Blockchain Technology for the Electric Grid: What Will Come Out of Today’s Wild West?

We’re in the Wild West when it comes to blockchain technology for the electric grid. But Steve Davis, founder and CEO of Oxygen Initiative, has a vision of where we’re headed — and it’s big.

Davis sees blockchain technology rehaping two of the pillars of our industrial economy: the grid and personal mobility.

How can this happen? One approach is by using blockchain when synching electric vehicles (EVs) with utility needs, either by delaying charging during peak hours, absorbing excess renewable energy on the grid, or feeding power to the grid when demand is high, Davis said.

Not only can such blockchain transactions take place between utilities and EV owners: they can also take place between microgrids and EVs.

“The owner of the microgrid might be the owner of the charging stations. There would be no bank in between and zero transaction costs,” he said.

His company is looking to work with community microgrids. “The microgrid would be treated like a utility. They can give us their grid conditions and the EVs can respond accordingly,” he said

Blockchain technology would allow this to happen by providing payments that circumvent the need to get a bank in the middle.

“In a public blockchain, there’s a global series of validations, and when everyone agrees, you get paid. It validates transactions with an overwhelming network of consensus, takes the bank out of the middle, and all currencies are based on confidence and acceptability,” he said.

What is blockchain technology? As defined by PwC,  a blockchain — the technology underlying bitcoin and other cryptocurrencies—is a shared digital ledger, or a continually updated list of all transactions. This decentralized ledger keeps a record of each transaction that occurs across a fully distributed or peer-to-peer network, either public or private.

There other ways, too, that blockchain technology for the electric grid makes sense. Consider how it could enable demand response programs among EVs and utilities.

“The EV charger gets the pricing and power availability in the form of a little tiny encrypted file from a demand clearinghouse that collects all the prices and grid conditions from utilities and grid operators,” he said.

A vehicle would connect to this system, look at the price of power, and tell the demand clearinghouse how much energy it needs. The EV would select a plan based on what ’s available.

“The utilities and grid operators know what’s coming; they can update the car with new power availability tables,” he explained.

The EV might discharge its battery during peak hours when the grid needs power. The vehicle owner could also make money by taking excess power off the grid. For example, if consumers run their air conditioners less than the utility expects — meaning the utility schedules more power than needed — the prices turn negative and the utility then pays to take energy off the grid, he said.

Davis expects California to be a major player in this type of system. The state aims to meet 50 percent of its power needs with renewable energy by 2030, and will need a lot of storage to meet its goal. It can turn to EV owners to supply some of that storage.

“All vehicles, when connected to the grid, can be like a mobile storage device,” said Davis. “They can absorb solar oversupply and discharge battery during peaks.” In this scenario, the vehicle and the grid would ‘talk’ to each other.

Giant virtual power plant

To help facilitate blockchain technology for the electric grid, Oxygen Initiative wants a common grid integration standard adopted in North America.

“If you have all the automakers and utilities manufacturing to one communication standard, you have a giant virtual power plant that can be managed intelligently,” Davis said.

Many automakers, including VW, BMW and Ford are now buying into this idea, he said. The global standard these automakers are implementing is called ISO 15118, a vehicle-to-grid communication interface.

Meanwhile, California — which is about to spend millions in ratepayer money on charging stations — is focusing on ensuring that the new stations meet vehicle-to-grid communication standards that allow chargers to know what to do based on utilities’ needs. That means knowing when to to add loads and when to back off, Davis said.

“Vehicles that meet these standards are now available,” he said. Some of these vehicles are connected to blockchain servers, he said.

“We want to work with automakers on this. We need to crawl before we walk. Innovators and early adopters will use this kind of early stage stuff.”

Automakers are interested in the standards and the EV-utility communication because these efforts can help lower the price of owning cars, Davis said. “The automakers want to see if they can lower the cost of owning the car and decarbonize the grid.”

So wild west

Davis, who has a background in telecommunications, said that with his knowledge of communications, standardization, and networks, he  saw the opportunity to use his experience to help solve the sustainability challenge. That’s why he formed Oxygen Initiative.

“It’s fascinating, it’s so Wild West,” he said. “This is at the nexus of electric power and personal mobility and can slash carbon emissions. This is a global solution and a global standard and these are the kinds of catalysts that can accelerate transformation.”

Oxygen Initiative is releasing information about this technology now to let people know it’s available. “Interested parties can figure out how they fit into this. Automakers might want to get involved. This is early stage, but it also helps us reach out to interested parties about our charging station and backend technologies.”

Oxygen Initiative is now into its second year of partnership and investment with Germany’s energy company innogy SE and wants to prepare the U.S. market to adopt blockchain-backed electronic wallets for drivers, according to a company press release.