Blockchain is defined as a distributed ledger technology (DLT) that is becoming the underlying layer of the future of the Internet. It is creating a new wave of decentralized services applications, called “DApps,” that will be introduced to replace most of today’s centralized, cloud-based Internet applications. Permissioned, enterprise, and consortium-based DLT Blockchain has been considered as a new enabling technology layer of information technology (IT) enterprise systems and processes, used in industry vertical markets to improve IT operations, security and process efficiency [1,2].
DLT Blockchain is being introduced in the energy vertical, particularly in the utility grid sector, to reduce costs, improve security, disintermediate processes, speed transactions, register and authenticate grid assets and data and improve all smart grid operations [3]. On the other hand, new Blockchain-enabled transactive energy models have been defined and introduced at the consumer and edge side of the grid, which may reshape traditional grid business models, enabling a new wave of decentralized services. Utilities will experience a new level of digital transformation by adopting DLT Blockchain technologies, which can be considered as an evolution towards grid modernization.
Before DLT Blockchain is considered in the energy sector, it is important to understand, classify and categorize all its applications segments, and define key concepts and frameworks. For this reason, a new Open Blockchain Energy (OBE) Architecture Framework is proposed and under consideration by the IEEE Standards Association, to create the first concepts on how to segment the DLT Blockchain processes, functionalities, applications, and use cases in the energy grid, which can be harmonized to enhance existing smart grid standards [4].
The distributed ledger OBE BUS contains two main segments. One related to mission critical, secure, and scalable grid operations (Blockchain core and edge); the other on the prosumer (producer and consumer of energy) or customer-facing side (Blockchain prosumer). Both will have DLT Blockchain segment-specific open application programming interfaces (APIs) to support multiple Blockchain grid applications segmentation. The operations segment can support high performance, high security, and mission-critical industrial grid Blockchain operations, where distribution system operators (DSOs) and regional transmission organizations (RTOs) work as participants in the process, as well as wholesaler energy providers, such as independent power producers (IPPs). On the consumer-facing side of the grid, a multitude of new Blockchain applications can be developed, where retailer energy providers, residential and microgrid prosumers can be connected to OBE open APIs. For each grid segment, a set of distinguished Blockchain decentralized applications (DApps) can be developed. This framework can be further evolved and detailed to accommodate more specific grid domains and applications in the near future. An Open Blockchain Energy reference model is needed to drive new grid services, improve and optimize the existing ones and eventually introduce new Blockchain-enabled transactive energy regulation in the energy sector. Figure 1 shows the preliminary concepts of the OBE framework.
Fig. 1 – Open Blockchain Energy (OBE) Framework (source: Blockchain Engineering Council-BEC IEEE standards contribution)
In the energy grid industry vertical, there is no one-size-fits-all DLT Blockchain solution. There are distinct processes, type of assets, and functional requirements that distinguish a typical grid electricity end-to-end solution. For instance, from the generation all the way to the distribution substation, there is a need to control and secure mission-critical assets that are isolated from most of the grid-edge and enterprise processes. This core grid segment, particularly at the transmission and distribution (T&D), substation, and grid edger (feeder side) are currently run by synchrophasor network, supervisory control and data acquisition (SCADA), and DNP3 protocols, evolving towards the IEC 61850 object-oriented protocol. The last mile segment is the prosumer customer-facing side, which includes all customer loads, electric vehicle charging stations, residential and commercial roof-top solar and batteries, with lots of renewable energy penetration at the edge and consumer side.
Based on these definitions, the DLT Blockchain energy grid solutions can be further classified into three main segments—Blockchain core, Blockchain edge/feeder, and prosumer. Each segment has their own grid devices and equipment, which are an essential part of the modern grid. From the T&D side, there are bulk renewable and fossil fuel generation, transmission lines, and substations. From the grid edger/distribution feeder-side, there are important grid elements, called remote terminal units (RTUs), such as capacitor banks, reclosers, voltage regulators, volt- var, transformers, etc. From the consumer-generation side (prosumer), there are smart meters, roof-top solar with connected electrical vehicle charging stations and energy storage systems. Each grid element can be a source/sink that generates its own “smart contract,” which is a Blockchain “what..if” embedded software logics. The enterprise and mission-critical permissioned Blockchain platforms can connect to existing grid enterprise/SCADA management system, such as energy management systems (EMS), distributed energy resources management systems (DERMS), and also to enterprise advanced metering infrastructure (AMI) solutions, using grid device smart contract logics that can contain important grid events, transactions, and asset identification that need to be registered and authenticated in the DLT Blockchain shared database. This shows the importance of identifying the critical assets and transactions and defining the levels of security and performance for each Blockchain grid segment. It is very important to create these isolated and federated Blockchain segments to improve grid security, scalability and performance, addressed by the 2P2S (performance, privacy, security, scalability) design principles [1]. Figure 2 shows the end-to-end DLT Blockchain framework with three distinct segmentations of the grid.
Fig. 2 – End-to-End Grid DLT Blockchain Framework Segmentation (source: Blockchain Engineering Council-BEC IEEE standards contribution)
Currently, there is a lot of of misconception in understanding that Blockchain technology can be applied beyond bitcoin or cryptocurrency applications and therefore can provide tremendous value to the utility of the future. The vast majority of the energy/utility regulatory commissioners are still trying to understand how Blockchain can be used in regulated and unregulated energy markets and how it can play in distributed transactive energy services that may disrupt traditional grid-centric generation models. In most cases, however, Blockchain is associated with high energy consumption scenarios due to the bitcoin mining proof-or-work (PoW) consensus algorithm, which is creating a new and unexpected distributed load to be managed by utilities. However, it is just a matter of time before more deployments are validated and the Blockchain value proposition is realized by grid-energy operators and consumers.
In parallel, there is a strong need to create standards in the DLT Blockchain Energy vertical. With this proposition, the IEEE Standards Association (SA) established in September 2018 the IEEE P2418.5 DLT Blockchain in Energy Standards Working Group [5], which is charged with developing the first global standards to address DLT Blockchain reference architecture, end-to-end framework design, interoperability requirements, and use cases to drive technology adoption.
In summary, DLT Blockchain technologies will be a critical enabling technology for grid modernization, introducing new decentralized services, operational, and cybersecurity models for energy/utilities.
Dr. Claudio Lima (lima@blockchain-eng.org)