As I write these words, North America and Europe alike are reeling from record-setting heat waves. June 2019 was the hottest June on record. Preliminary data for July 2019 suggests it may have been the hottest month ever recorded on Earth, thanks in part to a blistering Sarahan heat wave that saw temperatures in European cities reach all-time highs (such as Paris, which hit a staggering 109º F / 42º C).
Suffice it to say: the collective global consciousness is more focused than ever on the need to accelerate energy-sector decarbonization and avoid the worst impacts of the climate crisis.
High-penetration renewables can’t just be about enough installed supply-side capacity
Increasingly, there is no shortage of examples of major institutions setting 100% renewable energy targets, from countries such as Sweden and Denmark, to U.S. states such as Hawaii and California, to any number of the Global Fortune 500 that have signed on to the RE100.
Regardless whether the target is truly 100% renewables or ‘merely’ a high-percent majority, the question then becomes how to achieve that type of energy system. Over the past decade, strategies have evolved significantly.
First, there was the mantra of “efficiency first, renewables second.” The rationale was simple: at a time when wind and solar were notably more expensive than they are today, invest in comparatively cheap energy efficiency to reduce overall demand, and only then make the investment in renewables.
But then, as wind and solar got more and more cost competitive, “renewables first” regardless of complementary investments in efficiency became increasingly viable and convenient. Of course, wind and solar are predictable but also variable, so “buffering” variable generation and making it in some sense dispatchable became the priority.
Battery energy storage emerged as the chief technological way to arbitrate renewable supply and grid demand. Store surplus renewable generation for use later when demand is higher. To wit, we started to see power purchase agreements signed for eye-poppingly low prices for utility-scale solar+storage projects.
In tandem, another strategy surfaced: instead of investing in still-expensive battery energy storage, why not just overbuild renewables? Add so much renewable energy capacity to the system that we’ll still have enough generation to meet demand when renewable output is low, and we’ll simply deal with curtailment when renewables are generating a surplus?
Of course, none of these strategies are mutually exclusive. And to a large degree, they all share a common theme: they’re about hard infrastructure and capacity, and—with the exception of efficiency and perhaps storage—mostly focused on the supply side.
The critical role of demand-side software-based solutions—and a role for blockchain
With the recent proliferation of smart devices that control flexible electricity loads, the idea of demand flexibility—popularized by EWF co-founder Rocky Mountain Institute in a series of high-profile analyses in recent years—has been one of the first important demand-side and software-based solutions to managing a high-renewables power grid. Demand flexibility can achieve many—even most—of the same supply-demand balance goals of energy storage, yet at a fraction of the cost. It’s a big step toward a dynamic grid.
To wit, just earlier this month Vox covered how such load flexibility could save billions of dollars per year in electricity system costs while reducing peak demand via what has been dubbed demand response 2.0. But is it enough? More than ever, it’s looking like the future low-carbon, renewables-rich electricity grid of the future will also be a decentralized grid.
In some places, that’s a technological necessity. For example, Oahu—Hawaii’s most-populous island—simply doesn’t have enough land area available to build sufficient utility-scale renewable capacity to reach 100%. Oahu needs to robustly build out distributed rooftop solar as well. For another example, directives from the EU parliament clearly lay out a utility and grid operator mandate to empower customers and pave the way for smooth market participation from distributed energy resources (DERs). And for a third and final example, with electrification of emerging economies in currently off-grid areas, such as sub-Saharan Africa, a decentralized “cellular” grid—paired with innovative financing and creditworthiness for populations that don’t have traditional banking options—is the most logical approach to bringing electricity to the hundreds of millions who currently lack access.
In that world, there’s good reason to question whether it’s fully achievable without something like blockchain. Or at least, how rapidly and effectively we could achieve a high-renewables, low-carbon, and heavily decentralized electricity system without the enabling digital infrastructure that is blockchain.
How can we speed DER interconnections, while securely verifying their performance and streamlining their market participation and financial settlement for services bought or rendered? How can we tap into the values these customer-sited assets can provide, and especially leverage the synergies between green energy and the coming wave of electric vehicles sweeping through the global auto fleet? In a world of DER-based load flexibility and demand response 2.0—or even a future DR 3.0—how will we manage the onboarding, administration, coordination, control, settlement, and EM&V of millions or even billions of small assets?
From EY writing in January 2019 about blockchain and distributed energy, to a June 2019 report from the Electric Power Research Institute (EPRI), it’s becoming increasingly clear that blockchain offers compelling answers to these and other questions. In fact, the EPRI report specifically calls out DER management—including measurement and verification and a DER “quick connect” for streamlined trusted interconnection of assets—as a key use case. These ideas—about a low-carbon, customer-centric, DER-rich electricity grid—are increasingly popular and the business case is there. But importantly, EWF plays a key role in deploying digital infrastructure that leverages blockchain to actually make it all work.
As we have said many times before, blockchain is not a singular solution. But it does have an important seat at the table. And with the June 2019 launch of the production Energy Web Chain, it’s more realistic than ever for utilities, grid operators, and other market participants to embrace this technology and usher in a low-carbon, decentralized grid sooner than later. We’re all feeling the heat and owe it to ourselves and future generations to accelerate the energy transition.