PJM-EIS UPDATE: Modernizing a legacy U.S. REC tracking system with blockchain-based technology
With an initial pilot complete, we look ahead to what’s next for one of the world’s largest renewable energy markets
In the world of power grids, PJM Interconnection is a household name. It is a regional transmission operator (RTO) whose service territory spans a 13-state region in the Mid-Atlantic, Great Lakes, and Northeast region of the United States. It’s not huge by land area: as measured in square miles, all of PJM’s service territory could fit within the borders of France. But it is a massive electricity and renewable energy market.
PJM was the world’s largest competitive wholesale electricity market until the development of the European Integrated Energy Market in the 2000s. And it remains one of the world’s largest grid operators as a founding member of the GO15. On the renewable energy front, in 2020 PJM generated more renewable energy certificates (RECs) than the whole of Australia.
And so when we, Energy Web, kicked off a collaboration with PJM Environmental Information Services, Inc. (PJM-EIS) — a subsidiary of PJM Interconnection — in late 2018, we were excited. That’s because PJM-EIS administers the Generation Attribute Tracking System (GATS), a platform for tracking and trading RECs in the United States.
The focus of the collaboration was to build a blockchain-based pilot alongside PJM’s existing GATS system. Together, PJM-EIS and Energy Web wanted to explore the potential for bringing new functionality and benefits to GATS and evaluate how blockchain technology could be integrated into existing IT systems seamlessly and create value for PJM stakeholders.
Evaluating opportunities to modernize an existing U.S. REC platform
We set out to leverage the Energy Web Decentralized Operating System (EW-DOS), an open-source tech stack of decentralized software and standards for the energy sector. More specifically, the pilot used Energy Web Origin, an open-source software development toolkit (SDK) for REC (and similar) tracking and trading platforms running on the Energy Web Chain, to create new functionality for the GATS Bulletin Board and assess the potential for decentralized technologies to support wider improvements to GATS beyond the Bulletin Board.
The Bulletin Board is a place on GATS where REC buyers and sellers can, respectively, post their bids and asks for specific REC volumes. Actually selling or buying those RECs remains the responsibility of the counterparties in bilateral agreements. We thought a blockchain-based solution could improve that experience and increase use of the Bulletin Board.
Historically, the Bulletin Board has been an underutilized feature available on GATS to facilitate trading of voluntary RECs. The central aim for this pilot was to test new functionality that could enhance the Bulletin Board as a means to grow the REC market in the PJM footprint while also improving security, increasing transparency, and reducing transaction costs for PJM stakeholders. In other words, this pilot assessed how improving the technical functionality and user experience of the Bulletin Board could remove market barriers and grow the local REC market — and possibly even attract greater REC imports from other U.S. REC markets.
The result: a pilot for the PJM-EIS version of GATS Bulletin Board with blockchain-based REC marketplace functionality that integrated with the existing GATS
This spring, five PJM subscribers tested the pilot GATS Bulletin Board. Seller participants posted asks on the Bulletin Board based on actual RECs in their respective GATS accounts and buyer participants posted their REC bids based on their procurement needs. Any matches made between bids and asks then triggered notifications for participants to confirm if they wanted to complete any REC transfers, where any completed trades would link back to the legacy GATS to update the buyer and seller’s respective accounts. For this pilot, the transactions were purely test transactions and so there was no financial settlement.
Here are some screenshots from the pilot GATS Bulletin Board to give a flavor of the updated user experience (shown from the perspective of a renewable energy buyer):
- Getting a view of the overall Bulletin Board market activity
2. Starting the renewable energy procurement journey with various search filters to place bids
3. Identifying verified procurement options that match with bids
4. Viewing completed transactions and blockchain-based proof of each transaction
“We have learned a lot about what it would take to add new technical functionalities to GATS, how to integrate blockchain-based technologies ‘under the hood’ of GATS, and how PJM stakeholders support these improvements,” said Ken Schuyler, President of PJM-EIS. “We look forward to further understanding how we can use EW-DOS to support our overall digitization efforts.”
Energy Web Origin provided the back-end infrastructure for the marketplace functionality and use of a public blockchain — the Energy Web Chain — to digitize the RECs in GATS and anchor the proof of any REC transactions that occurred on the pilot Bulletin Board system.
Pilot feedback and next steps
In post-pilot interviews, pilot participants shared overall positive feedback about their experience, especially around the level of integration with GATS, and shared how they could successfully post bids and asks for RECs from their GATS accounts.
In the end, given how energy sector market participants typically adopt new technologies in phases (rather than in one fell swoop), this pilot illustrates that it is possible to integrate blockchain-based functionalities into existing IT systems to support wider digitization and tech modernization efforts.
Nevertheless, PJM-EIS and Energy Web experienced practical implementation challenges with the pilot. The core challenge revolved around how — while it’s possible to integrate new, blockchain-based tech with legacy IT systems — this integration process takes more time than designing and implementing an entirely new IT system from scratch. This is the main reason why the pilot took more time than initially expected to implement.
The pilot also raised bigger strategic questions that PJM-EIS will continue to evaluate as it explores next steps for technical upgrades to GATS in general and the Bulletin Board in particular. For example, this pilot showed that it is technically possible to integrate new technologies on a legacy system, but cannot answer the central question as to whether or not PJM-EIS wants to make the Bulletin Board an exchange where real REC purchases (and associated financial transactions) happen. In addition, the pilot did not assess the role of using new decentralized identifier technologies that make it possible to assign every energy device a unique digital identity anchored on a public blockchain so that a given device can plug into different PJM markets.
