Blockchain for Power & Utilities – real or hype?

EY Global Blockchain Summit

San Francisco, CA

April 26, 2017


Blockchain in power and utilities: real or hype?


A different generation mix and technology will have implications for the future of our utilities.

Regulatory encouragement

of renewables and

market reform

Digitalization of the gridTransition to clean energy

future

Changing consumer

behavior and expectations

Energy usage and demand

transformation

Predictability

and reliability

Geographic

mismatches

Time

mismatches

► Renewables are less predictable than

traditional grid power sources.

► The grid is very sensitive to even small

imbalances in supply and demand.

► Ideal locations for solar and wind farms

are often far from key demand centers.

► Long-distance power transmission has

a high loss rate.

► Balancing the supply mix on a real-time

basis is essential to maximize the

energy output and cost-effectiveness of

the whole system.

Trust and

security

► There has been a significant

increase in the number of new

entrants, making security and trust a

critical requirement in the system.

Complex

transactions

Standards and

interoperability

Autonomous response

to market signals

Empowered

prosumer

► As the number of participants

increases, so too does the level of

transaction complexity.

► There has been a significant increase

in the volume of transactions.

► Seamless interaction between central

and distributed resources will require

open standards and interoperability.

► The real-time monitoring of network

performance coupled with the

continuous assessment of supply and

demand based on price signals.

► Flexible monitoring and control

systems can accommodate different

degrees of customer engagement

according to individual preferences.

To be successful, the industry will need to resolve some

fundamental issues


To date, these issues have resolved into a small number of (often interrelated) use cases.

Country-wide charging and

payments

Electric vehicle charging optimization away

from the meter

Distribution system management

Establish autonomous capabilities to manage

constraints and balance supply and demand

Asset management

Market-to-peer trading

Facilitate direct consumer trading with the

market based on demand and supply

balancing

Peer-to-market trading

Facilitate prosumer access to the market for

excess capacity

Energy optimization

Facilitate consumption monitoring, control

and optimization, and the ability to interact

with markets

Establish effective real-time asset management

and supply chain tracking

Hurdles addressed by blockchain Autonomous response

Trust and security

Empowered prosumer

Hurdles addressed by blockchain

Complex transactions Geographic mismatches

Time mismatches

Hurdles addressed by blockchain Trust and security


Trust and security

Empowered prosumer


Trust security

Empowered prosumer

Hurdles addressed by blockchain Complex transactions

Time mismatches Standards and interoperability

Standards and interoperability

https://www.youtube.com/watch?v=oSP-taqLWPQ



Powerful and credible blockchain applications are developing among the hype.

Energy trade

IoT

Grid management

Peer-to-peer transactions

► Prosumer

► Peer-to-peer trade

► Large-scale microtransactions

► Asset management

► Portfolio reconciliation

► Settlement

► Certificates and trade

Grid

► Master data management

► Small power islands

Micro-grid

► Transactive grid

► Micro-grids on large scale

► Grid management on the basis of

wholesale trading data

► Virtual power plants

► System services

Grid

► E-mobility

► Smart homes powered by

blockchain

► Smart meters and blockchain

► Smart meter integration

Real

Hype

Eighty percent of the current development is spent on solving flashy hype topics, with limited near-term commercial

application, including micro-grids, transactive grids and peer-to-peer trading for prosumers. Twenty percent of the

current development is

focused on solving today’s

issues.

HypeReal

Grid

► Master data management

► Small power islands




Maturity timeline

2–5 years >10 years5–10 years

Real

Hyp

eH

igh

com

ple

xity

Low

com

ple

xity

The key determinant of success likely will be the complexity of the transaction.

Settlement in wholesale trade

Large-scale micro-grid and smart grid

management, Internet of Things and grid

service automation

Large-scale electric vehicle mobile charging

and sharing platform

Large-scale peer-to-peer trade and

prosumer

Grid management on base of wholesale

trade data

Local isolated micro-grids

Wholesale trading

Complexity of transaction and counter-party arrangements


The use cases in the market today


Blockchain is being deployed in a private wholesale trading scenario with three counterparties.

► Execute trades on blockchain

► Multiple trade types being implemented

► Real-time reconciliation dashboard, including alarms

► Prove scalability, 200 trades and second

► Prove privacy

$£

Real money world

Fiat currencies

Tokens

Regulator

Trade information

Physical power grid

BTL Group Ltd.

► Built from the ground up,

Interbit is BTL’s open,

multi-blockchain chain.

► BTL Group Ltd. offers

portfolio reconciliation

and a peer-to-peer

trading platform.

Start-up approach:

Smart meter

Smart contract

Wallet

Bank

Grid management

Consumer

Producer

Prosumer

Trader


But in the future, all transactions could be done directly using the blockchain architecture.

Smart meter

Smart contract

Wallet

Bank

Grid management

Consumer

Producer

Prosumer

Trader

► In the future, it will be possible to have a fully working

energy platform that can enable peer-to-peer

transactions between its players if regulation,

application security and scalability can be addressed.

$€

Real money world

FIAT currencies

Tokens

Regulator

Trade information

Physical power grid

$€

Trade information

Physical power grid


There are three other use cases in the market that fall across the spectrum in the issues they are addressing.

► Peer-to-peer trading platform for

renewables

► Renewable energy asset owners

decide who to sell surplus energy to

and at what price

► 11,000 households on

decentralized network

► Technology enables sale of surplus

renewable energy generated at

residential and commercial

developments

► Maturity level is medium

► Multiple projects across Australia

► Grid management

► Peer-to-peer trading, real-time

metering of local energy generation

and usage, as well as other related

data

► Technologies used and impacted

► Maturity level is low

► First demonstration project is

neighborhood installation in

Brooklyn, New York

► Demand response and mobility

► Smart wallets log users in and

charge vehicle at times not

contributing to major peak, in effect

shifting load and reducing cost per

unit

► Defer network investment for

electric vehicle uptake by

smoothing and shifting peak load

► Maturity level is low

► Established trial of combined

blockchain, e-walled and peak

shifting for the island of Texel

LO3 Energy Power Ledger Alliander


As distant as the “killer” use case appears, energy businesses stand to gain from understanding and exploration.

Experimentwith the technology.

Explorewhat it means for

your business.

Understandthe concept and

possibilities.

► If blockchain is

the solution, what

is the question?

► Where does the

solution fit within

the value chain?

► How would this

technology affect

the value chain?

► How do these

integrate into

the legacy

technologies and

institutions?

Implementit in your business.

“We always overestimate the change that will occur in the next two years and underestimate the change that will

occur in the next ten. Don’t let yourself be lulled into inaction.” Bill Gates, The Road Ahead, Viking Penguin, 1995


The current vendor landscape


What does the blockchain vendor landscape look like across the platforms and applications?

Trade Internet of Things

BTL Group Ltd:

► Built from the ground up, Interbit is open,

multi-blockchain chain

► Portfolio reconciliation

► Peer-to-peer trading platform

Adjoint Inc:

► Smart contracts building new messaging and

consensus protocol

► Institutional-grade security features to

provide high assurance to parties involved

Blockverify:

► Supply chain tracking and traceability

Tallysticks:

► Invoice software to automate purchase

order, to invoicing, to financing, to asset-

backed securitization, to payment workflow

BitFury Group:

► Internet of Things smart devices

► Supply chain management

► Payments acceleration

► Auditing assurance and risk

Power Ledger:

► Peer-to-peer trading

► Settlement

► Autonomous intelligent

Grid Singularity:

► Decentralized energy transaction and supply

system

LO3 Energy:

► Brooklyn micro-grid, local energy network

► Device control to balance the grid

ELECTRON:

► Master data management for smart meters,

demand-side response

Slock.it:

► Security and management of Internet of

Things devices

► Smart power plug, renting hardware

Filament:

► Internet of Things

► Security, scalability or network stacks

Ledger

► Hardware Oracles, bridging the physical

world and the blockchain

► Trust layer between the layers

Grid management


Smart metering and payments with bitcoin

► Use case: bitcoin-enabled smart meters can bypass banks and credit cards, getting utilities paid more promptly and avoiding disputes

with customers and municipalities.

Japanese power utility rolling out bitcoin payments for

electric customers

► One million bitcoin-paying electric customers expected

next year

► Plans later to include bitcoin payments for gas, water and

mobile phone bills

► Expected value: customer savings up to 4%–6%

► When a customer sends a bitcoin payment, tariff automatically

calculated and meter loaded

► Users can “send” electricity, water and gas to anybody in the

world, from anywhere

► Expected value: for emerging markets in Africa, meter price

includes preloaded bitcoin wallet so utilities get paid

South African producer of bitcoin-addressed smart

meters

Source: bitcoin.com, “Bankymoon to Launch Bitcoin-funded Smart Energy

Meter,” 10 March 2016, https://news.bitcoin.com/bankymoon-bitcoin-smart-meter

Source: Bitcoin.com, “Japanese Can Soon Pay Utility Bills with Bitcoin,”

26 September 2016, https://news.bitcoin.com/japanese-pay-utility-bills-

bitcoin

Marubeni Bankymoon


Micro-grids and virtual power plants

► REV incentivizes utilities to enable distributed energy resources

► Expected value: micro-grids allow customers to make the most of

solar panels, batteries, peak loads and other factors (e.g., weather

forecasts).

Source: “It’s Like The Early Days of the Internet,' Blockchain-based Brooklyn Microgrid

Tests P2P Energy Trading,” Microgrid Media, http://microgridmedia.com/its-like-the-

early-days-of-the-internet-blockchain-based-brooklyn-microgrid-tests-p2p-energy-trading

► Use case: blockchain-enabled energy trading platforms can

allow customers to buy and sell power more efficiently, without

an electricity retailer.► A micro-grid project in Brooklyn is based on local electricity

generation, energy trading between neighbors and, as such, has less

reliance on centralized utilities.

► The TransActive Grid is an interconnected peer-to-peer network of

power producers and buyers, leveraging blockchain technology to

ensure user financial and operational security.

► The advantages of such a system are as follows;

► Improved financial and usage data integrity and security

► Higher resilience of an isolated micro-grid network

► Power saved due to low transmission distances

Brooklyn micro-grid vector

Source: coindesk, “Ethereum Used for ‘First’ Paid Energy Trade Using Blockchain Tech,” 11 April

2016, http://www.coindesk.com/ethereum-used-first-paid-energy-trade-using-blockchain-

technology


Asset management

► Blockchain-enabled user interface devices allow renting and

sharing of physical assets (e.g., doorknobs, bike locks,

padlocks).

► Expected value: smart devices can facilitate smart contracts

that reduce cost and inefficiency in physical processes.

► Blockchain-enabled Internet of Things sensors can gather data

from remote assets, like electricity transmission towers.

► Expected value: grid can automatically reroute power to

prevent blackouts and notify maintenance crews of exact

repair locations.

Source: Bitcoin Magazine, “Slock.it to Introduce Smart Locks Linked to Smart Ethereum

Contracts, Decentralize the Sharing Economy,” 5 November 2015,

https://bitcoinmagazine.com/articles/slock-it-to-introduce-smart-locks-linked-to-smart-

ethereum-contracts-decentralize-the-sharing-economy-1446746719

Source: Fortune, “How Blockchain Technology Can Reinvent the Power Grid,” 15 May 2016,

http://fortune.com/2016/05/15/blockchain-reinvents-power-grid

► Use case: Internet of Things sensors can securely streamline inspections and repairs and automatically reduce outages.

Slock.it Filament


Device management and smart contracts for load shedding

► Utilizing blockchain to enable consumer control of appliances

in connected homes

► Expected value: easier demand response for small loads

Source: Bloomberg, “Bitcoin Technology Harnessed to Push Electricity Revolution,”

12 September 2016, https://www.bloomberg.com/news/articles/2016-09-12/bitcoin-

technology-harnessed-to-push-electricity-revolution

► Utilizing blockchain to track and monitor leased electric car

battery supply chain

► Expected value: cutting costs of electric cars through

confirmation and enforcement of property rights, tracking and

management of connected assets

► Use case: efficient tracking and management of devices and facilitation of microtransactions between them

Source: CoinDesk, “Blockchain to Drive Wanxiang's $30 Billion Smart Cities Initiative,”

23 September 2016, http://www.coindesk.com/blockchain-smart-cities-china-wanxiang

Fortum Wanxiang


Electric vehicle charging stations

► Rather than having the user pay for the amount of time spent

connected to the charging station, users purchase the amount

of electricity to be consumed during the charging process.

► Expected value: users will save money through the use of

microtransactions, and electricity will be deployed more

efficiently.

Source: CoinDesk “Why a German Power Company is using Ethereum to Test Blockchain

Car Charging,” 7 March 2016, http://www.coindesk.com/german-utility-company-turns-to-

blockchain-amid-shifting-energy-landscape

► Use case: bitcoin-enabled smart meters can bypass banks

and credit cards, getting utilities paid more promptly and

avoiding disputes with customers and municipalities

RWE AG

Source: CoinDesk “Why a German Power Company is using Ethereum to Test Blockchain Car

Charging,” 7 March 2016, http://www.coindesk.com/german-utility-company-turns-to-

blockchain-amid-shifting-energy-landscape


Omar Al-Juburi

Americas Power & Utilities Blockchain Lead,

Ernst & Young LLP United States

[email protected]

Anthony Natoli

Americas Power & Utilities Blockchain Program Manager,

Ernst & Young LLP United States

[email protected]

Key contacts

Thierry Mortier

Global Power & Utilities Innovation Leader,

Ernst & Young Advisory Services CVBA

[email protected]

Henry Wesson

Global Power & Utilities Innovation Director,

Ernst & Young LLP Netherlands

[email protected]

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Blockchain for Power & Utilities – real or hype?

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