Blockchain for Transactive Energy Platforms

The transition of the electric power grid from one-way power to two-way power (what Navigant Research calls the Energy Cloud) has been underway for several years, bringing numerous benefits. However, distributed generation (DG) also causes complications for grid operators. Intermittent generation introduces challenges to power quality, equipment reliability, and network balancing, and DG requires extra precautions to ensure the safety of lineworkers. The costs of dealing with these issues—and any DER subsidies—are typically borne by the utility customer base, leading to complaints that traditional customers are unfairly burdened for the benefits enjoyed by DER owners. These factors, among others, are leading to falling subsidies for DER, significantly affecting the economics of PV, wind, and storage investments.

Transactive energy (TE) is a two-way grid management approach that both ensures the proper functioning of power networks that have large amounts of DER and allows DER owners to earn a commensurate return on their investments. Blockchain is an IT technology that supports transactions of various types, typically deployed on a decentralized basis. As such, it has received significant attention as a potential technology to underpin a TE platform. But are TE and blockchain an appropriate match in practice? There is no simple answer to that question because of the many different blockchain applications and TE programs. While blockchain is neither a panacea nor a one-size-fits-all solution, there are likely some good TE scenarios for which blockchain will provide significant benefits.

This Navigant Research report discusses potential blockchain use cases in TE systems, with a focus on TE taking place within the distribution grid. The study discusses the diversity of scenarios, application goals, and flavors of blockchain applications and TE programs. It also examines the requirements for TE and what blockchain brings to the TE table and provides recommendations for potential developers of TE solutions employing blockchain technology.

Key Questions Addressed:
  • What is blockchain?
  • What is transactive energy (TE)?
  • What are the requirements of TE?
  • How does blockchain support TE?
  • What are blockchain’s limitations in TE?
  • What are Navigant Research’s recommendations to companies interested in blockchain?
Who needs this report?
  • Energy trading companies
  • Energy companies
  • Energy service companies
  • Blockchain startups
  • Distributed energy resources (DER) aggregators
  • Utilities
  • Regulators
  • Investor community

Table of Contents

1. Executive Summary

2. Market Update

2.1   The Blockchain Spectrum

2.2   Recent Blockchain Trials Focus on a Portion of the Traditional TE Scope

3. Requirements for TE and Potential Use of Blockchain

3.1   What Blockchain Brings to the TE Table (and What It Does Not)

3.2   How Blockchain Might Be Used for Major TE Processes

3.2.1   Value Determination

3.2.2   Negotiation

3.2.3   Responsive Interconnection

3.2.4   Contracting

3.2.5   Power/Energy Flow Monitoring and Verification

3.2.6   Settlement

3.2.7   Audit and Reporting

3.3   Selected Blockchain TE Systems

4. Recommendations

List of Tables and Figures

  • Functions and Processes of a Distribution-Level TE Framework
  • Map of Blockchain Strengths to TE Framework Functions
  • Selected Blockchain TE Projects

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