Blockchain: Not Just for Bitcoin

by Wayne Hicks,  National Renewable Energy Laboratory

National Renewable Energy Laboratory (NREL) researchers are considering the use of blockchain technology to help the nation’s energy grid manage complex energy transactions at scale. Their experiments aimed to determine what could happen when two homes are connected by blockchain so one could sell excess solar power to the other, which required two blockchain transactions, one a secure transmission of data about the amount of energy generated, the other a payment to the seller.

The research centered on NREL’s foresee software solution, which uses homeowners’ energy preferences to control connected appliances in the home. Foresee informed the second home when it would be cheaper to purchase renewable energy from its neighbor than to pay utility charges.

NREL’s Dane Christensen said, “Utilities are very interested in how to manage electric service without having to up-size all the grid equipment.”

For the uninitiated, blockchain serves as a distributed digital record of actions agreed and performed by multiple parties. Blockchain’s primary value is providing mathematical proof about the state of data, so that different parties to a transaction can agree on the outcome even if they do not know or trust each other. Though commonly associated with cryptocurrencies such as Bitcoin, blockchain technology can be used with virtually any type of transaction involving digital ownership in real time. These technologies rely on established cryptography and consensus mechanisms to ensure transactions remain secure, and an entire industry has emerged to apply blockchain technology in resolving real-world challenges.

Potential opportunities abound for the use of blockchain in the energy sector. The Congressional Research Service last year noted increasing interest among producers of distributed energy resources (DERs)—such as rooftop solar—to sell electricity to neighbors. Congress’ public policy research arm predicted that if this approach proves “practical and economical, blockchain technology could alter the manner in which electricity customers and producers interact.”

Today, utilities use complex software platforms called an energy management system (EMS) and advanced distribution management system (ADMS) to manage the demand, supply, and reliable delivery of electricity on the power grid. But it is difficult to scale EMS and ADMS to interoperate transactions between thousands of homes, let alone the millions of connected devices in use in those homes.

“When you have hundreds of thousands or millions of devices out there that want to interact, you face a significant trust challenge,” said Tony Markel, a senior engineer in the Secure Cyber-Energy Systems Group at NREL. “Trust between devices can only be achieved through methods that verify and enable proof that each system does what it said it was going to do. With blockchain, we may have a path to achieve secure, trusted communications between players without a need for central control.”  Read the complete article

DCL:  At the heart of this development is a great deal of CEP that provides the negotiation of the energy transactions that lead to agreements that are registered in the blockchain.  All of these negotiations are executed using real-time event processing.  That detail is brushed under the covers in this article!