Decentralizing Energy Data using Blockchain
- Oct 30, 2020 3:42 am GMTOct 30, 2020 3:34 am GMT
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In the utility sector, energy data has always played a significant role for the energy producers, suppliers, transmission operators, distributers and consumers in determining the supply & demand, trading & settlement, and analytics. AMI (Advanced Metering Infrastructure) systems, Smart Grid Systems and associated big data technologies already took a significant stride in giving a structured and granular energy dataset to these market participants, and large-scale investments are in progress to make best use of this data. With the advent of Blockchain technologies, there is a significant potential to get energy data into a decentralized, self-managed platform, rendering trusted data across market participants providing significant benefits.
Blockchain has already started making inroads in different industries, and utility sector is no exception. There are numerous small-scale blockchain platform across the world, like NY Brooklyn Microgrid1, Western Australia µgrid2, etc. using it primarily for distributed generation benefits. There have also been instances around its usage in carbon trading, Internet of Things within utilities. Similarly, one of the use cases can also be to store all energy transactions in a blockchain platform, targeted for a specific utility business function, and provide access to its users. This will also ensure that the market participants belonging to that business function adheres to a common standard and gets the data from a common source. This will also ensure data transparency and security, which are the key features of blockchain.
Energy settlement is often contemplated to be a critical use case of blockchain in utility sector. It uses transactional energy data coming from different sources with multiple market participants, who need to establish trust between them. These transactions are also interdependent on each other. As an example, figure 1 below depicts how different participants in a deregulated market can have their usage transaction registered in blockchain platform.
Figure 1: Energy Settlement Blockchain
The following transactions are being registered in this blockchain platform - The interface numbers are cross referenced in the diagram.
- Day Ahead Transmission Rights of each suppliers are stored as smart contract in the blockchain platform. These contracts can be further translated as supply transaction and stored in the platform.
- Real time Balancing Acts performed by regional transmission operators are stored as supply transaction in the platform.
- Usage consumption transaction gathered by participating utilities, for their customer bases, are also stored in the platform.
The following components comprise the ‘blocks’ in this blockchain
- The 1st component is the hash code for the previous block. This is the fundamental framework behind blockchain as transactions are always appended.
- The 2nd component is the market participant information. Each of the market participants, ex. Supplier, Transmission Operator, Distribution Utility having their own customer base. They are also the node for hosting this blockchain usage ledger.
- The 3rd component is the unit of measure of each transaction, which are MWH, KWH depending on the granularity of the data stored in the blockchain.
- The 4th component is the usage value of each transaction, it can be supply, denoted as positive; and consumption, denoted as negative.
- The 5th component is the location/place of the transaction, which is the point of delivery, ex. Transmission interconnection, Distribution Substation, Distribution Transformer.
This block structure can also be represented by the algorithm below.
Block(n) = Hash of Block(n-1) + Block Identifier(n) + Block Data(n) + Hash of Block(n)
where n = current block record
Typical factors to be considered for creating this blockchain algorithm,
- Creating the genesis node, this is the first transaction recorded in the blockchain
- Storage requirement for the blockchain data in each of the nodes
- Handling concurrent transaction and maintaining the integrity of the blockchain
To give an example, the framework depicted here can be implemented as a blockchain platform for any of the interconnections in US/UK and aid in their energy settlement functions. The data can be subscribed by the suppliers, transmission operators, utilities operating under a specific interconnection. This framework, apart from bringing the advantages of blockchain, i.e. transparent data, single source of truth, independent & secured data, can also help in
- Derivation of settlement financials from the usage transactions recorded in blockchain. RTO/ISO can use this data for settlement functions.
- Derivation of analytics through aggregation of usage data. Aggregators, Analytics provider can act as a node of this platform to retrieve these transactions for analytics, reporting use.
- Enabling regulatory alignment of loss calculation rules, estimation rules. These rules differ very significantly across different market participants, governed by local regulations. Blockchain platform will incentivize them to come to a common ground in terms of application of standard rules.
- Extension of this model to capture pricing information between supply and usage. This can be used to substantiate rate cases.
- Extension of this model to integrate with other blockchain capturing granular data having their own targeted participants. This will help develop a distributed blockchain energy transaction ledger based on the need of the participants.
Although, blockchain has numerous use cases across industry, it is a pretty new concept in common mind. Particularly in utility sector, using of blockchain need to overcome the concerns around regulatory adoption, privacy, competitive disadvantage. Additionally, any large- scale implementation of blockchain will require proven demonstration to meet operational, security, and performance objectives. However, with the ever-increasing need of transparent, trusted, autonomous energy data, combined with success results from small scale initiatives, blockchain is set to increase its footprint in utility sector.