Modernizing the Energy Grid to Scale
By: Matthew Olan
Tags: Power Ledger, Blockchain, Modernization, Renewable Energy, Solar Energy

There’s no doubt that if we as a species want to mitigate the issue of climate change that we must scale alternative ways to power modern-day society. Without the implementation of alternatives such as wind, solar, and hydroelectric, many believe that we face dire consequences brought on by our continued use of fossil fuels. That being said, our sourcing of energy is not the only issue we face in this highly complex industry. For us to effectively make our resourcing changes, we must also overhaul the existing energy grid infrastructure. In its current form, the grid was built to enable energy flows from Point A (a centralized producer) to Point B (a consumer). However, as society has moved towards Distributed Energy Resources (DERs), such as home installed solar, the modern-day energy grid must be rebuilt to better accommodate bidirectional power flows.

The need to accommodate the new two-way highway of energy is the result of more entities on the grid who are both consumers and producers of the commodity. These users can be defined as prosumers, and one could liken them to that of an Uber driver and the car they own. For instance, an Uber driver is capable of using their car for personal travel, but can also turn it into a revenue-generating asset when time and interest permit. A modernized grid with prosumers at the helm will operate similarly. Users will be capable of consuming, or producing and selling energy that they generate. While I’ve left out some details, this is how a modernized grid would work in theory. However, to actually achieve this feat the grid must also be able to account for what transactions are being executed and by who, or simply put, who is using energy vs who is producing it. For this type of monitoring of energy flow, the current grid infrastructure must be outfitted with two additional components.

The first critical component in upgrading the grid is the implementation of Advanced Meter Infrastructure (AMI). These systems help operators more effectively measure, collect, and analyze energy usage on the grid. Based on a recent 2020 Gartner report on Digital Grid Transformation, AMI’s have officially broken away from the Trough of Disillusionment and are beginning to Climb the Slope of Enlightenment. Within the next few years, we could see AMIs reach what Gartner considers the “Plateau of Production”, or the point in which they provide real functional value to consumers and the economy. In essence, we’ve reached a point where we’re no longer speculating on what value these meters can bring to the grid, but rather seeing them in action and learning from their applications. Moreover, we will only continue to learn more about the value they bring as we install additional meters. In the UK alone, 53 million electricity and gas smart meters were planned to be installed by the end of 2020. However, with all the data being generated by various parties on the grid, we will need a better way of tracking and tracing the trading of the energy being metered. This is where our second addition to the existing infrastructure occurs.

In recent years the announcement of blockchain technology has been widely tied to Bitcoin and cryptocurrencies. While blockchain has become synonymous with the discussion of such tokens and/or currencies, it important to recognize that the technology itself is a highly secure and traceable database that can’t be tampered with by any one user. In addition to its highly traceable and immutable properties, blockchain’s are also by nature intended to be decentralized and work with multiple parties participating in the network at once. With that being said, this type of database lends itself extremely well to helping track and trace data on an AMI enabled grid. Blockchain technologies could effectively help with the trading of energy production and usage by prosumers. With that data, individuals could improve upon existing energy trading models, better forecast consumption habits, and improve production required during peak demand hours.

While still in its introductory phase to the energy industry as a whole, blockchain lends itself to being a major middleware component of a modernized grid. In cooperation with AMI, blockchain technologies in the energy industry can set us on a path towards modernizing our energy consumption habits. The large scale consequences would mean that the grid is no longer solely dependent on centralized nodes (major producers) to power the entire network, but rather “major” and “minor” energy hubs would exist to help balance the supply and demand fluctuations we face in the future.