SUMMARY ON

ENERGY
BLOCKCHAIN

BY
PRAJEETH BABU KODRU
107117073
EEE-A
BLOCKCHAIN- AN OPPORTUNITY FOR
ENERGY PRODUCERS AND
CONSUMERS?
Blockchain
• Blockchain is collection of data in chain of blocks. Its a
distributed, decentralized, public ledger.
• Introduced by Satoshi Nakamoto.
• Blockchain consists of blocks. Each block consists of
information(any kind), hash(address) of the block and hash of
the previous block.
• Each block is connected to the previous block through the hash,
hence this forms a chain which is called as blockchain.

How does blockchain work?

Blockchain can be used in many ways. To explain the working, let us
take example of implementation of blockchain in bitcoin.
• First a provider and a customer agree for a transcation.
• The transaction is combined with other transctions made during
the same period to form a data block.
• Each transaction is encrypted and distributed to many
individual computers(peer-to-peer), each of which stores the
data locally. This ensures that no one person can make changes
to the ledger because everyone else will immediately flag it as
corrupt.
• Everything stored on the Blockchain is encrypted. This way,
everyone is able to see all the transactions.
 • Proof of Work is a concept invented in Bitcoin Blockchain
where in the miners (special users of Bitcoin) will validate
transactions by solving a complex mathematical puzzle called
Proof of Work. Technically, there is a hash target value
designated to every block before time. The miners are rewarded
with bitcoins for doing this.
• The verified block is combined with all other blocks previously
verified, thereby creating a (continuously growing) blockchain.
• Thus the transaction is confirmed to both parties.

Proof of work vs Proof of stake

• In the system of proof of work, the miners can join together and
form mining pools which will make their chances of getting the
solution faster and thus earning more rewards. Also this process
consumes a lot of electricity.
• To overcome this disadvantage, proof of stake is introduced.
Proof of stake selects a particular miner to mine a given block.
The person with the highest bid is selected, in case the person
fails to do the work, the money is withdrawn from his account.
This process consumes a lot less electricity.

Advantages
• High security :- The data stored in blockchain can't be tampered
by anyone. If anyone does tamper with the information, the
hash of the block changes, since every block is connected
through the hash, the person has to change the hash of the other
block and so on for the whole chain which is almost impossible.
• Since the technology is decentralized, it will allow middle-man
free way to exchange asset. There will be no intermediaries,
 this will save time and money.
• It provides durability, reliability, and longevity with
decentralised network.
• All the transactions can be investigated and audited easily.

Challanges
• To verify all the transactions takes huge power i.e. lots of
electricity is required.
• There should be security about the private key. Every time
private key must remain secret because revealing it to third
parties is equivalent to giving them control over the bitcoins
secured by that key. Also, it is necessary to have a back up of
the private key so that it can be protected from accidental loss.
• Blocks in a chain must be verified by the distributed network
and it can take time. So, transaction speed can be an issue.

BLOCKCHAIN APPLICATIONS IN DIFFERENT SECTORS

1. Blockchain applications serving as a basis for cryptocurrencies

The use of blockchain in bitcoins has been seen above.

2. Private blockchain
• The operator can conrol the access of the users.
• Rules governing the blockchain can be changed easily.
• Greater anonymity is possible as transcaction is not publicly
accessible.
• The operating cost is less and efficiency is high since the
blockchain models give the opportunity to automate their
models. Example :- Nasdaq
3.Smart contract applications based on private blockchain
• Only some members have access to it.
• Smart contract applications based on private blockchain can be
used for not only recording the transaction data but also to
implement smart contract for settlement of derivatives.
Example :-Barclays
• The contracts are made between customers through operators
platform.
• Centralised data storage and verification is performed by the
operator.
• The operator can manipulate in case of legal disputes.
• The operating cost is less.
• The operator may charge some fees for providing service.

4. Smart contract applications based on public blockchain

• Everyone can access for free.
• Smart contracts can be implemented on a public blockchain. So,
the users can trade with all users.
• Decentralised data storage and verification is performed by
peer-to-peer network.
• Data manipulation is not possible.
• The operating cost is high.
• No operator fees.
• Example :- Ethereum
APPLYING BLOCKCHAIN TECHNOLOGY
TO ELECTRIC POWER SYSTEMS

Electricity Trading Markets

• Peer-to-peer transactions: Applications of blockchain networks
that enable customers to trade electricity, such as that resulting
from excess rooftop solar generation, with one another directly,
bypassing the centralized electric power system .
• Grid transactions: Applications of electricity trading that
continue to rely on the electricity grid, including in existing
wholesale markets or new markets, such as distribution and
flexibility markets.

Energy financing
• This category comprises ventures focused primarily on using
cryptocurrencies to raise funds for energy projects (which tend,
overwhelmingly, to be clean energy projects).
Example:- WePower.
• Blockchain networks may broaden the pool of potential
investors in renewable energy projects by enabling a multitude
of smaller investors to supply capital.

Sustainability attribution
• A decentralized blockchain network could enable transparent,
accurate, and frictionless tracking and trading of these attributes
like whether a unit of electricity is renewable and emissions
resulted from its production , which would accelerate clean
energy deployment and carbon emissions reduction.
Electric vehicles(EV)
• Blockchain networks that enable private owners of charging
infrastructure to seamlessly sell charging services to EV owners
could improve the appeal and uptake of EVs.
Example :- eMotorWerks
• Blockchain network can be used to reduce transaction costs by
enabling EVs to charge using underutilized chargers already
installed in residences or businesses.

Other applications
• Managing and recording the energy use of appliances, such as
heaters, in response to price signals from the grid, it aims to
save customers money.
• Enable customers to rapidly switch retail electricity providers.
• Applying blockchain technology to enhance the cybersecurity
of electric power systems.

SOME APPLICATIONS OF BLOCKCHAIN TO ENERGY

TRADING

1. Brooklyn microgrid
• Energy not used by the rooftop photovoltaic systems in
buildings is themselves sold to neighbouring households.
• All buildings are interconnected through conventional
microgrid with transactions being managed by central
blockchain technology.

2. GRID+:
• Grid+ uses the Ethereum blockchain as its transaction
processing platform.
• Grid+ requires its customers to prepay for cryptocurrency
tokens to procure wholesale electricity.
 • Grid+ markets a smart software agent that opportunistically
purchases wholesale electricity on the customer’s behalf and
optimizes the customer’s appliances to minimize real-time
energy costs.

3. Vattenfall: Powerpeers
• Powerpeers can offer their self generated energy and share it
with other participants.
• Energy provided by each user can be viewed online.

4. RWE and Slock.it : BlockCharge

• Electric vehicles to interact automatically with charging stations
to manage the billing process for the electricity received during
a charging session.
• Develop a contract-less payment system not relying on third-
party intermediaries.

5.LO3 Energy: Exergy

• The project aims at heating homes using the heat generated in
data centres.
• Heat generated from computing and the use of other electrical
devices is captured and stored with the help of a technical
module, in order to be re-used in other applications.
• The concept builds on a storage system for thermal energy
operating in conjunction with an interface directly delivering
the heat to existing heating systems in homes.
• The system is supported by a blockchain system which allows
participants to purchase (stored) heat via a cryptographically
secured system.
POSSIBLE USES OF BLOCKCHAIN TECHNOLOGY IN THE
ENERGY SECTOR

1. Decentralised energy transaction and supply system

• Blockchain technology can enable prosumers to sell the energy
they generate directly to their neighbors.
• Blockchain systems can initiate and transmit transactions
recording them in a tamperproof manner.
• Transactions can be executed using peer-to-peer network.
• Energy networks can be controlled through smart contracts.
- The energy and storage flows can be controlled automtically
so as to balance supply and demand.
• It will make it possible to keep a distributed, secure record of
all energy flows and business activities.
• Secure storage of ownership records can be provided.
• Cryptocurrencies can be used to pay for the energy supplied.

2. Other possible uses

• Build blockchain based billing model.
- this can help in attainimg widespread use of electric vehicles.
• Integration of blockchain technology in the area of smart
devices.
• Create comphrehensive archive of energy billing data.

ENERGY LAW

European energy law

• Separate the business of operating transmission networks from
supply and generation activities, either through ownership
unbundling or by establishing “Independent System Operators”
(ISOs).
 • Right of consumers to switch their gas or electricity supplier at
no extra charge within a timeframe of no more than three
weeks.
• Goal of at least 80% of consumers should have smart electricity
meters installed by 2020.
• Consumers have a general right to be supplied with electricity
and legal provisions must be in place to ensure the protection of
“vulnerable customers”.

Applicable primary and secondary domestic legislation

• The aims of the Energy Industry Act are to provide a secure,
affordable, consumerfriendly, efficient and environmentally
friendly supply of energy to customers.
• The provisions set out in section 41 of the Energy Industry Act,
can serve as a starting point for the drafting of future energy
supply contracts to be made via blockchain applications.
• The basic principles are set out in sections 40 and 42 of the
Energy Industry Act.

Energy law and consumer protection

The aim of all consumer protection efforts is to protect consumers in
economic, digital and health matters.
• Economic consumer protection measures in the energy sector
involve ensuring that markets operate fairly, that suppliers
provide non-harmful products and services, that consumer
information is provided in a transparent manner and that
consumer rights can be exercised effectively.
• Digital consumer protection involves the protection of
consumer data.
Example :- personal data like telephone number, ip address.
REGULATORY CHALLANGES POSED BY BLOCKCHAIN
APPLICATIONS IN THE ENERGY SECTOR

Current regulatory framework

The meter operators obtain readings of the verified meter data
relevant for billing and transportation charging purposes and pass
them on
• To the relevant electricity supplier for billing purposes.
• To the relevant transmission system operator (TSO) for clearing
and settlement purposes.
• To the relevant distribution system operator.
• To the relevant balancing group manager, who in turn charges
the balancing energy.
Changed market roles under a blockchain-based market model
• All energy consumers would have to become balancing group
managers and to comply with the requirements of the market
role
• The responsibility of meter operators could be limited to
providing reliable and tamperproof meters.
• Distribution system operators would also receive the
information on transactions they require to charge their network
costs to customers from the blockchain.
• Transmission system operators would no longer require data for
clearing purposes.

Obstacles hindering implementation of blockchain applications

• Responsibility of meter operator role
• Responsibility for submitting schedules and forecasts for
transmission system operator.
• Responsibilityfor balanncing group manager role.
• Small or local businesses would encounter fewer or reduced
 barriers to market entry.
• Uncertainty regarding their legal recognition.

BLOCKCHAIN RISKS AND OPPORTUNITIES FROM

CONSUMER PERSPECTIVE

Opportunities
• Lower transaction costs due to the cutting out of intermediaries.
• Falling prices as a result of greater market transparency.
• Simple option for customers to become a service/electricity
provider.
• Transactions are generally made more simple (documentation,
contracts, payment).
• Greater transparency thanks to decentralised data storage.
• Flexible products (tariffs) and supplier switching.
• Strengthening of prosumers thanks to independence from central
authority (direct purchases/sales of energy).

Risks
• Complete loss of data on loss of ID.
• Currently high transaction costs for public blockchain systems.
• Possibly lack of acceptance on the part of consumers.
• No authority in the case of disputes, no direct possibility of
escalating conflicts.
• Risk of fraudulent activities at the interface between the real world
and the digital blockchain world (e.g. the smart meter/blockchain
interface).
• Lack of long-term experience.
• Technical problems with initial applications possible to start with.
• Insufficient or inadequate functionality and security risks due to
lack of standardisation.
• Networks must cope with greater flexibility.
Exergy

PROBLEMS IN THE MARKET TODAY

 Centralized model.
 Locks in models of energy waste.
 Lack of consumer choice.
 Electricity networks in need of expensive upgrades.
 Financial models are locked in

Why the market is changing

 There are new expectations for local or green products which
offer convenience.
 Grid problems don’t come from center but from edge which
makes it difficult to resolve.
 Renewables are cheaper.
 Smart utilization of grid reduces cost and increases security.
 Attributes like time and location will have significant value.

The solution:Exergy
Exergy can offer
 Efficient and adaptive market pricing.
 Improved system reliability and flexibility.
 Pathway for technological innovation.
 Data needed to develop additional direct and derivative
markets.
 Improved balance for risk and reward for asset owners.
 A rich, interactive future for an energy industry serving
 informed communities.

What is exergy?
 Exergy is an operating commercial microgrid transactive
energy marketplace.
 It is global in scope and highly scalable in design.
 Create new value-added services (such as local energy) and
valuing grid services.
 A ledger system operating commercially since 2016 on LO3
Energy hardware.
 Designed to operate with underlying grid infrastructure

TRACTION

Use case 1: Peer to peer energy

 Prosumer buys exergy complaint metering device.
 He downloads the mobile app that lets him join his local
microgrid community. The app is enabled by his own XRG
token, or by one provided for that purpose by an interested third
party.
 He stakes XRG to his meter corresponding to his revenue
capacity in order to join the local marketplace.
 He earns fiat currency for selling his power to his neighbors on
the local market.
 His neighbor also downloads the app because she wants to buy
power from John. She sets her budget for local renewable
energy in the app and pays in fiat currency.

Use case 2: Microgrid

 Microgrid project developers, operators and other hardware
vendors all see additional value by staking XRG.
  Exergy can improve system-wide operational efficiency by
responsive load management, thus improving return on
investment (ROI) and economics for developers and operators.
 It will allow monitoring of excess capacity and potential to sell
to other microgrids as long as they are connected, or otherwise
find value for the storage and other services available from the
microgrid.
 Data transparency and uniformity across project portfolios will
further support the commercial investment ecosystem.

Use Case 3: Distribution System Operator Use Case

 DSO acquires XRG and stakes it to devices in a marketplace. This
effectively pays the customers XRG in proportion to the value they will
provide at three levels:
- Analog or ‘dumb’ data such as that from an electricity bill
- Connected or ‘smart’ data that is enabled by a smart meter or other
device
- Responsive ability, that can control the energy use of on site assets
(such as a building management and control system).
 Customers are able to access and ‘opt in’ to the services offered via a
mobile app.
 DSO gets the data.
 DSO either signals the service event via the app for behavioural
responses, or selfexecuting contracts transact on behalf of the devices to
trigger IoT control events.
 Customer is paid in fiat currency per the service offered.
 DSO gets the value of the service, e.g. capacity, balancing, frequency
response.

Use Case 4: Electric Vehicle smart charging

GO TO MARKET STRATEGIES

Establish partnerships to maintain focus on data access and

control and network development.
