Peer-to-Peer Energy Trading
Despite living very close to a major US city, power outages are a common occurrence in my neighborhood. This is partly because most US power lines are above ground, which when met with high winds, heavy rain and forests result in the inevitable outage by tree. It’s also related to how far power travels from its point of generation to the point of consumption. One downed tree can affect thousands of homes.
The investment in residential and commercial solar panels continues at pace, as does the shift from fossil fuel to electric vehicles, the latter funding research that is resulting in increased battery efficiency and lower battery costs. It’s only a matter of time before we have the option of switching to our cars as a power source for our entire home in the event of a power outage. This leads me to the conclusion that most neighborhoods now have some capacity to both generate and store electricity. Owners of solar panels make a significant upfront investment, but their only options to recoup that investment are to either use the electricity they generate, store it for future use, or sell it to the electricity company.
It’s also worth noting that around 5% of all electricity generated in the USA is lost during transmission*, and in less developed countries like India those losses are as high as 20%.
With power cables connecting every home in your neighborhood, a clearly defined standard for supply**, and now the capability to locally generate and store power, we have the potential for a new type of energy solution. We can create a solution that is more efficient from an environmental perspective as it’s green energy traveling less distance and therefore more of it is getting from the point of generation to the point of consumption. We also have a solution that is more reliable, a distributed system does not depend on one source of power.
All we are missing to create a local distributed power grid is a way to record electricity put into the system and to record and pay for what’s taken out — ideally without high administration overheads or the need for a central authority. This is a perfect use case for Blockchain Smart Contracts.
A solution of this type will always have both a Hardware and a Software component. A registered Smart Meter will be required to measure and record the electricity put into the system and the electricity taken out. The software component could easily be implemented using an Ethereum Smart Contract — as power is generated and fed into the system the contract would mint Energy Tokens that represent watts of electricity and assign them to the wallet of the Smart Meter that generated the power. When connected to a form of payment such as Bitcoin or Ether, the combination of the Smart Meter and Smart Contract would ensure that Energy Tokens are purchased and transferred to the consumers account and burnt when used. This could happen in near real time with energy being paid for and consumed as its generated. Central battery arrays could store unused electricity, the Smart Contract paying an additional small fee to the owner of the battery array for the service they provide. There is no authority, there is no human interaction, it is an automated process.
Following some research, I was not surprised to learn that there are a number of projects underway across the USA, Australia and Europe.
Residents of the Park Slope area of Brooklyn are now able to sell power generated from rooftop solar panels via a microgrid enabled by Ethereum Smart Contracts. Working with Siemens they implemented a solution that is independent of the existing power supplier and that connects one small neighborhood. It provides consumers with the choice of buying electricity from a number of suppliers including their neighbors.
Energy Web Foundation- http://energyweb.org
The Energy Web Foundation is a global non-profit organization based out of Switzerland who are focused on accelerating Blockchain technology across the energy sector. In November 2017 they released ‘Tobalaba’, an open source Proof of Authority Blockchain solution that uses Parity Technologies’ Aura consensus engine and Ethereum client.
Power Ledger- http://Powerledger.io
Power Ledger is an Australian Blockchain energy trading platform enabling consumers and businesses to sell their surplus solar power peer-to-peer. Australia has both the potential to generate incredible amounts of solar energy as well as a geographically clustered population that provides the perfect use case. They recently raised AUD $34M in token pre and main sale. Power Ledger are also part of the AUD $8M part-government funded project in the city of Freemantle to use Blockchain technology to integrate distributed energy and water systems.
I am confident that we are seeing the start of an important shift in how we generate, buy and sell energy. Blockchain will be the technology that underpins the distributed peer-to-peer solution. It’s unlikely that we will generate all the electricity we need to create a truly independent peer-to-peer system, but I do see a model where the energy companies of the future focus less on power generation and more on supporting the shared infrastructure that connects homes and businesses.
#DigitalTown #Technologyforgood #Blockchain #Electricity #SharingEconomy
* Referred to as Technical Loss — https://tinyurl.com/joqkqxz
** 120v/60hz in the USA