Page 19 - April 2018 Disruption Report Flip Book

ELECTRIC UTILITY SECTOR
JAANPURAIRLY20210818
• Risk of stranded assets could increase as blockchain could hasten the penetration of DERs. Utilities may need the protection of improved pricing structures like net metering and fixed charges. However, blockchain technology could bypass utilities and net metering policies by facilitating trading at the microgrid level without the need for involving a utility at all.
• Future investments in the grid might move to private companies as eliminating a utility from the DERs price formation weakens their claim
Bitcoin has attracted wide interest in recent months, (Exhibit 1). Given their potential to streamline
b u t i t ’ s b l o c k c h t a o i n t h — e t h s e e t e i n c v h e n s o l t o m g e y n t h t s a t . u ( Cn d i t e i r Gp i Pn s S G l o t b r a a n l s P a e c t r i s o p n e s a c n t i d v c e u s t c a o n s d t s , S b o l o l u c k t i c o h n a s i n , s a n d s m a r t
bitcoin and other cryptocurrencies—that has contracts could help to remove pain points and
Anthony Yuen, Edward L Morse, Adriana Knatchbull-Hugessen, Praful
the potential to remake important aspects of the friction throughout the power value chain (see
Mehta, November 2017; The Developing Role of Blockchain, World
utility industry. Leading utilities have begun to
sidebar, “Blockchain 101”). That said, blockchain technologies are still in their infancy, and questions remain about security, scalability, and governance.
Energy Council, November 2017)
ask how they could take advantage of these uses while withstanding threats from blockchain-
Ex
enabled challengers. The emergence of blockchain
introduces a new measure of uncertainty at a
time when the industry is changing rapidly due to
In this article, we look at six ways that energy players are beginning to use these technologies, and we
McKinsey analysts Kimberly Henderson, Matt Rogers, and Emily Knoll wrote:
renewable and distributed energy, energy efficiency, energy storage, and digitization.
consider the prospects for blockchain’s development within the industry.
Blockchain technology could provide the
1. Issue and trade renewable-energy certificates
Blockchain technology could provide the infrastructure for sophisticated networks that
infrastructure for sophisticated networks that
Renewable energy certificates (RECs) are currently
manage payments, sales, trading, and distribution.given to solar producers based on generation manage payments, sales, trading, and distribution
BLOCKCHAIN TECHNOLOGY CAN COORDINATE DATA
hibit 1 Blockchain technology can coordinate traditionally centralized data flows throughout the power system.
Generation
Transmission and distribution
End user
Secure power generation and supply data transcribed to blockchains allow for visibility, security, and accuracy.
Renewable energy credits
based on actual production are semi-autonomously awarded and traded.
Wholesale power is traded via smart contracts that minimize the need for brokers and indexing agencies.
Blockchain-enabled sensors and controls allow for secure, centralized data and improved grid resilience.
Real time customer-utility interactions
facilitate faster payment cycles, more
efficient energy use, and streamlined account management.
Peer to peer microgrids run autonomously, with blockchains managing contracts for energy flows and instant payments.
Electric vehicles seamlessly connect with infrastructure executing transactions through ‘smart wallets.’
Smart home appliances coordinate electricity purchase and use with the grid, promoting grid efficiency and extending appliances’ useful life.
Source: What Every Utility CEO Should Know about Blockchain, McKinsey & Co., March 2018
What every utility CEO should know about blockchain
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