How to prevent blackouts with Blockchain

Most people see electric grids like roads and highways connecting A and B. And actually this is true. The grid basically connects the energy sources with energy consumers. But taking a more in depth look will make us realize, that the dynamic of the system is a much more complicated.

Let’s assume you switch on a netflix movie on a lazy sunday. While you’re watching the movie, the power for your TV is being produced somewhere. More important: it’s being produced at the exact same time. Sources are burning fuel, solar panels, wind turbines or nuclear reactors. There is nearly no storage of electricity on the grid. Hence, to ensure that you can watch the new blockbuster, the grid operator has to balance the grid (the utility frequency). Therefore, two main applied measures can be observed.

Expanding the grid to transport energy from renewable sources

With the growing number of renewable energy sources, the balancing becomes more and more challenging. As renewables are often placed at very lucrative areas (e.g. solar panels in sunny areas), the grid has a regional surplus in one areas but missing energy in another area. To compensate this, governments and grid operators plan high investments in grid expansions to transport this surplus energy and decrease the probability of blackouts. For example, the outdated US grid is going to cost up to $5 trillion to replace.

Interruptible loads are helping out to stabilize the grid

We might think that the power plants produce enough energy day AND night. And yes, they normally do. But what happens when they don’t? For these occasions we have interruptible loads. These are for example energy intensive manufacturing plants, where the plant operator agreed on adapting his energy need according to the available offer and total need of energy in the grid. The plants are being turned down during critical times in order to stabilize the grid and prevent blackouts. In return the provider of these interruptible loads are being payed for this "service". These costs are included in the price per Kilowatt. Basically, you pay these fees while watching your movie.

Why not using households as interruptible loads

So why not adopting the approach of interruptible loads on any kind of (energy intensive) device? Instead of turning down plants, which might be hundreds of miles away from your TV, we can turn down local devices. Let’s take your neighbor’s laundry machine. Let's switch it off and then turn it back on after you have finished the movie. In exchange, the owner is getting payed for this flexibility. Let’s call this local interruptible loads. One might answer “Well, if the grid operator then needs to track and refund each single households, it will become pretty painful for his billing department, right?”. True. So instead of organizing this “manually”, one need a possibility of autonomous tracking and transactions.

Use Blockchain as a caretaker against blackouts

For this context, I picked up the role of Blockchain in the energy market in my last post.

Regarding the described challenge, Blockchain may play the role of a caretaker for the grid balancing. More precisely, the Blockchain enables each device to participate by recording their availability. As soon as the local grid sends the need of saving energy for a period of time (e.g. due to a temporary shortage), a device can react autonomously by “accepting” the request through the Blockchain (no user interaction). The Blockchain is mapping these transactions as a ledger. Furthermore, the Blockchain is the trading platform between the local interruptible loads and the consumer. Either it’s being managed autonomously or by a grid operator.

As the devices agreed to change their operation time to a time slots with enough surplus energy in the local grid, less energy needs transportation from A to B, less cost intensive manufacturing plants (miles away) need to be turned down and the grid expansion can be limited to a minimum. Therefore, the German Energy Agency states: “Blockchain has the potential to reduce grid costs through better balancing, reducing metering costs, making information streams faster and more immediate, and adding customer value through more detailed and transparent information about energy origin and evolution.“ Although, this approach requires investments in smart grids, smart (digital) meters, smart devices and furthermore, Blockchain enables a new possible cost efficient alternative for the future.

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