The disruptive potential of blockchain technologies in the ...€¦ · Renewable Generation by Technology: Historical Data and SDS Targets B. Marchi et al., The disruptive potential

The disruptive potential of blockchain technologies in the energy sector

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Marchi B.*, Zanoni S. *, Zavanella L.E. *, Ferretti I. *, Pasetti M. **

*University of Brescia, Department of Mechanical and Industrial Engineering

** University of Brescia, Department of Information Engineering

contact: [email protected]

eceee 2019 Summer Study on energy efficiency

June 3 - 8, 2019, Presqu’île de Giens, France

From Centralized Energy Systems …

B. Marchi et al., The disruptive potential of blockchain technologies in the energy sector, eceee 2019 Summer Study on energyefficiency, June 3-8, 2019, Presqu’île de Giens, France

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• Large scale centralized power plants (from several MW to GW)

• Large share of thermal-electric resources (i.e., programmable generation)

• Limited share of renewables

• One way power flows

• Passive consumption

• Regulated electricity markets

The conventional grid architecture*

* S. Howell, Y. Rezgui, J. L. Hippolyte, B. Jayan, and H. Li, “Towards the next generation of smart grids: Semantic and holonic multi-agent management of distributed energy resources,” Renewable and Sustainable Energy Reviews, vol. 77, no. September 2017, pp. 193–214, 2017.

… Towards Distributed and Decarbonized Energy Systems


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• Increase of small scale distributed generation (from few kW to MW)

• Increasing share of renewables (intermittent and unprogrammable)

• Bidirectional power flows

• Use of distributed energy storage systems (for increased self-consumption)

• Operation in deregulated electricity markets

• New energy assets enabling the eMobilitytransition

The energy landscape emerging through smart grid and urban energy system concepts*

* S. Howell, Y. Rezgui, J. L. Hippolyte, B. Jayan, and H. Li, “Towards the next generation of smart grids: Semantic and holonic multi-agent management of distributed energy resources,” Renewable and Sustainable Energy Reviews, vol. 77, no. September 2017, pp. 193–214, 2017.

Renewable Generation by Technology: Historical Data and SDS Targets

B. Marchi et al., The disruptive potential of blockchain technologies in the energy sector, eceee 2019 Summer Study on energy efficiency, June 3-8, 2019, Presqu’île de Giens, France

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• In 2017, renewables saw the highest rate of generation growth among all energy sources. Wind power accounted for the largest share of overall renewables growth, at 26% thanks to a relatively windy year, followed by solar PV (19%), hydropower (3%) and bioenergy (5%)

• Solar PV and wind represent also the most promising solutions dealing with energy access and sustainability

eMobility Transition


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* S. Rinaldi, M. Pasetti, E. Sisinni, F. Bonafini, P. Ferrari, M. Rizzi, and A. Flammini, “On the Mobile Communication Requirements for the Demand-Side Management of Electric Vehicles,” Energies, vol. 11, no. 5, 2018.

Schematic representation of the type of charging systems, and of their typical use and interaction within electric distribution networks*

• Private charges continue to outnumber publicly accessible infrastructure

• High temporal and spatial stochasticity of power demand which collides with the intermittency and uncertainty of RES

EA (2019), "Global EV Outlook 2019", IEA, Paris, www.iea.org/publications/reports/globalevoutlook2019/

M. Pasetti, S. Rinaldi, A. Flammini, M. Longo, F. Foiadelli, “ Assessment of Electric VehicleCharging Costs in Presence of Distributed Photovoltaic Generation and Variable ElectricityTariffs”, Energies, vol. 12, 499, 2019

New Technologies and Strategies


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Intensive use of ICT (allowing improved observability and control capabilities)

Distributed control architectures (e.g., Holonic Multi-Agent Systems)

Accurate day-ahead load and generation forecasts

Improved automated controls of users’ loads

Advanced DSM techniques (e.g., direct load control, incentive-based programs)

New market entities(e.g., EV aggregators)

Transactive consumption models (e.g., smart charging of EVs)

The evolution towards cooperative multi-energy systems

Advanced DSM Techniques


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Classification of the main objectives of Demand-Side Management *

* M. Pasetti, S. Rinaldi, and D. Manerba, “A Virtual Power Plant Architecture for the Demand-Side Management of Smart Prosumers,” Applied Sciences, vol. 8, no. 3, 432, 2018.

• Demand Side Management (DSM) techniques represent a promising solution to match energy demand and supply, by manipulating the power demand profiles of end users

• They improve the reliability, efficiency and flexibility of energy systems

• But requires the implementation of advanced ICT solutions (e.g., intelligent devices, communication infrastructures and protocols)

Load Management

Strategic Conservation

DEMAND RESPONSE

Blockchain Technology


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Key concepts of Blockchain

The blockchain is a decentralized peer-to-peer system without a central authority, which can disrupt the traditional centralized energy market providing to utilities an

• open,

• transparent,

• trusted and

• secure platform for the management of distributed energy systems

• The blockchain consists of a distributed ledger

• built on a shared network infrastructure and public key encryption,

• replicated, synchronized and spread across multiple sites, countries, and/or institutions,

• used to record and manage transactions between users (both residential and business) or to store and verify data,

• where each node (i.e., network participant) has the same copy of the record

Distributed Shared Ledger


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CENTRALISED LEDGER DISTRIBUTED LEDGER

Consensus

• The blockchain uses distributed node consensus algorithms to add and update data and transactions

• Consensus is the procedure to have an accurate blockchain at every node

• Different algorithms exist (e.g., PoW and PoS) which consumes different amount of resources


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Cryptography

• Cryptography is used to secure data transmissions and access to guarantee the non-destructive modification of data in the distributed ledger


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Smart Contracts

• Smart contracts facilitate, execute, verify, and enforce the negotiation or performance of an agreement when specific conditions are met

• The entire complex process is automatedand the terms of the contract are recorded in lines of code that are immutable and always traceable

• Two or more parties are enabled to perform a trusted transaction without the need of third parties as intermediaries, reducing the contract-related transactional costs

• They clearly defines and tracks the ownership of the objects of the transaction.


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Blockchain Potential in the Energy Market

• The blockchain technology in the energy market can • support the automatic and distributed energy exchange

• lower the barrier for new entrant players face, increasing transparency, liquidity and competition

• lead to more flexible wholesale energy prices

• guarantee trustable transactions automatically managed instead of third-party intermediaries

• reduce the operational cost

• facilitate end users to implement DSM activities

• reduce the frequency of load fluctuations from the demand side improving the performance of the whole system


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Blockchain Use Cases in the Energy Market: P2P Energy Transactions

• The major use case of blockchain technologies in the energy market is the blockchain-based P2P energy trading model, which can provide an efficient and effective trading platform for the management of DERs in real time.

• Moreover, it empowers users, giving them the decision-making capacity about their own energy consumption and production.


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Blockchain Use Cases in the Energy Market: Electric Vehicles

• Blockchain technology applied to EVs allows users to experience a better charging process by improving the communication flows among EVs and smart grid, and to increase the efficiency of already installed charging stations.

• The unified payment platform based on smart contracts can be more easily accepted by the public.


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Blockchain Use Cases in the Energy Market: Carbon Emissions Certification and Trading

• The use of blockchain technology to tokenize carbon credits and other environmental incentive schemes providing a platform for the certification and trading of carbon emission rights

• strengthen the monitoring, reporting, and verification of the climate action’s impacts;

• improve transparency and traceability of climate action;

• …


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Blockchain Use Cases in the Energy Market: a Summary


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BDEW, “Blockchain in the Energy Sector - The Potential for Energy Providers”, 2018.

Weaknesses

• Blockchain Technology still presents some bottlenecks which lowers the speed of dissemination and represents the main challenges for the near future

• Scalability: huge amount of computational power consuming a lot of resources (e.g., time and energy) and leading also to reduced response speed

• Regulation: a clear framework is required to regulate smart contracts and protect users, to avoid incurring in market failure and to ensure a minimum standard of product quality for the consumers

• Identification and Privacy: some transaction patterns could uncover the owner’s identity even though its is hidden through a public key

• Invoicing: nobody can give an invoice. A solution on how to manage invoicing and accounting should be provided

• Reliability: the physical laws of the complex energy system should be considered

• Talent shortage


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Conclusions

• Nowadays, due to the increased amount of distributed and decarbonized energy systems several challenges are posed on the management of the energy flow

• Bi-directional electricity flows and transactions

• Increased volatility

• Exponential increase in number of players and of data volume

• …

• Blockchain offers solutions that fit the new energy paradigm: • it allows people to establish P2P energy contracts

• without third-party intermediaries,

• enabling prosumers to produce, consume and trade energy across existing grid infrastructure without any barrier, and

• brings a more flexible and adaptable system.

• The objective is to consolidate energy generation and demand based on the renewable production, reducing, or even eliminating, waste

• The future energy system could become a huge network composed of millions of micro-grids that interact with one another, automatically reacting to the surplus generation of electricity or to the energy needs of users

• … however there are still several bottlenecks that should be addressed


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Thank you for your attention!

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The disruptive potential of blockchain technologies in the ...€¦ · Renewable Generation by Technology: Historical Data and SDS Targets B. Marchi et al., The disruptive potential