The Role of Blockchain Technology in the Power Sector

Context

Blockchain technology is an industry-agnostic distributed ledger. It can store and manage transactions across multiple participants. By virtue of its immutable, secure, and transparent nature, it can be applied to any multi-step transaction-based application that requires security, traceability, and visibility. Blockchain technology directly connects the procurer to the seller, eliminating the need for a third party, consequently reducing transaction costs and fees.

Any transaction between market participants is stored in blocks that are replicated across the peer-to-peer network (P2P). Every transaction in this ledger is authorised by the owner’s digital signature, which authenticates the transaction and safeguards it from tampering. There are three types of blockchain platforms based on who can add data to the chain and view the distributed ledger: public, private, and consortium.

Relevance and impact

As we shift to a bi-directional grid, blockchain technology can provide a secure, transparent, and robust network with a tamper-proof data register accessible to every player in the network. Blockchain technology can assist multiple applications at the generation, transmission, distribution, and consumption stages in the power system to resolve existing challenges. For example:

• Automating the issuance and trading of renewable energy credits/certificates based on actual energy consumption.
• Maintaining energy flows and ensuring payments using smart contracts in a P2P microgrid.
• Coordinating wholesale power trading and eliminating the need for brokers, indexing agencies, specialised energy trading, or risk-management software. 
• Enabling real-time customer–utility grid interactions, facilitating faster payment cycles, efficient energy use, and streamlining energy accounting.
• Electric vehicle (EV) charging and billing (discussed in detail here) can become seamless when coupled with blockchain technology. EV owners can confirm the share of renewable energy in charging the EVs using blockchain technology and avoid double counting. In a P2P network, homeowners can register their private charging points (CP) and earn from otherwise idle chargers (when not in use).
• Enabling smart home appliances to interact with the utility grid and promoting the energy price-based operation of these appliances.

Infrastructure for blockchain technology

The critical components for implementing blockchain technology are full nodes (computers), partial nodes (smartphones or smart meters), a communication network, and a software platform.

Who should care?

• Transmission and distribution companies
• Renewable energy generators
• Consumers
• Central and state regulatory commissions

Case study

GridExchange pilot project (Canada), August 2021

The GridExchange¹ pilot project was launched by a Canadian utility, Alectra. Natural Resources Canada funded the project in partnership with Sunverge (a cloud-based software platform provider), Savage Data (an energy services provider), and FLO (an EV charging infrastructure provider). GridExchange is a blockchain technology-based software platform that enables distributed energy resources (DERs) such as solar PV, battery energy storage systems (BESS), and EVs to participate in an energy marketplace. Initially, 21 Ontario households participated in the three-month pilot programme. Under this programme, each clean energy transaction is recorded, and customers are compensated with cash and ‘GxRewards’ that can be redeemed at local shops and restaurants.

P2P solar energy trading (India), March 2021

Tata Power DDL² and Power Ledger, in association with India Smart Grid Forum (ISGF), rolled out the first P2P solar energy trading pilot project in Delhi. Power Ledger has provided its uGrid platform for the project, through which 150 sites with a cumulative capacity of ~2MW of solar PV participated. Prosumers will sell excess energy to other residential and commercial consumers in a dynamic pricing environment, benefiting from P2P energy trading. Power Ledger’s blockchain-enabled records of energy transactions will provide near-time settlement and complete transparency throughout the process.

Renewable Energy Certificate (REC) marketplace (United States), January 2020

In partnership with a renewable energy registry, Midwest Renewable Energy Tracking System (M-RETS), and Clearway Energy Group (a renewable energy developer), Power Ledger³ launched a global REC marketplace to streamline the buying and selling of RECs. Power Ledger’s TraceX, a digital marketplace for the trading and settlement of environmental commodities, will help reduce the costs involved in buying and selling RECs within M-RETS and introduce transparency.