy. It is still unclear whether the best solution for these applications will be blockchain, with its decentralized approach, or other distributed ledger technologies that centralize authority over the transactions involved.
But with DERs growing from tens to hundreds of gigawatts of capacity in the U.S. and Federal Energy Regulatory Commission Order 2222 requiring grid operators to integrate them into energy markets, the need for technology to integrate them is on the rise. Morris said. “FERC is clearly saying that we need a way for all DERs to deliver near real-time data … to someone they trust.”
NV Energy’s pilot project, which is expected to produce results next year, will not test the blockchain for these types of applications, Lahav said. “It really is an opportunity for us to educate the public and the Public Utilities Commission.”
But like other utilities across the country, NV Energy is developing a DER management system geared to working on a larger scale and addressing state regulatory mandates to integrate DERs into its grid and planning operations. “With the PEC trading market, if people are aware of the solution, they can integrate it into their process for creating other solutions.”
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