Australian tech pioneer Power Ledger’s solutions shed light on the increasingly important role of blockchain in the energy sector.
Power Ledger has introduced blockchain into four grid transactional services, peer-to-peer energy trading, virtual power plant and flexibility services, power purchase agreements and renewable energy certificates.
Blockchain is considered as the new financial architecture for a decentralised energy system with large numbers of variable distributed energy resources, which need to interact with each other.
This shift from the traditional ‘hub and spoke’ model of centralised generation to a ‘cellular’ structure with decentralised generation needs to be reflected in the financial structure, which similarly has been centralised, according to a new case study from the Global Blockchain Business Council (GBBC).
When this financial trust architecture switches from hub and spoke to cellular, and consumers become prosumers, no individual cell has enough financial probity to act as a bank. The trust instead must come from a network of cellular elements acting together, the report says.
In this case they are known as ‘nodes’, and this is the reason blockchain becomes an important part of the decentralised grid. Blockchain facilitates a trustless way of doing business in which small players can come together to create a system that is even more trustworthy than a traditional bank.
In addition to the solar panels, batteries and electrical loads, each cellular unit’s data and transaction is written to the blockchain. The blockchain has many nodes and each can be thought of as a decentralised back office billing unit and bank, responsible for handling and validating all the transactions, with their own built-in audit system.
Characteristics of Power Ledger’s – and other companies’ – blockchain use cases include growing numbers of resources and hence transactions and for practicality the need to automate them. The transactions also have a variety of values but they all need to be recorded and the correct payments made and audited between the resources.
The report says if blockchain did not exist, renewable energy certificates could still work and it is not critical to their existence. However, with their increasing complexity such as including more information on the provenance of the kilowatthours they represent and automation of creation and retirements, blockchain make their provenance more trustworthy.
For the other products, it is highly unlikely a distributed version of the grid work without blockchain, the report says. The sheer number of transactions between different cellular metered units would be astronomically high and all at relatively low margin.
“For anyone hoping to integrate renewable energy into the future of energy production, blockchain is a vital tool. Blockchain may be a fad to some, but the world of energy will soon find it is the game changer for which we have been waiting.”