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Image: Energy Web Foundation.
Blogs Tech

Bridging the gap: Blockchain in the energy sector

Image: Energy Web Foundation.

In 1994, Microsoft cofounder Bill Gates famously quipped, “Banking is necessary; banks are not.” More than 30 years later, those words sound particularly prescient, as blockchain-based cryptocurrencies have proliferated while disintermediating fintech and making secure, verifiable, and essentially bank-less transactions between parties possible.

Yet cryptocurrencies enjoy a luxury that blockchain applications for the energy sector don’t: they exist more or less exclusively in the virtual, digital realm. Sure, they can have real-world implications, such as the infamous runaway energy consumption of Bitcoin mining. But cryptocurrencies otherwise move around on various distributed ledgers without ever having to “anchor” themselves firmly to physical devices and other real-world assets.

On the other hand, in the energy sector and especially with the world’s electricity grids, bridging the digital and physical worlds is a must. That’s why a recent proof-of-concept demonstration at European Utility Week in Vienna was so important.

The electrical grid is one of the most complex cyber-physical real-time systems humanity has built. It’s “always on.” Fast-growing amounts of predictable but variable solar and wind power must be integrated into that grid. And a growing number of distributed energy resources (DERs) inject their green power at the nodes and “leafs” at the edges of the grid.

Trustworthy digital “twins” of these and other physical assets are key to gain signal awareness and control on the physical layer to solve those questions on production and demand side. Such digital twins can be represented on the right kind of blockchain.

According to Navigant Research, the global installed capacity of DERs is expected to balloon from ~132GW last year to more than 528GW by 2026. Gartner expects the number of Internet of Things connected devices to reach an installed base of 21 billion by 2020. Not to mention smart meters, bulk power system assets, and utility-scale wind and solar farms.

All of these billions of myriad physical assets will theoretically need to connect to, communicate with, and transact on a blockchain like EWF’s Energy Web Chain. And each asset will be associated with a rich variety of data: the kilowatt-hours of electricity they produce, store, and/or consume; the green attributes associated with their renewable and other low-carbon generation; the services they provide to and buy from the grid, such as real-time balancing; and yes, financial settlement for all manner of transactions.

Moreover, each asset needs an efficient way to be registered and commissioned on the blockchain, so that we can have good faith that a given device is “doing” what the transmitted data says it is doing.

In other words, one critical issue for successful deployment of blockchain-based solutions in the energy sector comes down to a single word: connectivity.

For all the talk about energy-sector digitisation, it remains a physical world. But as blockchain gains a greater foothold in the sector—including through the Energy Web Chain—all those physical assets must connect to and communicate with the digital world. Digitisation is nothing without connectivity.

Even if there are data and communication standards available for the energy sector today—including for smart meters, centralized IoT solutions, and other digital aspects—there are still a plethora of vendor-specific interfaces, protocols, and data formats out in the industry to enable device connections. To address this, a team at EWF has created an expandable input abstraction layer—EW Link—allowing you to connect to various devices and data sources ranging from smart meters to SCADA systems.

What remains, then, is the question of how to achieve device connectivity. That question opens up a Pandora’s Box of options: hard-wired fiber, Bluetooth, WiFi, wireless mesh networks, etc.

On one end of the Energy Web Chain network, there are the validator nodes themselves that maintain full copies of the blockchain and who must efficiently validate blocks and achieve consensus in order for the Energy Web Chain to continue humming along. These validator nodes are typically running on dedicated, server-grade hardware with high-speed fiber Internet connections.

On the other end of the Energy Web Chain network is the grid edge, where Navigant’s 500+ GW of DERs and Gartner’s 21 billion connected devices will live just a few short years from now. It’s impractical to think that each and every one of those assets will connect in ways similar to validator nodes. From thermostats to electric vehicle charging stations to solar panels to behind-the-meter batteries, these diverse devices need an energy-efficient, hardware- and software-lite way to maintain connection to the blockchain.

At European Utility Week (EUW) in Vienna in early November, the Energy Web Foundation and EWF Affiliate Wirepas teamed up to showcase a proof-of-concept demo connecting multiple small devices to the Energy Web Chain.

The Wirepas connectivity solution is a hardware-agnostic, autonomous, and highly scalable mesh network—decentralised and wireless—that could either be an aftermarket bolt-on solution or embedded directly on chipsets. At EUW in Vienna, Wirepas connected multiple solar panels from two different manufacturers, along with several environmental sensors, and successfully had them all “talking” to the Energy Web Chain using the EW Link standard integration interface.

While small in scale, the demo was a window into the not-too-distant future. With dozens of projects and companies actively building and testing applications on Tobalaba, the Energy Web Chain’s testnet, and with the Chain’s genesis block slated for mid-2019, a world in which blockchain-based solutions play an important role in grid operation could be closer than many think. But first, the decentralized, decarbonized electricity grid and all its component parts need to successfully bridge the physical-digital divide.

Peter Bronski Director of marketing and communications, Energy Web Foundation

Peter Bronski is director of marketing and communications at Energy Web Foundation.

Andreas Hergesell EW Link lead, Energy Web Foundation

Andreas Hergesell leads the Energy Web Foundation’s EW Link work.

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