Distributed ledgers are bound to promote the application of distributed power generation systems

Rage Comment : In Brooklyn, the United States, a peer-to-peer electricity transaction was successfully completed using blockchain. We all know that this transaction method can greatly reduce costs and increase speed. From a higher level, it is now possible to interconnect private solar panels with the entire power grid, but this kind of micro-generation transaction is completely cost-effective. Therefore, to truly realize a distributed power generation system, it is necessary to avoid third parties and improve this process in an automated, peer-to-peer manner. This is exactly the point of convergence between blockchain distributed ledgers, smart contracts and the new generation of distributed power grids.

Translation: Annie_Xu

The distributed energy revolution has already begun. In 2008, New York City boasted that its 20-gigawatt backup generators could provide about 20% of the electricity during peak hours each year. A survey by Wisconsin generator manufacturer Generac estimated that nearly 15% of homeowners in the United States have backup generators. In contrast, the distributed generation revolution has only just begun. EnergySage said that in 2015, only about 1 million households, or less than 1% of American households, had solar panels installed on their roofs.

Unlike backup generators, rooftop solar panels are usually connected to the grid because sometimes solar panels cannot meet the electricity needs of a household. In addition to relying on the grid to supplement power, households and businesses with their own solar systems can sell excess electricity to distribution companies according to the net power settlement policy. Therefore, these systems must be connected to the grid.

Backup generators are rarely connected to the grid because of high procedural costs and regulatory hassles.

The complexity and cost of distributed generation and grid interconnection are known as the Achilles' heel of distributed energy.

The value stream of distributed generation without some level of interoperability is difficult to capture. As a result, distributed generation cannot monetize its benefits on a sustainable basis unless capital costs are significantly increased through improved interconnection technology. Plug-and-play interconnection technology that can provide better control, island effect detection, stability, security, prediction, and similar capabilities can be a game changer.

The key to capturing the full value of interconnection is the ability to exploit supply and demand economics at the micro level in real time. This means that distributed generation requires autonomous systems to provide peer-to-peer buying and selling of small amounts of electricity. Until now, the cost of conducting such peer-to-peer transactions has far exceeded the benefits.

But now we have blockchain, or distributed ledgers.

The blockchain is a public ledger of Bitcoin transactions, with blocks holding a large number of timestamped transactions. Each block contains a hash of the previous block, connecting all the blocks. All blocks are connected to form a chain, and new blocks are used to strengthen the previous block.

In the traditional centralized ledger model, a single trusted party is responsible for maintaining the accuracy of the transaction database. This accurate database is called the "golden copy" and is the only reference for all participants. In contrast, in a distributed ledger system, each member can save a golden copy, and the unification of all member copies is completed within the transaction delay range and after the new transaction information is encrypted.

Distributed ledgers are transaction databases that can be accessed and updated by multiple parties. Distributed ledger systems enable market participants to manage multiple unilateral and multilateral transactions without the need for a trusted third party. It uses cryptographic techniques and algorithms to collect and encrypt transactions and add new transactions to existing transaction chains. Blockchain can enable distributed generation systems to directly enter automated, peer-to-peer transactions, rather than relying on third-party middlemen like power companies.

In April, the world’s first peer-to-peer electricity transaction on a blockchain was completed in Brooklyn, USA. LO3 Energy and Consensus Systems initiated this blockchain-based system, connecting local power suppliers and users with smart contracts.

Lawrence Orsini

Lawrence Orsini, co-founder of LO3 Energy, said:

"The current command and control system is that a lot of people are responsible for operating the power grid, but now you can design it to run automatically."

Smart contracts are the key to achieving automatic operation. Distributed ledgers use smart contracts to automate peer-to-peer transactions. The operation of smart contracts can be completely independent of human factors and can be automatically executed and implemented using asset-embedded software and control mechanisms.

The latest survey by the UK government’s chief scientific adviser shows:

"Until now, prosumers have not really entered the energy market, which is dominated by energy suppliers. This has greatly limited the economic advantages that micro-generation can bring to end users. Distributed ledgers, combined with energy-efficient power calculation systems and next-generation batteries (which can collect local electricity), can open up the energy market for prosumers. Smart meters can be used to calculate and register micro-generation electricity on distributed ledgers."