For all the publicity generated by the recent increase in value of Bitcoin, as well as the generally increasing awareness of the existence of blockchain technology, the recent Blockchain in Energy Forum 2018 held in New York City demonstrated that the technology is incredibly young and all stakeholders—utilities, regulators, entrepreneurs, consumers and investors—are still struggling with the ultimate impact of distributed ledger systems. The promise of blockchain as a decentralized, verifiable and immutable database with the scalability to displace existing record-keeping systems is as of yet unfulfilled, but not for lack of effort. The wide variety of issues covered in the day’s panels demonstrate the fundamental debates stockholder are still having. The touchstone questions to which panelists came again and again were “What problem is this solution supposed to solve?” and “Why does blockchain solve it better than any other solution?” Definitive answers to both questions remain elusive.
Most expect blockchain technology to be the foundation of the future transactive energy grid in which power generated by distributed energy resources on a scale ranging residential rooftop solar to traditional generating stations is bought and sold in a marketplace, matching production with demand efficiently in real-time. Our traditional hub-and-spoke model of electrical generation and transmission is evolving to one of widely distributed generation. This new marketplace will require the settlement of an incredible number of transactions every second. Some estimates have pegged the minimum rate of transactions to be settled for a country such as Germany at 260,000 per second in this future grid. As a means of comparison, the blockchain behind the cryptocurrency Bitcoin can only process 5 transactions per second – that of Ethereum, another well-known cryptocurrency, can handle approximately 15 transactions per second. For the transactive grid to come to fruition, much progress remains to be made.
Efforts are underway. The Energy Web Foundation, an off-shoot of The Rocky Mountain Institute, the nonprofit energy research and consulting group, has begun developing its own blockchain engineered specifically for use within the energy space named the Energy Web Platform. Presently even this best attempt at an energy-specific blockchain can handle only 750 transactions per second. Further technical issues abound. Governance and best practices concerning the protocols pursuant to which major changes to the structure of the blockchain are implemented remain a topic of hot debate, as do the measures of verifying transactions on the blockchain. With basic issues such as these still in flux, it is not surprising that a real world manifestation of a fully-functioning blockchain application has remained elusive in the energy industry.