Distributed Energy Resources

PJM partners on pilot using blockchain to track RECs

The Energy Web Foundation and an affiliate of the PJM Interconnection on Oct. 25 announced a partnership to develop a blockchain platform for the buying and selling of renewable energy credits.

PJM hopes the blockchain platform will help improve the security, transparency, and transaction costs of its existing REC tracking system.

Blockchain is a digital ledger that can automatically send and receive information in discrete packets that cannot be altered. It is being tested in many industries to lower transaction costs and improve data security.

PJM’s existing Generation Attribute Tracking System is a paid subscription service that creates and tracks a generator-specific electronic certificate for every MWh a generator produces. The system tracks the environmental and emissions attributes of generation, along with the ownership of credits as they are traded or used to meet governmental renewable energy standards.

PJM, through its PJM Environmental Information Services affiliate, will continue to use its GATS system but, using the Energy Web Foundation’s Energy Web Origin toolkit, the partners will create a pilot program to test the use of blockchain to track RECs on PJM’s system. The project is scheduled to last until November 2019.

The blockchain system will work in parallel with PJM’s GATS system in a simulated environment in which no money changes hands but where “ghost” transactions are recorded that will provide the track record for PJM to evaluate the potential of the blockchain system, Peter Bronski, director of marketing and communications at the Energy Web Foundation said. “It is a pilot program on steroids,” he said.

The Energy Web Foundation demonstrated the use of its blockchain technology to track simulated transaction in Germany in April. And while the Energy Web Foundation is working with utilities such as Duke Energy and Sempra Energy, the PJM project is “the first of this magnitude,” Bronski said.

“Our customers have expressed interest in incorporating blockchain technology into our services, and we look forward to leveraging the technology where it can provide additional benefits,” Ken Schuyler, president of PJM Environmental Information Services, said in a statement.

The PJM project, if successful, could be a first step in the building of a common infrastructure for the energy industry to accelerate the adoption of blockchain because it could remove concerns about having a common foundation, Bronski said.

EWF’s goal with the PJM project is to demonstrate how large numbers of distributed energy assets — in the tens or hundreds of thousands — can participate in renewable energy certificate markets, operating at a price point that makes it economically feasible for even small rooftop solar installations to participate in power markets.

Blockchain technology makes it possible to track transactions down to the kWh level, Bronski said, but ultimately “it goes beyond just recording. It could push out to the renewable generation asset” itself and enable generators to connect with new markets, such as small corporate buyers of RECs, he said.

The Energy Web Foundation hopes the PJM project will “go beyond proof of concept and will demonstrate the successful registration, tracking and execution of RECs” in a wholesale power market, Bronski said.

The Energy Web Foundation is a partnership between the Rocky Mountain Institute and Grid Singularity of Germany. The foundation’s EW Origin took is open-source, meaning users have the ability to change the underlying computer code. Unlike proprietary software, it is more difficult to come up with a profit driven business model for open source software. The potential for long term revenue generation from its software tool is “under discussion” at the Energy Web Foundation, Bronski said.

There is increasing interest in the use of blockchain among U.S. utilities. In August, the Senate Committee on Energy and Natural Resources held a hearing on the potential for blockchain technology in the energy sector and the regulatory hurdles to its use.

In July, the Arizona Corporation Commission opened a docket to investigate the potential for blockchain technology in the state’s energy sector, becoming the first regulatory commission to do so.

Also in July, a group of utilities in New York State, including the New York Power Authority, teamed up to study the potential for blockchain technology in the state’s power system.