Blockchain for Power & Utilities – real or hype?

EY Global Blockchain
Summit
San Francisco, CA
April 26, 2017

EY Global Blockchain Summit
Blockchain in power and utilities: real or hype?

A different generation mix and technology will have
implications for the future of our utilities.
Regulatory encouragement
of renewables and
market reform
Digitalization of the grid
Transition to clean energy
future
Changing consumer
behavior and expectations
Energy usage and demand
transformation
Predictability
and reliability
Geographic
mismatches
Time
mismatches
► Renewables are less predictable than
traditional grid power sources.
► The grid is very sensitive to even small
imbalances in supply and demand.
► Ideal locations for solar and wind farms
are often far from key demand centers.
► Long-distance power transmission has
a high loss rate.
► Balancing the supply mix on a real-time
basis is essential to maximize the
energy output and cost-effectiveness of
the whole system.
Trust and
security
► There has been a significant
increase in the number of new
entrants, making security and trust a
critical requirement in the system.
Complex
transactions
Standards and
interoperability
Autonomous response
to market signals
Empowered
prosumer
► As the number of participants
increases, so too does the level of
transaction complexity.
► There has been a significant increase
in the volume of transactions.
► Seamless interaction between central
and distributed resources will require
open standards and interoperability.
► The real-time monitoring of network
performance coupled with the
continuous assessment of supply and
demand based on price signals.
► Flexible monitoring and control
systems can accommodate different
degrees of customer engagement
according to individual preferences.
To be successful, the industry will need to resolve some
fundamental issues

To date, these issues have resolved into a small number of
(often interrelated) use cases.
Country-wide charging and
payments
Electric vehicle charging optimization away
from the meter
Distribution system management
Establish autonomous capabilities to manage
constraints and balance supply and demand
Asset management
Market-to-peer trading
Facilitate direct consumer trading with the
market based on demand and supply
balancing
Peer-to-market trading
Facilitate prosumer access to the market for
excess capacity
Energy optimization
Facilitate consumption monitoring, control
and optimization, and the ability to interact
with markets
Establish effective real-time asset management
and supply chain tracking
Hurdles addressed by blockchain
Autonomous response
Trust and security
Empowered prosumer
Complex transactions Geographic mismatches
Time mismatches
Trust and security
Autonomous response
Trust and security
Empowered prosumer
Autonomous response
Trust security
Empowered prosumer
Complex transactions
Time mismatches Standards and interoperability
Standards and interoperability

Powerful and credible blockchain applications are
developing among the hype.
Energy trade
IoT
Grid management
Peer-to-peer transactions
► Prosumer
► Peer-to-peer trade
► Large-scale microtransactions
► Asset management
► Portfolio reconciliation
► Settlement
► Certificates and trade
Grid
► Master data management
► Small power islands
Micro-grid
► Transactive grid
► Micro-grids on large scale
► Grid management on the basis of
wholesale trading data
► Virtual power plants
► System services
Grid
► E-mobility
► Smart homes powered by
blockchain
► Smart meters and blockchain
► Smart meter integration
Real
Hype
Eighty percent of the current development is spent on solving flashy hype topics, with limited near-term commercial
application, including micro-grids, transactive grids and peer-to-peer trading for prosumers.
Twenty percent of the
current development is
focused on solving today’s
issues.
HypeReal
Grid
► Master data management
► Small power islands

Maturity timeline
2–5 years >10 years5–10 years
RealHype
HighcomplexityLowcomplexity
The key determinant of success likely will be the complexity
of the transaction.
Settlement in wholesale trade
Large-scale micro-grid and smart grid
management, Internet of Things and grid
service automation
Large-scale electric vehicle mobile charging
and sharing platform
Large-scale peer-to-peer trade and
prosumer
Grid management on base of wholesale
trade data
Local isolated micro-grids
Wholesale trading
Complexity of transaction and counter-party arrangements

The use cases in the market today

Blockchain is being deployed in a private wholesale trading
scenario with three counterparties.
► Execute trades on blockchain
► Multiple trade types being implemented
► Real-time reconciliation dashboard, including alarms
► Prove scalability, 200 trades and second
► Prove privacy
$£
Real money world
Fiat currencies
Tokens
Regulator
Trade information
Physical power grid
BTL Group Ltd.
► Built from the ground up,
Interbit is BTL’s open,
multi-blockchain chain.
► BTL Group Ltd. offers
portfolio reconciliation
and a peer-to-peer
trading platform.
Start-up approach:
Smart meter
Smart contract
Wallet
Bank
Grid management
Consumer
Producer
Prosumer
Trader

But in the future, all transactions could be done directly
using the blockchain architecture.
Smart meter
Smart contract
Wallet
Bank
Grid management
Consumer
Producer
Prosumer
Trader
► In the future, it will be possible to have a fully working
energy platform that can enable peer-to-peer
transactions between its players if regulation,
application security and scalability can be addressed.
$€
Real money world
FIAT currencies
Tokens
Regulator
Trade information
Physical power grid
$€
Trade information
Physical power grid

There are three other use cases in the market that fall
across the spectrum in the issues they are addressing.
► Peer-to-peer trading platform for
renewables
► Renewable energy asset owners
decide who to sell surplus energy to
and at what price
► 11,000 households on
decentralized network
► Technology enables sale of surplus
renewable energy generated at
residential and commercial
developments
► Maturity level is medium
► Multiple projects across Australia
► Grid management
► Peer-to-peer trading, real-time
metering of local energy generation
and usage, as well as other related
data
► Technologies used and impacted
► Maturity level is low
► First demonstration project is
neighborhood installation in
Brooklyn, New York
► Demand response and mobility
► Smart wallets log users in and
charge vehicle at times not
contributing to major peak, in effect
shifting load and reducing cost per
unit
► Defer network investment for
electric vehicle uptake by
smoothing and shifting peak load
► Maturity level is low
► Established trial of combined
blockchain, e-walled and peak
shifting for the island of Texel
LO3 Energy Power Ledger Alliander

As distant as the “killer” use case appears, energy businesses
stand to gain from understanding and exploration.
Experiment
with the technology.
Explore
what it means for
your business.
Understand
the concept and
possibilities.
► If blockchain is
the solution, what
is the question?
► Where does the
solution fit within
the value chain?
► How would this
technology affect
the value chain?
► How do these
integrate into
the legacy
technologies and
institutions?
Implement
it in your business.
“We always overestimate the change that will occur in the next two years and underestimate the change that will
occur in the next ten. Don’t let yourself be lulled into inaction.” Bill Gates, The Road Ahead, Viking Penguin, 1995

The current vendor landscape

What does the blockchain vendor landscape look like
across the platforms and applications?
Trade Internet of Things
BTL Group Ltd:
► Built from the ground up, Interbit is open,
multi-blockchain chain
► Portfolio reconciliation
► Peer-to-peer trading platform
Adjoint Inc:
► Smart contracts building new messaging and
consensus protocol
► Institutional-grade security features to
provide high assurance to parties involved
Blockverify:
► Supply chain tracking and traceability
Tallysticks:
► Invoice software to automate purchase
order, to invoicing, to financing, to asset-
backed securitization, to payment workflow
BitFury Group:
► Internet of Things smart devices
► Supply chain management
► Payments acceleration
► Auditing assurance and risk
Power Ledger:
► Peer-to-peer trading
► Settlement
► Autonomous intelligent
Grid Singularity:
► Decentralized energy transaction and supply
system
LO3 Energy:
► Brooklyn micro-grid, local energy network
► Device control to balance the grid
ELECTRON:
► Master data management for smart meters,
demand-side response
Slock.it:
► Security and management of Internet of
Things devices
► Smart power plug, renting hardware
Filament:
► Internet of Things
► Security, scalability or network stacks
Ledger
► Hardware Oracles, bridging the physical
world and the blockchain
► Trust layer between the layers
Grid management

Smart metering and payments with bitcoin
► Use case: bitcoin-enabled smart meters can bypass banks and credit cards, getting utilities paid more promptly and avoiding disputes
with customers and municipalities.
Japanese power utility rolling out bitcoin payments for
electric customers
► One million bitcoin-paying electric customers expected
next year
► Plans later to include bitcoin payments for gas, water and
mobile phone bills
► Expected value: customer savings up to 4%–6%
► When a customer sends a bitcoin payment, tariff automatically
calculated and meter loaded
► Users can “send” electricity, water and gas to anybody in the
world, from anywhere
► Expected value: for emerging markets in Africa, meter price
includes preloaded bitcoin wallet so utilities get paid
South African producer of bitcoin-addressed smart
meters
Source: bitcoin.com, “Bankymoon to Launch Bitcoin-funded Smart Energy
Meter,” 10 March 2016, https://news.bitcoin.com/bankymoon-bitcoin-smart-meter
Source: Bitcoin.com, “Japanese Can Soon Pay Utility Bills with Bitcoin,”
26 September 2016, https://news.bitcoin.com/japanese-pay-utility-bills-
bitcoin
Marubeni Bankymoon

Micro-grids and virtual power plants
► REV incentivizes utilities to enable distributed energy resources
► Expected value: micro-grids allow customers to make the most of
solar panels, batteries, peak loads and other factors (e.g., weather
forecasts).
Source: “It’s Like The Early Days of the Internet,' Blockchain-based Brooklyn Microgrid
Tests P2P Energy Trading,” Microgrid Media, http://microgridmedia.com/its-like-the-
early-days-of-the-internet-blockchain-based-brooklyn-microgrid-tests-p2p-energy-trading
► Use case: blockchain-enabled energy trading platforms can
allow customers to buy and sell power more efficiently, without
an electricity retailer.
► A micro-grid project in Brooklyn is based on local electricity
generation, energy trading between neighbors and, as such, has less
reliance on centralized utilities.
► The TransActive Grid is an interconnected peer-to-peer network of
power producers and buyers, leveraging blockchain technology to
ensure user financial and operational security.
► The advantages of such a system are as follows;
► Improved financial and usage data integrity and security
► Higher resilience of an isolated micro-grid network
► Power saved due to low transmission distances
Brooklyn micro-grid vector
Source: coindesk, “Ethereum Used for ‘First’ Paid Energy Trade Using Blockchain Tech,” 11 April
2016, http://www.coindesk.com/ethereum-used-first-paid-energy-trade-using-blockchain-
technology

Asset management
► Blockchain-enabled user interface devices allow renting and
sharing of physical assets (e.g., doorknobs, bike locks,
padlocks).
► Expected value: smart devices can facilitate smart contracts
that reduce cost and inefficiency in physical processes.
► Blockchain-enabled Internet of Things sensors can gather data
from remote assets, like electricity transmission towers.
► Expected value: grid can automatically reroute power to
prevent blackouts and notify maintenance crews of exact
repair locations.
Source: Bitcoin Magazine, “Slock.it to Introduce Smart Locks Linked to Smart Ethereum
Contracts, Decentralize the Sharing Economy,” 5 November 2015,
https://bitcoinmagazine.com/articles/slock-it-to-introduce-smart-locks-linked-to-smart-
ethereum-contracts-decentralize-the-sharing-economy-1446746719
Source: Fortune, “How Blockchain Technology Can Reinvent the Power Grid,” 15 May 2016,
http://fortune.com/2016/05/15/blockchain-reinvents-power-grid
► Use case: Internet of Things sensors can securely streamline inspections and repairs and automatically reduce outages.
Slock.it Filament

Device management and smart contracts for load shedding
► Utilizing blockchain to enable consumer control of appliances
in connected homes
► Expected value: easier demand response for small loads
Source: Bloomberg, “Bitcoin Technology Harnessed to Push Electricity Revolution,”
12 September 2016, https://www.bloomberg.com/news/articles/2016-09-12/bitcoin-
technology-harnessed-to-push-electricity-revolution
► Utilizing blockchain to track and monitor leased electric car
battery supply chain
► Expected value: cutting costs of electric cars through
confirmation and enforcement of property rights, tracking and
management of connected assets
► Use case: efficient tracking and management of devices and facilitation of microtransactions between them
Source: CoinDesk, “Blockchain to Drive Wanxiang's $30 Billion Smart Cities Initiative,”
23 September 2016, http://www.coindesk.com/blockchain-smart-cities-china-wanxiang
Fortum Wanxiang

Electric vehicle charging stations
► Rather than having the user pay for the amount of time spent
connected to the charging station, users purchase the amount
of electricity to be consumed during the charging process.
► Expected value: users will save money through the use of
microtransactions, and electricity will be deployed more
efficiently.
Source: CoinDesk “Why a German Power Company is using Ethereum to Test Blockchain
Car Charging,” 7 March 2016, http://www.coindesk.com/german-utility-company-turns-to-
blockchain-amid-shifting-energy-landscape
► Use case: bitcoin-enabled smart meters can bypass banks
and credit cards, getting utilities paid more promptly and
avoiding disputes with customers and municipalities
RWE AG
Source: CoinDesk “Why a German Power Company is using Ethereum to Test Blockchain Car
Charging,” 7 March 2016, http://www.coindesk.com/german-utility-company-turns-to-
blockchain-amid-shifting-energy-landscape

Omar Al-Juburi
Americas Power & Utilities Blockchain Lead,
Ernst & Young LLP United States
omar.aljuburi@ey.com
Anthony Natoli
Americas Power & Utilities Blockchain Program Manager,
Ernst & Young LLP United States
anthony.natoli@ey.com
Key contacts
Thierry Mortier
Global Power & Utilities Innovation Leader,
Ernst & Young Advisory Services CVBA
thierry.mortier@be.ey.com
Henry Wesson
Global Power & Utilities Innovation Director,
Ernst & Young LLP Netherlands
henry.wesson@nl.ey.com

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