Distributed Energy Resources

N.Y. utilities eye use of blockchain in the power sector

A group of four utilities including the New York Power Authority have teamed up to study the potential for blockchain technology in New York State’s power system.

Their efforts will also include study of the potential of smart contracts, which use blockchain to enable the rules for completing transactions to be carried out by executable programs. Transactions done under a smart contract occur automatically when the system detects that the conditions in the contract are met. Blockchain technology is also secure because the discrete block of data cannot be changed.

Blockchain technology is often associated with Bitcoin. Bitcoin uses blockchain, but the two are not synonymous. Blockchain technology enables participants to keep track of transactions without centralized oversight, eliminating or reducing the need for intermediaries.

The utilities in the New York project, Avangrid, Consolidated Edison, NYPA and National Grid, say they are examining the technology collaboratively because many blockchain solutions involve multiple parties sharing information to enable new services.

The utilities detailed their efforts in a recent post on Greentech Media.

The partners say blockchain technology could be “transformative” in the power industry and that over the past two years many energy companies have launched pilot projects to explore the technology.

Just this month, the Energy Futures Initiative released a report assessing the potential of blockchain in the energy sector, and the Arizona Corporation Commission opened a docket to investigate the potential of blockchain technology.

However, the New York utilities say that a lot of issues still need to be defined from both a technical and business perspective before they begin using blockchain technology on a commercial basis.

Barriers will vary from utility to utility, NYPA noted, but among the barriers they have identified so far is the fact that adoption of blockchain will require a cultural shift and that the regulatory system needs to be “optimized to effectively utilize blockchain and other distributed ledger technologies.” NYPA also warned that existing investments in incumbent enterprise technologies may crowd out investment in blockchain technology.

Working with Indigo Advisory Group, the utility partners have begun to evaluate suitable uses for blockchain technology and have come up with over 50 use cases. Screening those use cases for practicality and feasibility led to several categories of use cases that warrant further exploration. They include customer management, clearing and settlement, decentralized energy markets, cybersecurity, distributed energy resource management, and electric vehicles.

In the category of clearing and settlement, the partners see the potential for using blockchain as a platform for wholesale commodity procurement and eventually for peer-to-peer energy trading.

In terms of cybersecurity, blockchain could be used to authenticate devices such as smart thermostats. Blockchain’s one-way encryption and distributed ledger could help prevent intrusions and tampering with authentication records, they said.

Blockchain technology could also facilitate the adoption of electric vehicles by providing a means of keeping track of who is using charging stations. The technology could be used to “facilitate a seamless mode between multiple parties: utilities, charging stations and third parties,” the utilities said.

NYPA will continue to coordinate with Avangrid, Con Edison and National Grid to develop a virtual proof-of-concept to demonstrate the utility of blockchain technology in the energy industry, the public power utility said. “We are looking forward to continuing to collaborate with our partners to better understand the opportunities that exist and that can bring value to customers,” NYPA said, adding that “it is too early on to determine exactly how and when blockchain technology will be leveraged in the energy industry.”

Currently, the technology is primarily being used in demonstration projects.