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Power Points

There's a blockchain energy app for that

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Remember the iPhone before the app store? It was basically the equivalent of someone gluing together your flip phone, camera and iPod. 

But once app stores came along, everything changed. There was a centralized way for developers to create new apps, and it blew open the door to innovators. Now I don’t know how to do anything — from figuring out how to get home to where to get lunch — without apps. 

Enter the "app store" for energy blockchain.

The Energy Web Foundation (EWF) wants to do the same thing to energy transactions as the app store did to your phone. The Switzerland-based nonprofit just launched the Energy Web Chain, which EWF describes as the first blockchain platform tailored to the energy sector, designed to support and verify energy transactions. 

What’s energy blockchain again? 

Simply put, energy blockchain is a technology that enables frictionless transactions by maintaining a decentralized, automated ledger for (close to) free. This matters as energy generation transitions from being centralized (think power plants) to a distributed system (think onsite solar panels). 

Blockchain is great at tracking a large number of small activities. That allows distributed energy resources to trade energy with other consumers and generators, without the cost or complications of some kind of separate authority to keep a ledger of who bought or sold what. 

Examples of energy blockchain in action include corporate neighbors sharing solar power in Pennsylvania, businesses trading energy to save money in Australia and neighborhood microgrids swapping electricity in Brooklyn.

Right — so why does this change anything?

EWF CEO Hervé Touati says that the Energy Web Chain isn’t just about software — it’s also about adoption. By making a blockchain with energy in the name, he predicts the sector will become more familiar and comfortable with the technology, which will spur growth.

"Of course we engineer software, but in part, it is about social engineering," Touati said. "The world is becoming more tribal, and we are in a tribe called the electricity sector. It is really important that we have one place where the sector can pull together."

Scott Clavenna, chairman at Greentech Media and Wood Mackenzie Power & Renewables, and a blockchain expert who speaks like a human, says that the Energy Web Chain does have some unique characteristics that are well-suited for the energy sector. For example, it has a limited set of validators for transactions (10 organizations that include utilities, regulators and blockchain developers), as opposed to permissionless blockchains such as Bitcoin and other cryptocurrencies.

"This has advantages for the energy sector, which requires a great deal of security/privacy for its users, but for regulatory reasons can’t have customers and transactions be anonymous," Clavenna said in an email.

Didn’t you mention something about the App Store?

Although obviously at a much smaller scale, the Energy Web Chain is analogous to the app store in that it is an open-source platform that supports third-party applications. 

That means if an innovator has an idea for a new product powered by blockchain, they don’t need to wrestle with a more general blockchain technology to make it work. That could lower the barrier to entry for innovators with good ideas but few funds. It’s the same kind of power that PayPal offers online retailers: You wouldn’t need to invent a secure financial transaction software to develop your online store.

But the Apple app store did more than develop software: It built a trusted network to connect millions of phones. Likewise, Touati hopes that having an energy-specific blockchain will add value to distributed energy through the network effect. After all, Uber wouldn’t be very valuable if only 10 people used it in your city. 

"We are working on developing access to [energy] devices," Touati said. "As an application developer, you can talk to many devices connected to the chain. What we want to do, what we intend to do, is to develop a standardized interface to energy assets."

Applications could include services for selling renewable energy from your onsite solar panels, tracking demand response programs or streamlining electric vehicle charging. The more people who are on board, the more interesting it will be to develop blockchain applications and the more value it will add to users. 

Neato — what does this mean for my company? 

If energy blockchain apps take off, corporate energy managers could benefit in two ways. 

First, there will be more distributed apps. There are already apps for energy credit, energy source transparency and carbon tracking. More apps could offer better, easier options, and expand into demand response programs and more access to the electric grid services and energy trading. 

"That’s pretty powerful when you think about it being hosted all on one common platform," Clavenna said. 

Second, there will be more energy assets and customers for your assets. That will make energy blockchains more valuable for everyone involved, and help companies and localities figure out where and how to acquire clean energy to decarbonize operations. 

But before that can happen, the Energy Web Chain needs to prove it works. 

"Some are excited, and some are skeptical [of blockchain]," Touati said. "What we need to do is find middle ground with concrete evidence that it will add benefit to our society."