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21
Nov
2017

Are blockchains a better way of managing electricity?

Cryptocurrencies, inspired by Bitcoin and based on the blockchain principle, have been very much in the media spotlight. They have a variety of potential uses: several trials have shown that they could be used to optimize the distribution of decentralized electrical energy and facilitating the sale and purchase of energy generated by consumers.

A blockchain forms a public, permanent and unalterable register, in which successive elements are chained one after another in a way that is considered inviolable. The system works as a decentralized currency, without a central repository or single administrator.

It began in 2009 with Bitcoin

The bitcoin is a computer protocol available to Internet users in an open source logic to structure a trading system that is decentralized because it lacks a supervisory authority.

Bitcoin spread, developed, and, in spite of its controversial image, increasingly took on the characteristics of an alternative currency. It was listed on markets, could be traded at any time for traditional currencies and was accepted by a growing number of e-commerce sites as a means of payment. A total of 16.5 million bitcoins are in circulation while a bitcoin traded at €858 in early 2017, more than double its value in early 2016. In November 2017, a bitcoin trades at around €7000.

Bitcoins work in an innovative way. Each transaction carried out is recorded in a register that is distributed and shared, built with computer calculations that are complex but whose validity is very easily verified. The complexity of these calculations collectively ensures the integrity and security of the Bitcoin network and, for this effort, they are remunerated by a fraction of newly created bitcoins.

Blockchain: a decentralized chain of information

Following on from Bitcoins, several hundred similar cryptocurrencies were created, all based on the technology of the blockchain (i.e., a chain of blocks): a shared file in which successive elements are chained one after another in a manner that is considered inviolable, following a decentralized validation process (generally based on cryptography).

The key-word here is “decentralized”: a classic blockchain forms a public, permanent and unalterable register whose coherence and integrity are maintained by participants in the network without any kind of control entity, central servers or trusted third-parties. This avoids the need to use a trusted third-party to centralize all the information.

Infinite applications

Going beyond the financial sector financier, blockchains have now become new mechanisms for validating transactions (of any kind), certifying trading and conserving inviolable logs.

The technology is being tested by banks, insurance companies, public services, online players and start-ups, seeking to take advantage of the principle of secured and decentralized databases. Numerous services – including distributing and registering music rights, notarial services, video games, social networks, distributed digital storage – are being reinvented under the influence of blockchains.

Solar energy began using blockchains in 2014

The energy sector is no exception. The SolarCoin cryptocurrency, launched in 2014, is an incentive system encouraging consumers to transfer to solar energy. Businesses and individuals equipped with solar panels can receive SolarCoins on the basis of the energy they produce (1 MWh of solar energy is paid 1 SolarCoin). Around 150,000 MWh of solar energy have been paid for by SolarCoins, in 24 countries. Several other projects have emerged under the banner of SolarCoin and the foundation responsible for its development. ElectriCChain is intended to identify all solar installations and provide non-confidential data that can be employed for scientific and climate studies. More ambitiously, ElectraSeed seeks to provide autonomous solar kits that form their own electricity network, with all trading managed through blockchains. Around one hundred sets of equipment have been installed in an African country for a pilot experiment in May 2017, with the rollout of 100,000 units targeted for 2018.

Neighbors can buy and sell solar energy

Other initiatives are going in the same direction. In Perth, Australia, Power Ledger launched what is hailed as “Australia’s first blockchain-powered residential electricity trading market” in December. Tested in New Zealand last summer, the system enables owners of solar panels to sell their surplus energy, with all trading carried out on Ecochain, a dedicated blockchain. In New York, meanwhile, the Brooklyn Microgrid project is intended to allow users to manage their own electricity network locally and independently, using the Ethereum blockchain to form “a shared community energy market,” with surplus power traded between neighbors via secure transactions.

BLOCKCHAIN - TO DOWNLOAD

Many people are saying that this is a change in paradigm: the consumer is transformed into a producer, becoming a “prosumer”, while energy distribution is taking place without a central operator, automated by computers and made secure by blockchains. And some people are going farther, imagining a future where blockchains are an intrinsic part of the Internet of Things. Every electrical appliance would itself be a node in the network, playing a part in the validation of transactions. In what is still an empirical model, each light bulb (or washing machine) would have its own electronic wallet and would trigger a transaction on a blockchain to pay directly for the electricity it consumes.

ENGIE and blockchains

Experiments are already under way at ENGIE. In France, the Group is exploring the use of blockchains to optimize the management of consumption and maintenance, particularly in the traceability of water, natural gas and electricity flows. In the Burgundy region, south of Paris, for instance, the Group has set up a blockchain infrastructure on a network of connected water meters. Handling the data from the meters, the system automatically will trigger a call to a repair team in the event of a leak.

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