Off the Chain: Building Blockchain Support

The digital transaction system known as Blockchain is a nascent technology that may be getting an outsized share of hype. Right now, it is confined to usage with cryptocurrencies, such as Bitcoin. However, analysts, energy companies and entrepreneurs are working to identify how it will ripple across industries and when. In the long run, it likely will affect electrical contractors.

Put simply, blockchain is a public ledger that distributes data and transaction histories across many computers instead of residing on only one. It is arguably more secure and more trustworthy.

The cryptocurrency process and its verifications for each transaction consume a huge amount of power. Due to the nature of blockchain, those processes are performed at data centers around the world, distributing the energy demand.

On a broad scale, blockchains could influence many markets, especially in the utilities. Applications for blockchains are springing up like mushrooms, and in fact, there are already about 50 startups looking at the model and repurposing it for energy sharing. Many of those are in Europe, but there are some in the United States, said David Groarke, Indigo Advisory Group.

The goal is to provide an easy charging infrastructure for the buying, selling and sharing of power. In the long run, it could change the way power is managed as well as just who is managing it. Companies include Grid+, which enables wholesale energy markets, and Swytch.io, which tracks and rewards production of clean, renewable energy.

It means companies that generate more power than they are using can more easily sell or share it, and become utility companies on a smaller scale. Once blockchains take hold, utility markets may become more decentralized.

However, changes are wrapped up in other trends too, Groarke said—namely artificial intelligence (AI), robotic processing and internet of things (IoT), all of which mean machines are managing much of what is happening in and around them and sharing access to the data related to each event.

All the sensors required for the IoT and AI need to be supplied and deployed, and just who is going to do that may still be up for grabs. Groarke said many blockchain companies are in the software business but not actually installing sensors that would be collecting and sharing data.

There are a few forms of low-hanging fruit when it comes to blockchain use in power supply, including electric vehicles (EVs). Individual home or business owners could earn revenue by letting others charge their EVs in a peer-to-peer manner. Users could employ an app that accesses blockchain data to understand where available power stations are and where the rates may be higher or lower. The utility can act as a facilitator of these transactions.

“For contractors, I see this transition as helpful,” Groarke said, as more companies get into generating energy. “One thing we might see is a shift to more contractors working for third parties.”

Navigant’s energy research analyst Johnathon de Villier also pointed to EV charging stations as an area where blockchains may lead to infrastructure changes. Blockchain can help with two categories for EV charging. In one case, it can support a secure platform for infrastructure sharing.

“Think AirBnB, except people share their charging stations instead of their homes,” he said. “[Moving forward], it could enable EVs to autonomously interact with and respond to the grid, for example, in a demand-response program.”

This is made possible by what he referred to as “smart contracts,” which equate to pieces of computer code that execute automatically when a set of predetermined conditions are met. In a blockchain network, every node (in this case, both the meter and the EV would be nodes) has a unique ID. An example of a simple smart contract could be: “If any EV other than my own charges at this station, charge $10 per kilowatt-hour,” de Villier said.

There are still hardware issues to consider, though, before this becomes commonplace.

“A lot of charging boards [currently in use] are not compatible with blockchain,” de Villier said.

Since many charging stations are not networked, they will need to be retrofitted or rebuilt to accommodate a network where consumers and station owners can share data. In that way, people driving EVs can learn where the best rates for rechargers are, as well as share their charging credits with others.

De Villier also expects to see changes in how blockchain enables what he calls “transactive energy”—residents or buildings trading the power they generate with others. Increasingly, companies and homeowners are generating their own power, often with solar panels, and the opportunity to share it is gaining interest. Users could sell back power to their utilities or directly to their neighbors in a microgrid, community energy market.

Examples of this are already underway. New York power company LO3 Energy teamed up with Siemens Digital Grid to create an example of such a microgrid in Brooklyn. Known as the Brooklyn Microgrid project, it enables neighbors to produce solar energy as well as buy or sell that power using a blockchain on a transactive energy platform.

The blockchain time stamps every transaction in a series of secure blocks. Although the project represents one neighborhood system of trading energy, the long-term plan is that such microgrids could be possible anywhere and be of value around storms or other emergencies in which solar energy could be stored and accessed from battery storage units as needed, whether or not there was access to the utility grid.

Such systems require a network control and the related switchgear, batteries and smart electric meters.

“For a two-way exchange of energy flow, you would need meters with pretty specific capabilities in households,” de Villier said.

Thus far, blockchain startups are focusing more on software solutions than on selling and installing the hardware. The question is whether utilities will embrace blockchains to share data and, ultimately, energy with others. That would mean top-down pressure for more blockchains in addition to bottom-up pressure from the software startups.

Utilities could use blockchains to manage assets—such as the condition of their poles and power lines—by capturing sensor data wirelessly and potentially making that available privately within the company or publicly. Pilots of such solutions are underway in Australia and elsewhere.

People are even experimenting with blockchains around building automation, but de Villier said the business models for these applications have yet to materialize.

Smart appliances, especially those in homes, are likely to eventually leverage blockchains to share and receive data about the function of those items.

According to research by analysis firm Gartner, companies should respond to blockchain technology by performing scenario planning exercises for sharing and distributing ledgers.

However, there’s no reason to jump yet. According to Gartner, by 2022, only 10 percent of enterprises will have achieved any radical transformation with the use of blockchain technologies. Analysts forecast that the majority of the new blockchain-based startups will either consolidate, be bought out or close down.

However, one thing can be said definitively, according to de Villier: “Blockchain isn’t going anywhere.”

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