New York — With the technology having gone through the hype cycle, energy market applications for blockchain are emerging as power markets change to address customer needs and evolving power system conditions, industry executives and experts said Wednesday.
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"We have gone through the hype cycle," Lawrence Orsini, founder and principal of LO3 Energy, said at the Blockchain in Energy Forum 2019 hosted by Greentech Media in New York City.
"It's becoming clearer to see where blockchain can unlock value in energy markets," Jesse Morris, chief commercial officer at non-profit Energy Web Foundation, said.
Between 2016 and 2018 blockchain received lots of attention as the technology behind cryptocurrencies and for its potential distributed ledger applications in many energy industry sectors.
However, blockchain appears to have moved past a phase where it was seen as a wide-ranging solution for a laundry list of energy market inefficiencies to a point where it is being viewed as a powerful tool for specific use cases.
With the growth of 100% carbon-free targets and associated high penetrations of renewable energy resources being driven by US states, cities and large corporations, new power market models are required, Scott Clavenna, GTM's chairman, said.
"Blockchain doesn't need to catalyze anything because it's already happening," Clavenna said.
New markets will require scalability, cost efficiency, validity, security, data privacy, regulation and governance, as well as reliability and affordability. And while blockchain "does not get a gold star" on all these things, it offers some solutions for each, Clavenna said.
European countries, regulators and companies are some of the market leaders in adopting blockchain technology.
US technology giant IBM is involved in a variety of projects from nuclear plant decommissioning, disaggregated meter data and guarantees of origin for the European version of renewable energy credits, Neil Gerber, director of new energy & environment for IBM, said.
The Netherlands had markets for ancillary services and they were "seeing prices in those markets going to hundreds of times the price of energy," Gerber said. A blockchain-based application was chosen because the transmission system operator wanted a solution that could address the price issue and be able to expand in the future to include other TSOs, he said.
One of the first pilot projects IBM helped design involved using Tesla electric vehicles as taxis in Amsterdam through a system that provided free electricity in exchange for allowing the TSO to interrupt their battery charging when needed for grid balancing purposes, Gerber said.
The next phase involves transporting North Sea wind power to southern load centers in the Netherlands and Germany.
"We chose a specific service that we knew the technology could do and would add value to an existing market," Gerber said. A new market might involve managing distribution system operator congestion, he said.
Asked about the US market for blockchain-based energy market applications, Gerber said he didn't know why more was not happening. He suggested markets in New York, California, Texas and Canada have regulatory structures where some of these ideas could work.
"We are quickly falling behind [in the US]," LO3's Orsini said. There are roughly 50 state-funded projects in Europe and "I can't think of any here," he said.
After building the Brooklyn microgrid project that facilitates peer-to-peer energy trading as a research and development project, LO3 has gone on to create over ten business-to-business-to-customer platforms globally, Orsini said.
Regulatory structures that do not value the hyper-local real-time price signals these platforms offer is part of what holds back further US expansion.
During a recent Texas heat wave when power prices hit their $9,000/MWh cap, the southeast corner of the grid saw negative prices because there was no way to get the power out due to congestion, Orsini said.
And citing summer blackouts in New York City, he said hyper-local pricing could have helped prevent a substation from overheating and knocking out LaGuardia Airport and surrounding communities, "but there is nothing to value that now."
"Blockchains are like tires on a car," Orsini said. "The innovation is not blockchain, the innovation is creating a platform that solves a problem."
-- Jared Anderson, firstname.lastname@example.org
-- Edited by Gail Roberts, email@example.com