Energy and the Blockchain in New Zealand

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Imagine a world where every home is generating their own energy. Consumer solar panels and wind turbines are commonplace. Sustainable energy is not just a novelty - it’s the norm. Naturally, homes in sunnier and windier areas would produce more power than their less fortunate counterparts. Even more than they’d need to power their homes, thus creating a new market for trading energy. So the energy is there; it’s being produced; but consumers need a fast, secure and automated way for power to be bought and sold - an energy economy, if you will. Here’s where the Blockchain could quickly disrupt the energy industry, providing the perfect platform for the sale, purchase and distribution of one of our most valuable and vulnerable resources.

So how soon could we expect the emergence of this ‘energy economy’? The answer is sooner than you might think. In early 2016, German company, Sonnenbatterie, launched a local peer to peer energy market with their home battery that automatically adjusts the energy usage in your household. What’s more, is that all Sonnenbatterie owners are virtually and intelligently connected, allowing excess energy to be distributed between each other. On top of the decentralisation and independence that this solution provides homeowners in Germany, Sonnenbatterie claim that energy traders within their community achieve better prices than if energy was sold anonymously back to the grid (more on that here). And Sonnenbatterie isn’t the only company of its kind facilitating peer to peer energy trading. The European market is exploding with companies exploring this new consumer-driven power frontier. UK has it’s own energy innovator, Open Utility, which has focused instead on the commercial market. And Dutch platform Vandebron, have over 60 staff members and already have more than 73,826 subscribers, proving there is most certainly demand for this independence.

What can energy retailers do to avoid being disrupted? Adopt the Blockchain and provide better, cheaper services to your customers, because the traditional utility option won’t be the only option for much longer. When we talk about the internet of things we think of home appliances, cars, even our homes themselves. But the power network could be smarter. In addition to the current smart meters that are making consumers power bills more consistent, each power pole could have a smart device fitted, lowering maintenance costs. Rather than responding to complaints by attempting to pinpoint the issue based on the symptoms reported (and the geographic locations of those who are reporting the symptoms), smart power poles could send a status report in real time identifying the exact location of an issue and the nature of the problem. This is particularly vital in remote locations where time, distance and cost are all factors in the response time to blackouts.

Companies are already combining mesh networks (devices that are connected directly to each other) with blockchain technology to solve complex infrastructure problems. American startup, Filament, is experimenting with smart devices on power poles in the Australian outback. Filament’s devices can create a wireless mesh network for asset management of many applications, such as mobile equipment and fixed machinery, but it’s long range (up to 10 miles) makes is perfect for the energy industry. Their sensors capture a data stream which Filament then sell to the system operator (which in New Zealand would be Transpower) and the lines companies (such as Vector and Powerco) (more on this here).

The key to making this work at scale (imagine tens of thousands of smart poles all fit with devices reporting a multitude of sensor information at any one time) is being able to ensure reliability and accountability. The Blockchain provides the ledger capabilities with which each pole can be uniquely identified and issues can be quickly tracked and responded to. It’s this ability to be able to uniquely identify each pole and temporarily reassign duties to another using smart contracts, that is incredibly exciting for the entire utility supply chain. Think lots of time and money saved, as well as health and safety gains when maintenance workers are not taking risks while trying to manually identify the root issues of power outages.  

The first Kiwi company to explore peer to peer energy trading (P2 Power - which launched in April 2016)  provides a guarantee that during summer 7% of their energy will be green; delivered from a peer to peer grid of Sustainability conscious New Zealanders. Consumers will save 4c per kWh buying from the peer to peer network. Currently it takes 30 minutes to scan the networks for excess power generated by those who are part of it and when that is unavailable, energy will be provided by local power stations. Moving to the ‘Ethereum’ blockchain, P2 Power would experience even faster and more reliable peer to peer matching.

New Zealand is already using 80% renewable power sources (in Makara, a suburb outside of Wellington, Meridian Energy operates 62 wind turbines that generates enough to power 62,000 homes every year) but imagine the possibility of integrating Blockchain to make self generation even more viable. Craig Auty of the Sustainability Trust believes that it’s not  far off. “NZ homes can become fully self-sustainable with the right planning and I believe that a few Kiwi homes are already there. You just need solar to run your small electrical draw and you have zero running costs.” Scott Clavenna, CEO of Greentech Media said, “when the internet was first introduced, it was hard to conceive of the drastic impact it would have on the world. We’ve got all the parts to do some really interesting things”. Realistically, a 100% peer to peer grid is decades away, but the opportunities presented by blockchain have a raft of clear benefits for both New Zealand’s energy companies and consumers.