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Peer-to-peer energy trading could completely flip the electricity delivery model. But before that arrives, energy companies may use blockchain for less flashy applications, like tracking equipment and building materials through their chain of custody. They may also use distributed ledgers to track individual energy behavior and reward it, eventually developing into new market mechanisms for energy.
Utility PG&E pointed to those examples of early blockchain pilots at GTM’s forum on the subject in San Francisco this week. The presentation suggested that early proof-of-concept projects are more likely to succeed at humble, relatively elementary tasks before they win approval for more ambitious, market-altering deployments.
“We’re excited to be able to start investing and testing and piloting in this space," said Kathleen Kay, senior vice president and chief information officer at PG&E. "We do think it will solve some of our problems, but not all of them. With what we learn, it will help us figure out where else we might be able to leverage it."
The Northern California utility has a few issues on its mind that blockchain could help with.
Serving 16 million Californians means the company manages a massive portfolio of installed power infrastructure; the benefits of operating that fleet more effectively add up across the utility territory.
The company also has 340,000 solar rooftops in its territory, Kay said, with 6,000 new ones joining each month. That means a lot of customer-sited energy equipment showing up and interacting with the grid on its own initiative. The growth in electric vehicles will only expand that phenomenon.
Better tools to account for electrical production and consumption by distributed energy resources will give PG&E a boost in its efforts to orchestrate that sector along with conventional grid assets.
To the first point, PG&E is performing a steel reels traceability project, using blockchain to track the chain of custody for the steel reels that carry overhead cables.
The goal is to test whether distributed ledger technology can robustly track chain of custody for grid materials. Doing so would enhance the company’s visibility into the status of its own assets and reduce the cost of tracking them manually over the years.
If it works for steel reels, Kay said, this process could expand to things like transformers, gas pipes and electric poles. Further along, these efforts could be used to automate parts of supply chain — like the grid equivalent of a smart refrigerator that automatically orders a new container of milk when the current carton is almost empty. (That’s not an energy application of blockchain so much as a supply chain logistics application put to use in the energy space. Building materials aren’t load or generation.)
The other pilot addresses energy more directly.
PG&E is working with BMW to create carbon credits for EV drivers based on the emissions profile of when they charge their cars. Charging when the grid is flush with solar generation produces greater carbon reductions than charging at peak hours, when more carbon-intensive resources kick in to balance demand.
Using telematics data from BMW, this pilot aims to cross-reference user charging behavior with real-time energy mix data. Customers would gain the chance to monetize their clean charging choices by trading their authenticated credits on California’s marketplace.
"Then we can incentivize EV drivers to align their vehicle-charging behavior with green choices," Kay said.
Though circumscribed, this pilot gets at a core question to the future of the grid: How can utilities encourage customers to consume energy in a way that benefits, or at least minimizes stress on, the overall system?
Time-differentiated rates move in that direction, nudging consumption away from peak hours, but they are lacking in terms of granularity. Multi-hour block pricing doesn't send as fine a market signal as real-time accounting.
If successful, the trust instilled by distributed ledgers could prove a decisive link between customer behavior and transactions with third parties based on that behavior. There’s no reason why that should stop with EV charging. It could apply to billing for EV charging more broadly, and even lay the groundwork in a long-term sense for a distributed energy marketplace.
The technology has to mature before that more robust vision becomes reality. For that to happen, Kay said four key requirements need to be met: scalability across the service territory; data privacy; linking physical assets to their digital representations; and integration with the existing regulatory requirements.
Members of GTM Squared can watch every session from our blockchain summit on demand here.