Utility Week

UTILITY WEEK | 25TH - 31ST MAY 2018 | 23 Operations & Assets Expert comment The significance of blockchain Wipro's Ravindra Balija says the technology will be a driver of disruption in the energy industry. A s a technology, blockchain solves the problem of ensuring data integrity in a distributed peer-to- peer system, irrespective of any technical failures or malicious intent in the network. Another way to think about it is that blockchain or DLT ensures data integrity of a shared data store, where multiple parties have the permission to write to the data store, all of whom cannot be guaranteed to exhibit consistent agreed behaviour. At a business level, trading parties engage a trusted intermediary who keeps the record of the terms and conditions of the trade as well as arbitrating discrepan- cies, if any, among the trading parties. Blockchain enables such record keeping while preventing discrepancies. It also provides capabilities to embark on business process re-engineering across the value chain that spans organisation boundaries/businesses, such that the entire ecosystem can reap the benefits. The current energy system is dominated by a handful of large participants – gen- erators who sell energy through bilateral and wholesale trades to the retailers, who in turn sell it to the consumers, with energy and financial transactions flowing one way. The grid operators manage the flow of electrons by keeping the system in balance. Effective functioning of the energy value chain requires accurate and timely information hand-offs among the energy companies to deliver energy to the custom- ers, bill them for their consumption and prevent any blackouts by keeping the system in balance. With growth in renewables, many solar installations and windfarms are being con- nected to the grid. Similarly, households and commercial businesses are installing solar PV on rooops, delivering surplus energy back to the grid, resulting in a vari- ation in energy supplied to the grid owing to the weather conditions. Charging stations are being commis- sioned and connected to grid infrastruc- ture to serve the needs to electric vehicle (EV) users. Where, when and how many charging events occur depends upon the movement patterns of EV users, which increases the variation in the energy con- sumed from the grid. Variations in supply and demand results in unpredictable load patterns and potentially an increase in the frequency of system imbalances. Increased deploy- ment of renewables and electrification of transport increases the number of market participants, the bi-directional flow of energy and the number of financial transactions. To address this will mean increases in the volume and complexity of the trades, while making settlements com- plex. This will also increase the volume and frequency of information hand-offs. Blockchain, along with the Internet of Things, enables the digitalisation of energy, lowers the barriers of entry to more market participants, enables trading among multiple participants, helps govern the marketplace, reduces transaction costs and simplifies the settlement processes. Information hand-offs are reduced because market participants operate from common and single information source. Owing to its decentralised nature, it enhances the agility of those looking to introduce new products and services as the energy market evolves. This will in turn drive greater adoption of renewable resources, thereby accelerating decarboni- sation Ravindra Balija, general manager of digital architecture and technologies for utilities, Wipro house that I did not use, that's a pretty sim- ple transaction. But on the other hand, if I'm using a blockchain to dispatch a battery and conduct multi-party settlement contingent on prices from a couple of different end- points, that's a more complicated transac- tion. That would require more bandwidth of the decentralised computer." Another issue is whether all the players in the energy sector can co-operate and develop a common approach, but Shell's blockchain lead, Arno Laeven says the "buzz" around blockchain has certainly helped get people round the table. "Nobody has a final answer yet to what it will look like and therefore everyone understands that we have to work together to find these answers. With the Energy Web Foundation, we are very lucky that two very prominent parties took this to heart – the Rocky Mountain Institute and Grid Singularity – and are working on this," explains Laeven. "They have reached a tipping point, whereby you see everyone is going in the direction of the Energy Web Foundation. It does not mean they will be the next institu- tion. The Energy Web Foundation is really only there to build the infrastructure layer. Everything else and all the applications on top of it will be built individually, either by companies or start-ups. This is about laying down the infrastructure layer for blockchain." Batt adds that PwC did a joint paper with the World Energy Council on the issue of blockchain and energy, which included a survey on the impact it might have on the industry. "More than 90 per cent said they were confident blockchain would disrupt the industry in some shape or form, and respondents were also confident it would speed up the transformation towards poten- tial future models," he adds. "The interesting thing for me is that over 80 per cent of people said they think it will happen in the next five years, some even said within three years. The technology is steadily maturing. We have numerous pilots proving that business scenarios work and this grow- ing belief among people that blockchain will play a key role going forward." With several pilot projects running both in the UK and abroad, the next 18 months will be crunch time for many of the projects in development. All eyes will be on whether blockchain applications can deliver on scal- ability, security and cost. If, as been claimed, blockchain can deliver a more flexible and secure grid, improved data management and new business models then the doubters will be silenced. Brought to you in association with

• Cover