Distributed Energy Resources

Officials from NYPA, other utilities detail questions tied to blockchain

Officials with the New York Power Authority, National Grid and Avangrid recently detailed some of the questions that are being spurred by the emerging technology of blockchain and possible blockchain uses by the power sector.

Those questions include what does blockchain mean for customers and how can utilities utilize the technology to boost customer engagement, as well as whether blockchain can help enable a dramatically more efficient energy system across New York, which has emerged as a leader among states when it comes to the growth of distributed energy resources and related technologies.

The executives made their comments on March 8 at the “Blockchain in Energy Forum,” sponsored by Greentech Media and held in New York City.

One of the panels at the forum, “The Utility: Optimizing Operations & Identifying New Opportunities,” sought to identify how utilities are working to identify the potential applications and promise of the emerging technology.

Panelists were Rachel Flynn-Kasuba, senior program manager, new energy solutions, at National Grid, Drury MacKenzie, ESC customer and market innovation lead at Avangrid, and Doug McMahon, vice-president of strategy, at NYPA.

Investor-owned Avangrid and National Grid serve electricity and natural gas customers in New York state, while NYPA is a public power utility that operates 16 generating facilities and more than 1,400 circuit-miles of transmission lines.

National Grid overall is “really excited about the technology and we think it can open a lot of doors and provides a lot of opportunity,” said Flynn-Kasuba. “We’re also very interested in being part of the conversation on use cases for the energy industry, working with the other utilities to think through what that actually looks like,” she went on to say.

At the same time, the National Grid executive said “we’re definitely in the learning and exploratory phase, so we recognize that there’s still a lot that we need to understand about it.”

National Grid is “trying to take a perspective of what does this mean for the customer and how can we use blockchain to increase customer engagement?” she said.

An example comes in the form of a National Grid pilot in New York involving a distributed system platform, or DSP.

DSPs are part of New York’s broader Reforming the Energy Vision initiative, the state's strategy to build a cleaner, more resilient and affordable energy system. REV encourages the development of DSPs to help customers and utilities benefit from a higher penetration of distributed energy resources, including renewable generation, energy storage, responsive demand and smart microgrids.

“We’re looking at what are the ways in which we can use blockchain in order to increase customer engagement and give customers more control and insight over their energy use,” Flynn-Kasuba said.

“In future phases, we’re interested in exploring – with a DSP, can we use blockchain to not only enable customers to sell their DER into the DSP, which they can do now or very soon, but to also be able to procure power from the DSP on the back end.”

On the financing side, “we’re interested in exploring whether we can use blockchain as a way to decrease the settlement and clearing costs and whether we can give those savings back to the customer as well,” she said.

Avangrid’s MacKenzie said that there is a “timely opportunity” to better understand how blockchain can be integrated into the DSPs.

Meanwhile, NYPA’s McMahon said that “it’s still early days for us as utilities” when it comes to blockchain. “The technology is still a little nascent and complicated, but it’s promising, so it’s worthy of our attention,” he said.

He said that he looks at it “from three perspectives, from NYPA’s side of things.”

First, “short-term, I do believe there are areas worth exploring” when it comes to blockchain “with regards to operational efficiency and internally within NYPA so that we can look to maintain our low-cost commodity position here in the state.”

Longer term, “and with my kind of state energy organization hat on, I’m very interested to see whether blockchain can help enable a much more efficient energy system across New York, one that’s a little more flexible and resilient,” particularly as New York state moves to a much more decarbonized energy system.

McMahon said that in New York, “we have a capacity factor of about fifty-five percent.” So as “we continue to add on these local distributed energy resources, I’d love to find a way to see if blockchain can help us optimize the deployment of those resources in a way which is going to help integrate them and drive up that capacity factor, rather than actually worsen it. So I think that’s an area we’d like to look at longer term.”

Another question is whether blockchain can “really help us as a business and help our customers harness the power of data and in particular value that data, because we’re going to have to start sharing it with others in order to create this new energy world that REV promotes. So can blockchain untap the value and harness the power of that data for us?”

Use cases for blockchain

Responding to the question of realistic use cases for blockchain, McMahon pointed to electric vehicles, which he sees as an area where there could be growth in blockchain activity tied to billing and settlements.

He also mentioned renewable energy credits as being “another area where there’s some immediate potential opportunity to do something, although I’m not quite sure about the scaling of that longer term.”

The panel’s moderator, David Groarke, Managing Director, Indigo Advisory Group, asked panelists to describe what they look for when it comes to possible use cases. “How do you screen use cases at this stage or are you just waiting for the market to mature a little bit more?” Groarke asked.

“Clearly, we’re still going through this process,” McMahon said. The NYPA official said that there are “some things to me which I think are important. I think if you want to get momentum and scale things, you need to find use cases where the parties involved can at least have a strong influence over a positive outcome, so I think that’s something I would definitely be looking for.”

National Grid’s Flynn-Kasuba responded by saying “having both the technical blockchain chops, in addition to some understanding of the energy industry, is really important and sometimes we see companies that have all of one or the other, so being able to have both of those is certainly helpful.”

Meanwhile, panelists were asked to comment on where they see distributed ledgers and blockchain five years from now.  

“In five years, I think we will see new customer offerings and services” with blockchain and distributed ledgers, said Flynn-Kasuba.

“I don’t know what it will look like, but I think just from a process point of view and a kind of mindset point of view, I think there’ll be more people within our collective companies, as well as the regulators and the customers and markets, who just kind of think through the investments that we’re making differently,” said Avangrid’s MacKenzie.

The idea is to “make sure that we’re not making investments in this smart grid that will become obsolete in five years based on not having taken into account how blockchain is either already a part of that solution or will be within a few years,” she said.

Blockchain often associated with Bitcoin

Blockchain is often associated with the cryptocurrency Bitcoin.

But at a 2016 Greentech Media conference, Scott Clavenna, CEO & co-founder of Greentech Media, noted that blockchain technology has been decoupled from Bitcoin, with a variety of other industries looking at it for a number of different purposes as a way of authenticating transactions and contracts "and a variety of other ways to use something as secure and distributed as the blockchain is."