Blockchain in Energy & Mobility: a report from the first lines of scale

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Last month, we held our second executive summit on blockchain in New York. As in the past year, key corporate executives have come together to meet some of the most promising innovators in space. But the state of the work has changed dramatically during the year, and so has the mood. Last November it was full of hype, in the middle of the ICO wave peak. 2018 had a "chewy hit the road" flavor. This was reiterated in the rich content planned for the day – our focus was on the scale challenges that blockchain innovation is facing in energy and mobility, and on projects that are approaching commercial profitability. If you missed it, here's a review of some of the lessons of the day.

Climbing blockchain means negotiating decentralization – for now

We started the day with an update on the technical scalability of the blockchain, given by Catherine Woneis, of the California startup Cryptowerk. According to Catherine, blockchains are not by nature scalable, since the technology was built on the basis of distrust between the parties. Each transaction must be processed independently of each node in the network and each signature of the transaction must be verified. Requires "consent" to validate an entry. This is the case for public blockchains like Bitcoin or Ethereum, which can process 7 and 15 transactions per second respectively, far below the needs of the energy sector. Catherine thinks that the blockchain developers are still facing a "trilemma" of opposite characteristics of the blockchain:

  1. scalability
  2. Decentralization
  3. Safety

Each blockchain technology is a compromise between these three characteristics. For example, authorized blockchains are very scalable, but compromise security and decentralization. There are ways to try to increase public blockchains, such as increasing block sizes or using fewer nodes, but also reduce decentralization and / or security. More advanced techniques such as sharding could be a turning point, but they are difficult to implement.

Energy certificates on the track to be the first case of use to grow in our space

Throughout the day, when we touched on various use cases and scale challenges, it became clear that a use case was driving the package in terms of progress and scale: certifying the origin of products energy. The use of blockchain for the certification of origin implies lower transaction costs and less need for third-party certifiers. The transparency and security of exchange systems also increases. We have heard about some of these projects:

Xpansiv is a platform that allows markets to differentiate raw materials (such as crude oil, palm oil, steel or soy) based on environmental impacts. The Xpansiv platform transforms primary production information into Digital Feedstock ™, a standardized format that combines data science, cryptography and distributed diffusion technologies to produce the environmental attributes of goods. Its first product is a certified "responsible" natural gas, produced with minimum fugitive methane gas emissions and based on well monitoring data in real time. He collaborated with CBL Markets, an exchange of raw materials, to allow utilities to differentiate and choose the gas they purchase based on environmental criteria.

The first case of live use of the Energy Web Foundation is called EW Origin and also focuses on certificates of origin. Doug Miller of EWF refers to this as a portfolio of toolkits for the renewable energy markets that helps market operators monitor, trade and signal the production and consumption of renewable energy. EW Origin is currently in the testing and configuration phase for PJM, the US-based power grid operator and wholesale market administrator, for the Generation Attribute Tracking System (GATS) it administers.

SP Group, the transmission and distribution utility in Singapore, has also developed its blockchain-based trading platform for renewable energy certificates (REC). To build this exchange, SP Group is leveraging some of EWF's infrastructure and tool kits, which means that global REC buyers will be able to purchase Singapore's RECs, open global markets to local renewable energy producers and increase incentives for produce green energy.

Mobility applications are not ready to be scaled, but will become more valuable as the autonomy of vehicles grows

A novelty of this year's event was its partial attention to mobility-related use cases. In the last two years, car manufacturers and blockchain companies have explored ways to apply distributed ledger technology to the mobility space. This is driven by increasingly complex data and transactions that vehicles must manage in a connected and autonomous context. The session of the related panel confirmed some results of the research we conducted in the field.

Blockchain technology is a possible factor of vehicle autonomy. It is able to manage microtransactions efficiently, execute intelligent contracts between machines, help autonomous vehicles to transit with their environments and become decision-makers. However, getting there requires some steps. Blockchain must be able to handle existing transactions (such as tolls, parking and EV recharge) and self-employed vehicles must mature in order to request such transactions.

While current pilots are focusing on identifying the provenance of components and creating vehicle identification books, the value of using blockchain in mobility will grow as vehicles become more autonomous and as Usage-based models will continue to emerge.

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