Blockchain technology has the potential to enhance energy markets significantly. While there are a number of projects being undertaken globally, including in Australia, they are quite small scale and there is significant development needed before any widespread implementation can be a major disruptive force in this area. Working Group C5.30 has recently produced Technical Brochure 824 on “The Application of Block Chain Technologies in Power Markets" which provides a status report on this technology and its future potential to be a significant enabler of energy markets, particularly in relation to decentralised trading systems. The Convenor was David Bowker and other members from Australia were Alex Barakat, Bhwana Kapoor, Greg Thorpe, Tim Baker, Victor Francisco and Victor Tan.
Energy Markets Overview
Due to the centralised structure of energy systems with large-scale industrial and commercial loads and because of the environmental concerns, power generation has often been located far from the load centres. High-Voltage (HV) transmission lines and power distribution networks are therefore needed to transmit the generated power. Traditionally, energy systems with a centralised structure have been capable of efficiently delivering power with the use of fossil fuels.
There are three technological trends which are driving the transformation of the energy sector:
(1) The energy sector is becoming more electrified, due to a shift away from the direct energy consumption of non-renewable energy sources for commercial operations,
(2) The increasing deployment of renewable energy resources and distributed generation facilitates the decentralization of the energy sector and increases the volatility of the operation of the power system in real time.
(3) The increased development of digital technologies means large parts of the energy value chain are being digitalised.
The grid has remained fundamentally the same for more than 130 years. The result is a centralised, rigid system that was not designed to manage the variability of distributed energy resources and where maintaining balance becomes increasingly difficult as more complexity is added to the system. Managing this grid is like trying to centrally control the internet.
Digital and technological transformation enhances the real-time communication infrastructure between different nodes across the energy value chain. This allows new emerging technologies, such as Blockchain, to facilitate the rapid changes in the energy sector.
Potential Application of Blockchain to Energy Markets
Blockchain technology is an elegant protocol enabling people to verify information and transact directly with one another in a trust-less environment. Three important and fundamental characteristics of blockchain are security, transparency, and immutability. These aspects are what make blockchain technology unique and a potential solution for energy and power applications.
The absence of a third-party can result in cost, operational and market efficiencies.
The table below lists some of the shortcomings which blockchain technology could mitigate:
Current Blockchain implementations
The CIGRE C5.30 working group has just completed its study into operational projects which use blockchain in energy power systems. The graph below shows the functional areas where these projects have used blockchain technology.
Blockchain in Australia
The C5.30 Working Group identified 37 projects globally where blockchain was in operational use and 10 of those projects (27%) were from Australia. In addition, the WA based PowerLedger is a world leading framework. It has several important projects in Australia but also in the USA and India. (See Researchers put case for blockchain-based market of "energy neighbours" | One Step Off The Grid). The high level of renewable generation also makes the use of Blockchain particularly relevant for Australia.