Blockchain technology revolutionizes power supply
The hype about the digital currency Bitcoin cast a spotlight on blockchain. An energy start-up plans to use this technology to coordinate electricity distribution and to revolutionize how we see electricity.
An electrifying network
Blockchain technology was originally developed to enable digital currencies, like Bitcoin and Ethereum, without using a central bank computer to store account balances. However, it can also be used for all other processes where two partners have to reach an agreement and want to record this agreement. The blockchain enables two people to conduct business directly with each other on the Internet without the need for a mediating body. The data is centrally stored on countless computers and each transaction is recorded in the block.
The line between electricity producers and consumers is becoming blurred
One application example is the energy industry where the energy revolution is eating away at the traditional divide between electricity producers and consumers. Solar systems, photovoltaics, wind power and CHP plants deliver decentralized energy. This development also poses challenges for the network. On the one hand, large transmission lines are needed in order to transport electricity from wind parks, for instance. On the other hand, electricity can be better distributed in the block, in the street, in the city.
And this is precisely for this distribution that the blockchain could be of enormous help. The idea that start-up Canjoule has come up with is quite simple: Anyone who generates electricity on their own roof can decide on their own PC who they wish to deliver the electricity to. Electricity now no longer comes from a large power plant but from Mrs Schulz with her solar installation in Freiburg, Mr Meier with his wind turbine on the coast or farmer Friedrich with his biogas system in Allgäu. Sam Warburton, an energy pioneer and co-founder of the start-up, refers to these people as prosumers, a term created by combing the words producer and consumer. “Customers don't really care that we use blockchain technology,” says Mr Warburton, “a good product is what really matters.”
Grid stability thanks to blockchain
The blockchain is also interesting for suppliers. “The blockchain is paving the way for the energy revolution. It is simply a very inexpensive way of dealing with complexity,” says Christoph Burger from the European School of Management and Technology (ESMT) in Berlin. “In the past, the energy sector has missed out on trends. Nobody wants to miss out on this trend.” Especially since this is an approach that can cut costs quickly.
For network operators, on the other hand, the technology offers yet another prospect. Dutch grid operator Tennet is not interested in local electricity trading, but in the stability of the national grid. In a pilot project, the company is testing to see if clever negotiation can lessen the load on the grid. In northern Germany, in the wind farms off the coast, large quantities of wind power are often generated which cannot be transported to consumers in southern Germany, since this would overload the grid. However, Tennet uses 6,000 private electricity storage units that belong to customers of Sonnen GmbH as a buffer. What's special here is that this distributed buffer capacity is not centrally controlled but controls itself thanks to blockchain technology. These households are thus helping to stabilize the electricity grid without the need for intervention by a central computer. The control of each individual private power storage unit adapts smartly to the situation in the Tennet network.
The blockchain will not replace everything that exists, but it will create something new
The use of grid-stabilizing measures, such as expensive regulation of wind turbines, can now be reduced to a minimum. The amount of wind power “thrown away” because it cannot be transported will be reduced. Thanks to this new efficiency, not only will money be saved because fewer new lines will be needed, front gardens will not have to be dug up to make way for new power lines.
Germany’s electricity grid is about to jump into the cloud. “All that needs to be done now is to connect the many different stakeholders in the energy system in a smart way. The blockchain will not replace everything that exists. But it will create something new,” say energy expert Mr Burger.