After a few years of hype, a lot of questioning and a handful of disappointments, Blockchain is starting to make some inroads into energy and utilities.
Once upon a time, Hervé Touati worked as an executive at Shell in Houston, where he built and led the company’s distributed energy business, Connected Energy–one part of a trillion-dollar investment which was laser-focused on bettering communities, including key C&I customers.
Then, one day, he got inspired by discussions at the non-profit Rocky Mountain Institute (RMI), based in Boulder, Colorado. He became one of RMI’s Senior Fellows.
Fast forward a few years to him co-founding The Energy Web Foundation (EWF), a global non-profit focused on enabling “the digitalization of the energy sector by leveraging blockchain, IoT and associated technologies”.
This summer, EWF announced the launch of the Energy Web Chain, “the world’s first public, open-source, enterprise-grade blockchain (platform) tailored to the energy sector.” Proponents are saying that this is the missing link to unlocking the future of the transactive grid.
It’s certainly a very tall order for the newly launched project – but who says you can’t reach for the stars when launching a new way for electric-transactions to occur?
What do the critics of blockchain have to say?
Visionaries in the energy industry, including Founder and Chief Scientist of RMI Amory Lovins, have been arguing for the creation of an effective community energy marketplace which, in turn, powers the creation of a “shared energy economy.”
But EWF may be too focused on large corporates and large-scale projects, which some think will result in it missing the really big opportunity here: developing and deploying the necessary digital ingredients for a new kind of energy economy.
When most of us think of Distributed Ledger technologies, and when we hear about Blockchain, we think of one word: Bitcoin. That’s perhaps the best-known manifestation of Blockchain, but it’s only one use of the technology.
Bitcoin’s rise (and fall) as a digital currency was driven by the fact that such “cryptocurrency” lives or dies on the basis of peer-to-peer consensus. Clearly, the future of EWF’s Energy Web Chain and other experiments like it will depend on addressing a much larger challenge: the readiness of the digital backbone technologies and enabling tools that make such digital transactions secure, safe, reliable, and trustworthy enough for users to buy in—both literally and figuratively.
EWF affiliates and others making progress
Two of the EWF co-founders, RMI and Grid Singularity, had been joined at the outset by a cohort of approximately 12 initial Affiliates. By early 2018 EWF says they “had surpassed 40 Affiliates and by early 2019 had crossed the 100-Affiliate threshold.
Meanwhile, a growing list of respected utilities and grid operators have launched demonstrations, pilots, and even pre-commercial deployments on Energy Web test networks, including PJM-EIS, SP Group, Acciona, Iberdrola, Elia, and Stedin, among many others.” That is certainly impressive progress.
Outside of EWF, one of the 100 largest electric utilities in the US, Avista, is focused on a unique pilot initiative inside the City of Spokane’s University District, a 770-acre education and business hub. The utility is demonstrating and testing a package of new ideas and technologies that, when integrated, can build what they call the Shared Energy Economy. Ultimately, this project aims to enable a host of solutions, including smart contracts, wherein electric energy producers and consumers engage in new ways. These types of smart contracts are powered by Blockchain’s distributed ledger technologies and by a host of decentralized applications.
Avista is also testing the integration of energy assets, from rooftop solar and battery storage to building energy management systems (BEMS), that can be shared and used for multiple purposes. According to a press release, “(Avista’s) goal is to demonstrate how both the customer and the utility can benefit from this shared energy economy model and demonstrate that the electric grid can become more reliable, efficient, resilient and flexible.”
To kick off their ambitious program, Avista was awarded a $3.5 million matching grant from the Washington Department of Commerce Clean Energy Fund. Other partners include Washington State University, McKinsey, Schweitzer Engineering Laboratories, Spirae, Itron and Pacific Northwest National Laboratory (PNNL).
To ensure the success of the effort, Avista is also teaming with the non-profit Urbanova, which will also bring together organizations including Verizon, Itron, and Washington State University.
What’s Ahead for Transactive Energy?
EWF’s launch of the Energy Web platform is one part of a much larger digital evolution now underway throughout the 21st century business world: transactions increasingly managed, measured, monitored and priced at lightning-speeds, all built around automated processing.
Critics of such systems are most often not Luddites. They care about the quality of transactions, and not just the quantities of transactions, and they argue for keeping values—and the human being—in the loop. They argue that there are four essential components which must be integrated into any worthwhile effort aimed at building a new kind of energy economy: tokenization, peer-to-peer (P2P) markets, the rise of the prosumer, and the establishment of community-based energy service companies (ESCOs).