Blockchain technology for the grid
- 1. /SLAC Executive Ed: Blockchain Technology For the Grid Mayank Malik Chief Data Officer, Blockchain Lead SLAC National Accelerator Laboratory Stanford University May 8, 2019
- 2. /SLACStanford Introductions Mayank Malik • Working at the intersection of Big Data and Renewable Energy • Prior experience working in investment banking and wholesale finance • Masters in Computer Science from State University of New York at Buffalo Chief Data Officer and Blockchain Lead Grid Integration Systems and Mobility Group SLAC National Accelerator Laboratory Blockchain and Cloud Computing Instructor Bits and Watts Stanford University
- 3. /SLACStanford Our goal today • Walk-through fundamentals of Blockchain • Introduction to Smart Contracts • Ecosystem of Blockchain-based Startups, Applications, and Platforms • Blockchains in the Energy Industry
- 4. /SLACStanford Agenda 8:00am - 10:00am Fundamentals - Definitions - Digital wallet deep dive (setup, transact) - Understanding transactions from a user’s perspective 10:00am - 10:15am BREAK 10:15am – 11:30am Look under the hood - How do blockchains work? - Detailed examination of a transaction - Ethereum network and Smart Contracts 11:30am – 11:50am Blockchain in the Energy Industry - Evolution of electricity grid - How can blockchain help - Ecosystem of players, products, and platforms - Challenges and benefits of implementing blockchain in the energy industry 11:50am – 12:00pm Concluding Remarks and Session Adjourns
- 5. /SLACStanford What is Blockchain? Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually anything of value. - Don Tapscott, The Tapscott Group
- 6. /SLACStanford Part I: Fundamentals • What’s in a wallet? • What’s a wallet? • What are the different types of wallets? • How to set one up? • There is no “one blockchain”
- 7. /SLACStanford What’s in a wallet? ● Your Private Key ● One or more Public Key(s) CRYPTO-WALLETS DO NOT CONTAIN COINS CRYPTO-CURRENCY IS NOT STORED ANYWHERE ONLY YOUR CLAIM ON THE CURRENCY IS STORED ON BLOCKCHAIN
- 8. /SLACStanford Types of Wallet Based upon where your keys are stored, there are a few different types of wallets: • Desktop • Mobile • Web • Hardware • Paper
- 9. /SLACStanford Desktop Wallets ● Electrum (Intimidating UI, Secure, advanced features like address tagging, fee adjustments, wallet encryption, signed messages, SPV or API option) ● Exodus (Pretty UI, excellent starter wallet, SPV wallet, Altcoin support) ● Bitcoin Core (Full Node wallet, Independent Verification) ● Copay (Multi-Signature / multisig wallet, extra security against theft, good option if you can’t afford a hardware wallet) ● Armory (Secure, Features a variety of encryption and cold-storage options) ● Jaxx (Easy to use, excellent starter wallet, Altcoin support)
- 10. /SLACStanford Mobile Wallets ● Electrum (Android only, Bitcoin only, Watch only option) ● Mycelium (Tried and tested security, >100,000 users, iOS and Android, linked debit-card support) ● Mobi (Support for over 100 fiat currencies, instant cross-border payments, bitcoin only) ● Coinbase (>8M users, multisig support, Easy UI, Simple to setup and use) ● Blockchain.info (14M users, Minimalist design and options)
- 11. /SLACStanford Web Wallets ● Coinbase ● Green Address ● BitGo ● Xapo ● Copay
- 12. /SLACStanford Hardware Wallets ● Ledger Nano S (~$100, Screen, Supports Altcoins) ● Trezor (Small, Hot wallet option) ● KeepKey
- 13. /SLACStanford Paper Wallets ● Simply a public key and private key printed together ● https://walletgenerator.net/
- 14. /SLACStanford Setting up a wallet ● Exodus.io
- 15. /SLACStanford Setting up a wallet ● Jaxx.io
- 16. /SLACStanford There is no “one blockchain” Public Private Consortium Access Permission-less, open access Permissioned, authorized participants only Share-Permissioned, authorized participants only Identity Protection Identity obfuscated Identity traceable Identity traceable Device Authentication Not required Required Conditional Block Generation Decentralized through use of resources such as compute Centralized Implementation dependent; centralized and/or decentralized Consensus Mechanism Proof of Work Proof of Stake Proof of Stake Proof of Authority Proof of Work, Proof of Stake, Proof of Authority Manipulability Difficult, resource intensive Intervention by Central Authority possible Implementation dependent Transaction Speed Slow Fast Fast than Public with upper limit of Private; Implementation dependent Energy Consumption High Low Low to Medium Operating Cost Low Medium to High Low to Medium
- 17. /SLACStanford Consensus • Popular blockchains like Bitcoin and Ethereum are permission-less • Anyone can participate in transactions on Bitcoin and Ethereum Blockchains • But how does everyone agree on validity of transactions? –consensus mechanism (aka proof mechanism)
- 18. /SLACStanford Proof-of-Work ”I have worked to validate a block of transactions. Anyone can check that my work is correct. I have validated the transaction faster than anyone else, therefore, I get paid for providing the validation service. Why would I validate a manipulated block? Then I would not earn anything for my work. “
- 19. /SLACStanford Proof-of-Stake “I have invested a great deal in this blockchain. It’s continuity and functionality are important to me, so you can trust me. I’ll build you a new block and use the assets invested in this blockchain to vouch for it’s validity. If the block is invalid or has been manipulated, I’ll lose my investment.”
- 20. /SLACStanford Proof-of-Authority “When this blockchain was designed, I was specified as the authority. You know me, and you trust me. So why should I create invalid blocks.”
- 21. /SLACStanford Proof-of-Control (R&D work by Mayank Malik and David Chassin) • More on this later…
- 22. /SLACStanford Central Promise of Blockchain • Data Integrity • Disintermediation (unless, the intermediary ‘owns’ the blockchain) • Automated Execution
- 23. /SLACStanford Part II: Look under the hood • How do blockchains work? – What is mining and how does it work? – Transaction Workflow – Introduction to Distributed Consensus • Introduction to Ethereum • Examination of how Ethereum network works – Interfacing with Ethereum Networks – Intro to Metamask – Understanding Ethereum Accounts
- 24. /SLACStanford Roles Blockchain in the Energy Sector The Potential for Energy Providers, Hochschule Fresenius, University of Applied Sciences
- 25. /SLACStanford Where do Bitcoins come from? Fiat Currency Cryptocurrencies Controlled by Central Authority (Governments) No Central Authority Printed when Government decides to print more Miners (human) use special software to solve math problems are issued new bitcoins in exchange The special software is called Miner (software) This special software can be run on specialized hardware to speed up mining and generate more bitcoins. This specialized hardware is called Miner (hardware)
- 26. /SLACStanford Mining in early days ● Math problems were simple enough ● Anyone with a computer and miner (software) could mine bitcoins ● Bitcoins mined at this time are sometimes referred to as ‘CPU-mined bitcoins’
- 27. /SLACStanford Mining in early years ● Gamers figured out that mining with GPUs was faster ● GPU mining took-off ● But, GPUs consumed more electricity and produced more heat
- 28. /SLACStanford Mining in mid years ● Companies started building Application-Specific Integrated Circuit (ASIC) to perform mining operations. ● ASIC hardware is faster and more energy efficient than GPUs
- 29. /SLACStanford Mining today ● Contribute your hardware to solving math problems in concert with others ● Purchase into a specialized datacenter specifically designed for mining ● Share profits in proportion to your contribution
- 31. /SLACStanford Why are Miners rewarded? Miners are required to validate bitcoin transactions on the network, thereby providing a critical service to the network. If 51% of the network approved the validity of a transaction, it is cleared (added to the blockchain)
- 32. /SLACStanford Functions of mining • Book-keeping: The bitcoin miner client downloads and syncs in real time the entire blockchain of the bitcoin network • Network guardians: Miners safeguard the network against hacks and validate each transaction • Settlement and Clearing: Blocks validated by miners are added to the blockchain without dependence on a trusted 3rd party • Creation of new bitcoins: Miners are rewarded with bitcoins for contributing processing power and keeping the network safe
- 34. /SLACStanford What is a transaction? Transaction is a digitally signed declaration by one party of it’s intent to transfer some bitcoins they posses to another party
- 35. /SLACStanford Transaction Workflow BTC LEDGER (State of the Network / Account of all Coins) Ashley 10 Berk 12 David 13 Emre 50 Karen 26 Marie-Louise 70 Nani 123 ● Everybody can see the ledger ● This is what a network looks like except...
- 36. /SLACStanford Transaction Workflow ● Everybody can see the ledger ● No one knows your name ● Your identity is represented by your public key / verification key ● This is what a network looks like, except... BTC LEDGER (State of the Network / Account of all Coins) MIIBOQIBAAJAT+qwrlMhJOkn3VSQQK... 10 FsPkKavfDcE19SFZnuJ4HHA0XMn3xD... 12 TtWttB/pfSh5FT/Wr6B3bRoM7nzWpeq... 13 AiEAnnIGwnywSjvpsecRrp9RTpVqgirn... 50 DesPyX5YO5eXSieI8cV5xs+nDsz6KwIh... 26 WdqKfiE5+YcBAiBP0aaBTe8xk5TNW0h…. 70 wi4V/2ZlZnl6kn+QgtKx+hQC8ZWKvBcb... 123
- 37. /SLACStanford Transaction Workflow ● Everybody can see the ledger ● No one knows your name ● Your identity is represented by your public key / verification key ● No one knows who you are unless they transact with you in person Governments and Financial Institutions do not like this. BTC LEDGER (State of the Network / Account of all Coins) MIIBOQIBAAJAT+qwrlMhJOkn3VSQQK... 10 FsPkKavfDcE19SFZnuJ4HHA0XMn3xD... 12 TtWttB/pfSh5FT/Wr6B3bRoM7nzWpeq... 13 AiEAnnIGwnywSjvpsecRrp9RTpVqgirn... 50 DesPyX5YO5eXSieI8cV5xs+nDsz6KwIh... 26 WdqKfiE5+YcBAiBP0aaBTe8xk5TNW0h…. 70 wi4V/2ZlZnl6kn+QgtKx+hQC8ZWKvBcb... 123
- 38. /SLACStanford Transaction Workflow BTC LEDGER (State of the Network / Account of all Coins) MIIBOQIBAAJAT+qwrlMhJOkn3VSQQK... 10 FsPkKavfDcE19SFZnuJ4HHA0XMn3xD... 12 TtWttB/pfSh5FT/Wr6B3bRoM7nzWpeq... 13 AiEAnnIGwnywSjvpsecRrp9RTpVqgirn... 50 DesPyX5YO5eXSieI8cV5xs+nDsz6KwIh... 26 WdqKfiE5+YcBAiBP0aaBTe8xk5TNW0h…. 70 wi4V/2ZlZnl6kn+QgtKx+hQC8ZWKvBcb... 123 Node with public key , digitally signs a declaration announcing to the network, it’s intent to transfer 10 bitcoins they possess to node with public key . Network’s job is to verify that node with public key , does possess 10 or more bitcoins. 10
- 39. /SLACStanford Transaction Workflow BTC LEDGER (State of the Network / Account of all Coins) MIIBOQIBAAJAT+qwrlMhJOkn3VSQQK... 10 FsPkKavfDcE19SFZnuJ4HHA0XMn3xD... 12 TtWttB/pfSh5FT/Wr6B3bRoM7nzWpeq... 13 AiEAnnIGwnywSjvpsecRrp9RTpVqgirn... 50 DesPyX5YO5eXSieI8cV5xs+nDsz6KwIh... 26 WdqKfiE5+YcBAiBP0aaBTe8xk5TNW0h…. 70 wi4V/2ZlZnl6kn+QgtKx+hQC8ZWKvBcb... 123 At any given time, there are multiple declarations of transactions being proposed to the network. Several of these proposed transactions are combined to form a Block. 10
- 40. /SLACStanford Transaction Workflow BTC LEDGER (State of the Network / Account of all Coins) MIIBOQIBAAJAT+qwrlMhJOkn3VSQQK... 10 FsPkKavfDcE19SFZnuJ4HHA0XMn3xD... 22 TtWttB/pfSh5FT/Wr6B3bRoM7nzWpeq... 13 AiEAnnIGwnywSjvpsecRrp9RTpVqgirn... 50 DesPyX5YO5eXSieI8cV5xs+nDsz6KwIh... 26 WdqKfiE5+YcBAiBP0aaBTe8xk5TNW0h…. 70 wi4V/2ZlZnl6kn+QgtKx+hQC8ZWKvBcb... 113 Transaction, once verified, will change the ledger state to below. 10
- 41. /SLACStanford Questions before we move on...
- 42. /SLACStanford Bitcoin vs. Ethereum Bitcoin Ethereum Cap 21 million; ~17 million mined Cap unknown; ~100 million mined Issuance ~ 75 / hour ~ 720 / hour Block Creation New block every 10 min New block every 15 seconds Hash SHA-256 KECCAK-256 Smart Contracts Limited scripting support Turing complete language Transaction Costs Based on size of transaction Based on gas, a token used to measure cost of every operation and storage on the chain Accounts User accounts User accounts and Smart Contracts (which have their own account) Distributed Consensus Proof-of-Work Proof-of-Stake **
- 43. /SLACStanford Smart Contracts: Benefits & Challenges Benefits: ● Security - if someone wants to modify a contract, everyone gets a warning ● Self-executing ● Distributed/Decentralized ● Machine-to-Machine (M2M) Challenges: ● Scalability of the chain ● Difficult for legal contracts, which need human interpretation ● Computation power ● Difficult to update a smart contract
- 44. /SLACStanford Part III Grid Applications and Use Cases
- 45. /SLACStanford Electricity Grid is evolving
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- 50. /SLACStanford California homes use 557KWh/month (avg)
- 51. /SLACStanford How blockchain can help?
- 52. /SLACStanford Blockchain offers compelling solutions when… q Data which should be stored collectively is fragmented at source q Multiple producers of data exist q There is absence of trust q There is lack of security
- 53. /SLACStanford Issues that blockchain can solve q Multiple databases referencing the same set of objects q Significant reconciliation activity q Operational efficiencies due to manual processes
- 54. /SLACStanford Blockchain adoption could yield the following benefits: q Reconciliation elimination q Standardization and harmonization q Automation; ‘code as law’ (smart contracts) q Reduce systemic risk
- 55. /SLACStanford Blockchain in the Energy Industry
- 56. /SLACStanford Use Cases • Certificates of origin • Congestion management in electricity distribution grids (e- mobility) • Registration of installations in an asset registry • Landlord-to-tenant electricity supply • P2P trading between customers of an electricity supplier • Electricity wholesale trading (OTC)
- 57. /SLACStanford Notable Platforms and Consortia • Energy Web Foundation • MOBI
- 58. /SLACStanford Energy Web Foundation • Open-source, scalable platform designed for energy sector’s regulatory, operational, and market needs • 3 Core technologies: – EWF Tobaloba Network (Proof-of-Authority) – EW Origin App for Renewable Energy Certification – D3A Decentralized Autonomous Area Agent
- 59. /SLACStanford EW Origin Dapp Rocky Mountain Institute 2017: EWF Certificates of Origin
- 61. /SLACStanford Mobility Open Blockchain Initiative Mission: non-profit organization working with forward thinking companies, governments, and NGOs to make mobility services more efficient, affordable, greener, safer, and less congested by promoting standards and accelerating adoption of blockchain, distributed ledger, and related technologies Critical Use Cases: ● Vehicle ID + history ● Autonomous machine payments ● Driving data markets ● Car & ride sharing
- 62. /SLACStanford Vehicle to Grid Services • Share&Charge • eCharge • Parkres
- 63. /SLACStanford Share&Charge • Vehicle to Grid (V2G) services use electric vehicles as an energy storage solution, while they are parked, which is on average 80% of the time. • Such services all EV owners to make money by storing and selling electricity back to the grid. • For E.g. Share&Charge allows blockchain-based tracking and billing of electricity purchased for EVs. In addition, it allows participants to make their private charging stations available to others. Payment and billing are handles automatically using smart contracts. • Share&Charge was a collaboration between Innogy and Slock.it and is now run by MotionWerk.
- 64. /SLACStanford Share&Charge • Share&Charge has 1000 registered users in Germany, with around 1300 active charging stations. • Share&Charge has partnered with eMotorWorks to offer their platform in California.
- 65. /SLACStanford eCharge ● Places fully managed charging stations at hotels ● Travelers and hotel guests are allowed to use the charging station. ● With the growing demand for e- vehicles, the charging stations will get a “necessity” status in the hotels, just like Wi-Fi has evolved from being a luxury to a must- have service. ● Can provide DR services to grid.
- 67. /SLACStanford Certification of Energy • Renewable Energy Certificates (RECs)
- 68. /SLACStanford Renewable Energy Certificates (RECs) • RECs are tradable, non-tangible energy commodities in the US that represent proof that 1MWh of electricity was generated from an eligible renewable energy resource and fed into the shared system of power lines which transport energy. • Blockchain is being used to track issuance and transactions of RECs. • Similar solutions are being deployed in France, Germany, UAE. • In general, blockchain has tremendous promise in the area of certification.
- 69. /SLACStanford P2P Trading and Microgrids • Tokenizing and trading energy • Microgrids • Proof-of-Control
- 70. /SLACStanford Tokenizing and trading energy (E.g. Power Ledger) • Power Ledger ties together municipal and commercial, solar, storage, EV charging, and water treatment with blockchain approaches, then use analytics to optimize the mix • $8 million AUD project for blockchain-enabled electricity and water utilities in Fremantle
- 71. /SLACStanford Microgrids • A microgrid is a group of interconnected loads and distributed energy resources (DERs) with clearly defined electrical boundary that acts as a single controllable entity with respect to the grid. • Blockchain is being used to perform aggregate energy transactions between virtual electrical islands of loads and DERs.
- 72. /SLACStanford Proof-of-Control • Scarcity is key to assign value to blockchain- managed assets, typically tokens. • Scarcity is also inherent in an energy system. • Control devices can provide a valuable service to the grid by alleviating scarcity through better redistribution of resources.
- 73. /SLACStanford Part IV Facilitated Discussion and Closing Remarks
- 74. /SLACStanford Questions for the group ● What blockchain use cases are you/your companies working on? ● What use cases are most appropriate for a coin or token-based applications in energy? ● What blockchain hardware/software considerations should be prioritized for energy systems? ● How could a blockchain-based data marketplace potentially facilitate greater integration of renewables?
- 75. /SLAC Thank you