Microgrids and the blockchain are powering our energy future

A revolution in energy generation is happening. The days when millions of people’s electricity needs were met by a handful of large coal, nuclear and gas-fired power stations are waning.

People are increasingly installing solar panels on their rooftops or investing in other renewable energy devices. It’s great for Britain’s goals under the Paris Climate Agreement – the country’s grid recently broke an important record for low carbon emissions.

“Offshore wind is coming on board, we’re seeing lots of onshore wind and a huge growth in solar,” explains Roisin Quinn, head of energy strategy and policy at National Grid. But there are new challenges. For one thing, renewable energy doesn’t provide a constant supply of electricity, but fluctuates greatly depending on how much the Sun is shining or how windy it is. “You need to manage that variability which means taking more actions,” adds Quinn. Because the supply of electricity on the grid has to equal demand to avoid overloading it, grid operators need to turn sources of energy up and down to cope with the waxing and waning input of renewables.

But something else is happening to the grid as energy generation changes – the rise of microgrids. These smaller grid systems are linked to localised power sources, often referred to as “distributed generation” sources. For example, a handful of buildings in a city with their own solar panels might be connected to nearby residences.

In fact, that is exactly the model that LO3 Energy has experimented with in its Brooklyn Microgrid project. Customers signed up to it can choose to power their homes via a range of local renewable energy sources. People with their own solar panels can sell surplus electricity to their neighbours, for example. It’s a peer-to-peer network for electricity.

To ensure that accurate records of these transactions are kept, LO3 has opted to use blockchain distributed ledger technology. This means the microgrid’s accounting is decentralised and shared by everyone on the network.

“It’s virtually unhackable,” says founder and chief executive Lawrence Orsini, explaining that tampering with these records is almost impossible because of the fact that everyone has their own, regularly updated copy of the ledger.

LO3 is now rapidly expanding with a series of other projects around the world. One is based in South Australia, where Orsini explains there is already a lot of distributed generation going on – and plenty of grid stability issues. Users can now experiment with LO3 to get access to electricity from solar-fuelled batteries nearby when needed.

“The value of trading energy storage and demand on the same network is incredible,” says Orsini. But microgrids are also springing up in developing countries, notably across the African continent says Philip Sandwell, a PhD candidate at Imperial College London who has been studying such projects.

In areas that don’t have any connection at all to their national grid, installing solar panels and a battery can be an easy way to bring a basic amount of electricity to a village, for example. This is often initially used for lighting and the charging of mobile phones – ubiquitous in Africa.

But Sandwell explains that these microgrids face a daunting prospect. One day, an expanding national grid will want to connect up these self-powering villages. But what will the microgrid operators do then? Will their customers simply be poached?

Instead, it might be possible to use accounting software such as distributed ledgers to keep track of what electricity residents are consuming, and from where. That way, the operators of the national grid and the microgrid can be paid accordingly.

“If blockchain or some similar technology could provide that accounting system, it could turn the national grid from being the enemy of microgrids in a lot of places to being their friend,” says Sandwell.

One firm hoping to leverage blockchain technology to help enable partnerships on the grid is Electron. “Blockchain is a useful technology when you have shared infrastructure – where companies need to share something or coordinate,” explains Jo-Jo Hubbard, cofounder and chief operating officer.

One of Electron’s experiments, a collaboration with French energy giant EDF, has brought peer-to-peer electricity to a block of flats in London that sports solar panels, owned by the landlord, on the roof.

This, says Hubbard, is a way for people who can’t install their own panels to take part in a decentralised energy economy. EDF is hoping the model can be scaled up and brought to other similar locations in the future, she adds.

But the potential for distributed ledger technology to assist the grid as it evolves doesn’t end with distributed generation at the “edge” of the system, Hubbard believes. It could even help customers switch between major energy suppliers more quickly. This faster switching is something that the UK’s energy regulator, Ofgem, is keen to encourage.

Making that change of providers can sometimes fail because of bad data on a customer’s energy usage, or even erroneous records of their address.

If providers used distributed ledgers that they alone had access to for their batch of customers – a “permissioned blockchain” – then holding such data might be cheaper and easier, Hubbard argues. “Essentially as a switching customer, apart from it being a really smooth process you won’t necessarily notice the difference.”

She suggests one other use case: blockchains could allow grid operators to have a more informed overview of the resources they manage. An operator might need to reduce the supply on the grid for a few hours, for example. But asking a power station to turn down their supply will cost them money. But what if there were a station in Kent, for example, that will gladly do it for a cheaper price because its own resources are constrained.

Intelligence like that could one day be available via a blockchain. There’s a lot of buzz around distributed ledgers at the moment, but those championing their use in the energy sector say they are an ideal solution to a genuine problem. That is, the shared nature of energy resources and the difficulty of tracking the large volume of transactions – from energy supply and demand, to actual sales.

Whatever underlying system we come up with to manage the grids of the future, it will have to be efficient and adaptive. The story of how energy generation has evolved in recent years already demonstrates why: it’s clearly what people want – and it’s probably how we’ll go greener, too.

Source: Wired