Blockchain Is A Clean Tech Innovation Catalyst (Blockchain Report Excerpt)
Blockchain Is A Clean Tech Innovation Catalyst (Blockchain Report Excerpt)
Along with our regular daily clean tech news coverage, CleanTechnica also produces in-depth reports on various aspects of clean energy and clean transport. One of the emerging technologies we cover that isn’t directly a clean tech innovation is blockchain, which promises to be a catalyst for innovation in the green economy in the very near future. Blockchain is probably most widely known to the public as “having something to do with cryptocurrency and Bitcoin, right?,” which is partially correct, but the technology itself has a wide range of applications, some of which will be crucial in the fields of distributed renewable energy, grid management and energy storage, and smart contracts, among others.
The electricity grids that power our global economy are undergoing greater, more rapid transformation than any time in their history. In mid-January, Bloomberg New Energy Finance announced that 2017 clean energy investment surpassed US$333 billion. Cumulative clean energy investment since 2010 has reached a whopping $2.5 trillion. Meanwhile, customer-centric devices in our homes and businesses are scaling rapidly and turning each of us into energy prosumers. For example, analyst firm Navigant forecasts the global smart thermostat market will reach $4.4 billion by 2025, up from $1.1 billion in 2016.
The question has not been whether the energy market will transform, but when, and to what extent. The answer has often proven “to a greater extent, sooner than expected.” To wit, electric vehicles are now expected to comprise more than half of all new vehicle sales by 2040, upwardly revised from a previous estimate of 35% just one year prior. Costs for solar energy have plunged 86% in just 8 years.
On 21 April 2017, the United Kingdom had its first ever coal-free day since the country’s use of fossil fuel began in the 1880s. By mid-November, Costa Rica had run on 100% renewable energy for an incredible 300 consecutive days. Most recently, in early February Tesla and the South Australia government announced the world’s largest virtual power plant, coordinating rooftop solar energy and in-home batteries from 50,000 households to help run the grid and keep the lights on.
Behind this change are five megatrends that influence regulators, utilities, energy companies, corporations, and individual customers: decarbonization, digitalization, decentralization, democratization, and resilience. The logical result is an electricity grid rich in dynamic, low-carbon, customer-sited technologies — smart thermostats, rooftop solar, battery energy storage, electric vehicles, etc. — that harmoniously balance electricity supply and demand in real time.
But how will we achieve that cleantech future? More pointedly, is the digital infrastructure that supports this fast-evolving physical electricity grid poised to soon reach its limit and fail? We must plan for this possibility, and develop a new “digital DNA” for the electricity grid designed to handle the future, rather than serve as an incremental crutch to a legacy grid ill equipped for what’s coming.
With the rise of the Internet of Things, it’s tempting to assume that centralized, cloud-based supercomputing will serve as the “brains” for the future grid. Yet this approach has two crucial shortcomings for running critical energy infrastructure. Firstly, centralized supercomputing is relatively and unacceptably insecure, with a single point of failure vulnerable to cyber or other attack. Secondly, a world of ubiquitous devices will surely surpass the capacity of centralized computing to manage all those resources. (Analyst McKinsey forecasts by 2020 — two short years away — the world could already have 30 billion connected IoT devices.)
There is another, better way: blockchain. De- spite the current mania — thanks in large part to blockchain’s association with the cryptocurrency craze — the cleantech industry should pay attention.
Blockchain’s attributes make it particularly well suited to cleantech’s needs. Blockchains are a form of distributed ledger. They are heavily decentralized, with identical copies of the ledger residing on many independent computers around the world. Those computers cross-validate blocks of transactions and agree to add them to the ledger, making blockchains especially secure against corruption. This low-cost, flexible, scalable software — and the smart contracts and transactions it supports — can empower utilities, grid operators, major corporations, communities, and everyday energy prosumers like you and me (i.e., individuals). We will all play an increasingly important role in the future grid.
Still, thoughtful platform design will be critical. What is the best way to manage machine-to-machine (M2M) and peer-to-peer (P2P) transactions? How to balance open access for market participants of all shapes and sizes (from individual customers and de- vices to massive utilities) with the kinds of transparency, governance, and oversight regulators expect? In a world where billions of devices are connected to the electricity grid, how can a grid and market architecture successfully, intelligently manage tremendously high communications and transaction volumes with low latency, high reliability, integrity, and lean energy consumption for computing?
The world and the energy industry are taking notice. At the beginning of February, the European Union announced formation of an observatory and forum, alongside €100 million ($124 million) in funding, for researching uses for blockchain technology. That same week, Bloomberg New Energy Finance released a report highlighting $143 million in investment by 135 companies supporting blockchain applications for the energy sector. Energy sector investment in blockchain has dramatically accelerated across Q4 2017 and into early 2018. In March 2018, GTM Research highlighted $300 million in cumulative investment, more than half since January 1.
For its part, the nonprofit Energy Web Foundation, cofounded by Rocky Mountain Institute and Grid Singularity, announced major expansion of its global network of affiliate partners, who are together creating an open-source blockchain plat- form specific to the energy sector.
Blockchain presents a compelling opportunity and solution. Everyone — from major utilities and energy companies to small businesses and residential prosumers like you and me — stands to benefit.
By Neil Pennington and Peter Bronski: Neil Pennington is a strategic advisor to the Energy Web Foundation and EWF co-founder Grid Singularity. Peter Bronski leads marketing and communications for the Energy Web Foundation and is a veteran of Panasonic, Rocky Mountain Institute, and others.
Blockchain Is A Clean Tech Innovation Catalyst
Energy generation, demand and consumption have been fertile grounds for innovation for decades and the pace isn’t slowing. Electrification of transportation is taking off, wind and solar generation are the cheapest forms of new generation on the market and every KWH of electricity is being used more ef- ficiently than ever with our solid state, LED, OLED and LCD devices and lighting.
But there’s a new technology bringing innovation to a rapidly expanding field: blockchain.
It’s the underpinning technology for cryptocurrencies such as bitcoin and Ethereum. But it’s also the underpinning technology for microgrid electricity sharing plans, for using battery storage to smooth massive wind generation in the North Sea over a currently small transmission line to the European mainland, and for funding new renewable energy projects.
Blockchain is a new foundational building block for doing business on the internet. In its various forms, it allows fully anonymous transactions and regulatory ready transactions, fully distributed solutions that radically change value streams to better centralized solutions and more.
It’s going through a hype cycle right now, but there is a lot of value in looking at the technology’s application to the clean technology space, how it operates in sufficient detail to spark innovation and to look at examples.
Unsurprisingly, in a world where mining for bitcoin is by one analysis consuming more electricity annually than 159 countries, there are several utilities which accept Bitcoin as a payment option. The first was Bas Nederland in 2014, when bitcoin was fluctuating in the $300 to $800 range. Assuming a couple of people took Bas Nederland up on this offer and they received say 10 bitcoins worth $5,000 at the time and that the company held onto them, they’d have been worth $183,000 USD in January 2018, about 37 times as much.
We’re aware of 63 initiatives in 26 countries using blockchain for clean tech and grid management initiatives. These range from major utilities and global corporations to tiny cryptocurrency startups, but they share a belief that blockchain can change the world.
In preparation for publication, we surveyedCleanTechnica readers in April of 2018. CleanTechnica readers cross the spectrum from deep industry professionals to environmentalists to technology early adopters. It was not an academic survey of high accuracy, but the results are informative. More people thought blockchain would be transformative for grid transmission of electricity and payment for electricity than for generation of wind and solar energy or electric vehicle charging. All of these are use cases which are in at least proof-of-concept stages today in different parts of the world.
CleanTechnica readers appear to be on the side of the disintermediation of cryptocurrencies and not expecting utilities to benefit, as the majority said the largest benefits would flow to consumers, followed by business and then utilities as a distant third. Readers are split almost equally as to whether blockchain solutions will be a net environmental benefit or detriment. The jury is definitely out at present.