A Hypothetical: Restoring Power to Puerto Rico Using the Blockchain

In the days after Hurricane Maria hit Puerto Rico, news and images started to trickle out indicating just how bad the situation is down there. Half the island doesn’t have clean water, hospitals are overloaded, and damaged infrastructure is limiting the movement of supplies. Particularly hard-hit is Puerto Rico’s electrical grid: in a world where we take power for granted, the notion that it’s going to take months to restore service to most homes is nearly unimaginable. Relief efforts are underway, but it’s an enormous task to get Puerto Rico’s legacy infrastructure operational again.

There has to be a better way to get Puerto Rico’s power network up and running again. Turns out, there might be one. The technology is probably too new to be realistically used on the ground today, but it serves as case study for where decentralized solutions can win in the future.

Let me pause before going further: I’ll describe a thought experiment here that imagines a different way of solving the issue of electricity on the island using new technology, but let’s remember that the disaster in Puerto Rico is very much not theoretical. There is surely a long list of reasons — political and otherwise — that this wouldn’t actually work. If you take the time to read this, please also take time to help the victims of Hurricane Maria here.

Here’s the major issue: Puerto Rico’s power generation facilities are largely intact, but up to 80% of transmission lines — the giant towers that haul electricity over long distances — are down throughout the island, with scenes like this:

It’s estimated that up to 80% of Puerto Rico’s power transmission lines are down, taking months to rebuild.

Most smaller power lines in residential areas are likely damaged as well.

It’s going to take months to rebuild the transmission lines to get electricity from power plants to hospitals and homes. While they’re rebuilding, another solution awaits: create a distributed network of electricity on the island independent of the centralized grid. These “microgrids” are not a new concept, but they have always relied on central utilities to maintain the larger system and set the price of power. It turns out that we may not need the central actor: a decentralized, blockchain-based pricing system can set up incentives, broker deals and allow interconnectivity automatically and efficiently. Simply by plugging into the network, anyone can buy, store, generate and sell power to and from each other, all without involving a central utility. Here’s how it could work (Note: I don’t cover the basics of coins or the blockchain here, but this is a good primer):

1. The Puerto Rican Power Authority, SolarCity, or any interested party would start by issuing blockchain-enabled power meters. These meters would do two things: measure power going in and out, and tie that power transmission to a coin on the blockchain, which we’ll call a PowerCoin. If you consume power, you’re charged PowerCoins. If you generate it, you’re paid PowerCoins by those that consume it. The price of PowerCoins is completely dynamic, allowing electricity to be traded on a free, decentralized market.
2. The power meters would be connected together in what would start as a small network. A few solar panels on a roof or an industrial generator outside a warehouse would be connected to a residential refrigerator or a cell tower, each connected by a meter. Every node starts with zero PowerCoins, so to draw power from the grid, each connection must first either generate power (rewarded with a mixture of purchased and newly created PowerCoins), or purchase existing PowerCoins at the market price. Relief efforts can plug in, pumping power into the network and giving away their earned PowerCoins to those that need them. Solar panels or other forms of generation can also be donated, allowing people to create PowerCoins on their own. All the while, there is no “central node” — both the power and the PowerCoins are distributed.
3. Slowly, the network will grow. Because the price of power is dynamic, the price will go up when the network is strained and down when there’s excess power. That incentivizes battery banks to be installed, buying power when prices are low and selling it when it’s high. As the network expands, the price and reliability of power will stabilize.
4. The PowerCoin system sets up incentives not just for those generating and consuming power, but also for those doing the work to make sure others are connected to it (a power network would definitely fail if everyone had to hang their own power lines to plug in). The PowerCoin smart contract can solve that, too. If a third party helped you get connected to the network, they can charge a connection fee tied to your meter. That fee can be a portion of power consumed, a flat fee, or zero — it’s all possible. It’s even ok if many small, different networks are created with different types of meters and PowerCoins: the networks can be tied together and the coins traded for each other at their respective market prices.
5. Eventually, a big power plant will plug in, flooding the network with power and driving down the price of PowerCoins to “normal” levels. Great! Relief operations that have been generating power and giving away PowerCoins no longer have to do that. The big difference is that the utility now influences the price of power, but it no longer controls it. They’re competing on a level playing field with a network of distributed power sources, with a completely transparent pricing mechanism.

The PowerCoin solution is not without its issues: grid planning and standardization, power theft, and blackout prevention are all real problems. It’s particularly unlikely that any solution like this will actually be implemented in response to Hurricane Maria, unless someone has already built a blockchain-enabled power meter I don’t know about (EDIT: Looks like a similar concept is being tested in New York). Existing rebuilding efforts will probably be done by the time those are created. But I hope the example is instructive on how distributed networks can fill the void left when centralized systems fail.

Finally, I need to come back to the American citizens that are suffering greatly as a result of this disaster. It’s fun to think about new ways of solving old problems, but unfortunately the need is too urgent for R&D. We (probably) won’t be able to actually implement a cutting-edge distributed power system for the island, but we can do our part to help.