When batteries meet blockchain

Blockchain fans gather at a CryptoFriends Netup meeting this month. Pic: CryptoFriends.

Blockchain fans gather at a CryptoFriends Netup meeting this month. Pic: CryptoFriends.

By Jason Deign

New energy-trading business models based on blockchain technology could help and be helped by the spread of energy storage, experts have said.

The idea of combining battery storage with blockchain-based business models “works perfectly,” said Nikolaj Martyniuk, co-founder of blockchain energy trading platform WePower, at a  CryptoFriends Netup meeting last week.

“If you want to play with arbitrage, you can,” he told Energy Storage Report. “You can use storage as a service.”

Companies such as WePower aim to use the blockchain, an open, distributed transaction ledger, to keep track of energy trading records.

This would allow people with rooftop PV, for example, to sell kilowatts to friends and neighbours. 

No need for a central bookkeeper

Because the blockchain does away with the need for central bookkeeper, proponents claim it could reduce the cost of energy by sidestepping utility overheads.

Grid+, a US energy blockchain start-up, says some utilities may impose a 100%-plus mark-up on wholesale electricity prices.

But there is a big problem with this utopian vision of energy prosumers swapping ultra-low-cost distributed electrons.

To begin with, if you are into the idea of buying community-based distributed energy, the chances are you might be thinking of investing in a solar array yourself.

And if you do, then you will find you are producing energy at the same time as everyone else who has rooftop PV. Hence there is little incentive to trade. And that incentive diminishes as the number of people with rooftop solar grows. 

Adding storage into the mix

Until you add storage into the mix, that is. Residential battery storage is already being touted as a useful way to store PV production past the daytime generation peak and into the evening, when it might be more useful.

With blockchain-based energy trading, that ability to store and deliver electricity on demand gives homeowners an easy way to make money into the bargain.

“Using blockchain as a transactional layer gives users direct access to market pricing and a native capability to sell excess power when it is profitable,” said Grid+ co-founder Alex Miller.

“This change in economics and access will drive consumer adoption of energy storage devices, which is largely blocked by lack of transparency and trans-active capability in today’s electricity market landscape.”

To gain maximum financial benefit, the ideal would be to use stored residential energy not just for arbitrage, producing cheaply and selling at a profit, but also to deliver valuable ancillary grid services. 

Aggregating residential capacity

For this, though, one or two batteries won’t do. You need to be able to aggregate residential storage capacity to deliver multi-megawatt or gigawatt levels of energy. In most countries, residential storage isn’t at that point yet.

But it could be soon. Even in WePower’s main market, Spain, which has one of the least attractive legal frameworks for energy storage in the world, Martyniuk foresees trading stored electricity on his platform by 2019.

At that point, he said, WePower would look to generate added grid value through demand response services, so residential battery owners might get paid for taking excess energy off the grid as well as selling it back.

In any case, the ability to handle energy storage is “integrated into the architecture from day one,” Martyniuk said.

WePower launched an initial a crowdfunding push last month, based on pre-selling green energy tokens that owners can either use or sell on. The token pre-sale ends on October 22 and will be followed by a full sale next month. 

Blockchain-based energy trading platforms

And WePower is just one of a growing number of blockchain-based energy trading platforms launching this year.

When Grid+ carried out a pre-sale last month, it raised around USD$29m in dollars plus ether and bitcoin cryptocurrencies. With cryptocurrencies on the rise, today the hoard is worth closer to $33m.

In Australia, meanwhile, a trading network called Power Ledger raised AUD$17m in a similar token pre-sale.

In a later initial coin offering, the blockchain business equivalent of a stock market launch, the company scooped a further $34m.

While these amounts underscore the appetite for blockchain-based peer-to-peer energy trading networks, they also hint at the possibility of a blockchain business bubble that could burst and take many players down.

If that happens then the question for residential battery fans might not be whether a blockchain platform could help them make more money, but if it is worth taking the risk on a fad that will be gone before you can say ‘dot-com’.

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