blockchains in energy€¦ · smart grid and blockchain expert european technology & innovation...
TRANSCRIPT
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Blockchains in Energy Ioannis Vlachos, PhD
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Dr Ioannis Vlachos
Smart Grid and Blockchain Expert
European Technology & Innovation Platform Smart Networks for Energy Transition
WG4 Member
CEN-CENELEC Focus Group on Blockchain and Distributed Ledger Technologies
Member
National Technical University of Athens, Greece
Senior Researcher on Smart Grids
Hellenic Blockchain Hub
Advisory Board Member and Coordinator for the Energy Working Group
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Presentation Overview
Blockchains
Smart Contracts
Applications of Blockchains
Blockchains in Energy
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Decentralization
Digitalization
Decarbonization
Democratization
4Ds
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History of Blockchain
1991
Digital timestamps Like a notary
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History of Blockchain
2009
Bitcoin By “Satoshi Nakamoto”
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“Blockchain is a little bit like teenage sex: everyone talks about it, nobody really knows how to do it,
everyone thinks everyone else is doing it, so everyone claims they are doing it.
Unknown
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The Blockchain
Distributed ledger
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Data
Hash
Hash of previous
block
Block
From: A To: B Amount: $
Hash: e12f4271d0b792ea1bdb621a038f8c22
Hash: f67c2bcbfcfa30fccb36f72dca22a817
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The Blockchain
1
Hash: 1DET Previous Hash: 0000
Hash: 5G7Y Previous Hash: 1DET
2
Hash: GT90 Previous Hash: 5G7Y
3
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The Blockchain
1
Hash: 1DET Previous Hash: 0000
Hash: 5G7Y Previous Hash: 1DET
Hash: GT90 Previous Hash: 5G7Y
2 3
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The Blockchain
1
Hash: 1DET Previous Hash: 0000
Hash: 5G7Y Previous Hash: 1DET
Hash: GT90 Previous Hash: 5G7Y
2 3
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The Blockchain
1
Hash: 1DET Previous Hash: 0000
Hash: 5G7Y Previous Hash: 1DET
Hash: GT90 Previous Hash: 5G7Y
2 3
Genesis block
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Attacking the Blockchain
1
Hash: 1DET Previous Hash: 0000
Hash: 5G7Y T1R8 Previous Hash: 1DET
Hash: GT90 Previous Hash: 5G7Y
2 3
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Proof of Work
1 2 3
10 minutes 10 minutes
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P2P Network
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• A network node submits a digital transaction
Submission Transaction
• The network nodes verify the validity of the digital signature. The transaction is not confirmed
Authenticated Verification
• The miners prepare a new block composed of non-confirmed transactions
Block Construction
• The miners perform cryptographic processing to validate the block of transactions
Proof of Work
• The first block with a proof of work is broadcast to all the nodes for validation and integration into the rest of the chain
Broadcast / validation of Block
Proposed transaction Hashing and/or mining Propagation
How Blockchains Work
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New Block!
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Consensus
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Consensus
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Smart Contracts
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Smart Contracts History
1997
• The term smart contract was used for the first time in 1997 by Nick Szabo
• Need to use a distributed ledger to store contracts
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Smart Contracts • Smart contracts are simply programs stored on the
blockchain • Used to automatically exchange coins based on
certain conditions
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Traditional Crowdfunding Example
Supporters
Product Team
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Traditional Crowdfunding Example
Trusting a third-party is required
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Product Team
Traditional Crowdfunding Example
Supporters Smart Contract
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Product Team
Traditional Crowdfunding Example
Supporters Smart Contract
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Product Team
Funded!
Traditional Crowdfunding Example
Supporters Smart Contract
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Product Team
Failed
Traditional Crowdfunding Example
Supporters Smart Contract
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Smart Contracts are stored on the blockchain!
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Immutable
Distributed
Cannot be edited
Consensus
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Trust is embedded in the network
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Applications of Blockchains
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• Land title • Food safety and
origin • Patent
Static Registry
• Identity fraud • Civil-registry and
identity records • Voting
Identity
• Insurance-claim payout
• Cash-equity trading New-music release
Smart Contracts
• Fractional investing
• Drug supply chain
Dynamic Registry
• Cross-border peer-to-peer payment
• Insurance claim
Payments Infrastructure
• Initial Coin Offering
• Blockchain-as-a-service
Other
Record Keeping Transactions
Source: Blockchain beyond the hype: What is the strategic business value? – McKinsey&Company
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Bloc
kcha
in A
pplic
atio
ns
Digital identity
Proof of ownership
Data storage
Peer-to-peer transactions
Digital content
Blockchain Applications
Digital securities trading
Foreign exchange
Data storage
Peer-to-peer transactions
Digital content
Financial Services Non-financial Services
Source: Opportunities for Blockchain in the Energy Sector – CGI
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Blockchains in Energy
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$2m $6m $9m
$739m
$359m
4 8
14
53
15
0
100
200
300
400
500
600
700
800
2014 2015 2016 2017 20180
10
20
30
40
50
60M
illion
s
Investment Trends in Blockchains for the Cleantech Sector
Total $ Amount Total Deal VolumeSource: Blockchain in Energy & Industry Raises $1 Billion – and Heads into Challenging Times – Cleantech Group
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22
10 6 7
18
3
1
1 2
4
2 2
1
2014 2015 2016 2017 20180
5
10
15
20
25
30
35
40
45
50
Type of Venture Rounds in Blockchains for the Cleantech Sector
Coin Offering Seed Series A Growth EquitySource: Blockchain in Energy & Industry Raises $1 Billion – and Heads into Challenging Times – Cleantech Group
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$723m
$140m
Investments
Europe North America
70
38
Companies
Europe North AmericaSource: Blockchain in Energy & Industry Raises $1 Billion – and Heads into Challenging Times – Cleantech Group
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45%
55%
2017
EnergyAgriculture & Food, IoT, Logistics, Transportation
62%
38%
2018
EnergyAgriculture & Food, IoT, Logistics, Transportation
Source: Blockchain in Energy & Industry Raises $1 Billion – and Heads into Challenging Times – Cleantech Group
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$337m $134m $19m $16m $9m $4m
23
5 5 6
3 4
0
50
100
150
200
250
300
350
400
P2P and RetailTraiding
Green Mining Smart Home andEnergy Efficiency
Wholesale Traiding Energy Certificatesand Currencies
Renewable ProjectFinancing
0
5
10
15
20
25M
illion
s Investments within Core Energy
Total $ Amount Total Deal VolumeSource: Blockchain in Energy & Industry Raises $1 Billion – and Heads into Challenging Times – Cleantech Group
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5 21
322
522
229
2014 2015 2016 2017 2018
Application Filing of Blockchain-related Patents
Number of Applications Filed
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Production Transmission / Storage Distribution Provision
Participative financing
Asset management / Maintenance / Logistics / Conformity
Alert and intervention management
Market mechanisms (balance, differentials, erasure, self-production, guarantees of origin, etc.)
Smart network management / Microgrid
Electrical mobility
Wholesale market
Retail market / Loyalty
Support functions (HR, purchasing, financing, insurances, etc.)
Source: Opportunities for Blockchain in the Energy Sector – CGI
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Wholesale and Retail Markets
Trading Platforms
Customer Satisfaction
Loyalty Programs
Customer Data
Management
Billing
Publishing Customer
Data
Source: Opportunities for Blockchain in the Energy Sector – CGI
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Decentralized Energy Transaction System
Components of a blockchain-based energy system
Energy networks controlled by
smart contracts
Secure storage of ownership
records
Distributed, secure record of
transactions
Payments via cryptocurrencies
Smart Meters Smart
Devices / Homes
Sensor Technology
Smartphone Apps
Supply and demand are balanced by smart contracts (balancing market,
microgrids, virtual power plants, storage)
Transaction data is stored on the blockchain using a decentralized
mechanism, with parties identifying themselves through their digital
identities – e.g. in the context of energy storage, renewable energy, electric
mobility, energy trading
For emission allowances, renewable energy certificates, asset management
In addition to traditional means of payment
Decentralized energy transaction and supply system
Source: Blockchain – an opportunity for energy producers and consumers? – PwC
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Asset
Technology
Standards and Regulations
Ecosystem
Blockchain Feasibility Utilities Financial Services Agriculture Transport and Logistics
Source: Blockchain beyond the hype: What is the strategic business value? – McKinsey&Company
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Revnue
Cost
Capital
Social
Value at Stake Utilities Financial Services Agriculture Transport and Logistics
Source: Blockchain beyond the hype: What is the strategic business value? – McKinsey&Company
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“When the only tool you have is a hammer, everything begins to look like a nail”
The law of the hammer
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Blockchain or DBMS Sharing of data with third-
parties?
Do partners trust each other?
Is the speed of transactions lacking?
Is processing complex, expensive or time-consuming?
Are the data sensitive?
Public Blockchain
Private or Hybrid Blockchain
Simple DBMS
Shared DBMS, interfaces, etc.
High-frequency middleware
Other management solution (DMS, etc.)
No
No
No
No
No
Source: Opportunities for Blockchain in the Energy Sector – CGI
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• Automated processes • Improved experience • Reduced
management and IS costs
Optimization of Processes
• Improved transparency of markets
• Enhanced confidence of users
Transparency
• Improved traceability of energy produced and consumed
Traceability
• Enhanced reliability of transactions
Reliability
• Vulnerable peripheral applications
• Risk of 51% attacks • Theft/loss of private
keys
Security
• Technologies not mature, transactions relatively slow
Scalability Performance
• Few standards, impact of IS integration
Standards
• Regulation not adapted, restricted development
Regulation
Opportunities Risks
Source: Opportunities for Blockchain in the Energy Sector – CGI
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Advantages in the Energy Sector
• Blockchain is readable by all members and allows each member to verify the veracity of the information contained in the registry.
Transparency of exchanges
• Using smart contracts, an action such as transferring an asset or sending an alert, can be initiated automatically.
Automation
• Smart contracts allow data, like meter data, to be validated automatically.
Enumeration and Validation
• Using assignment and prioritization rules, smart contracts ultimately make it possible to assign values or differentials to specific stakeholders.
Reconciliation and compensation
Source: Opportunities for Blockchain in the Energy Sector – CGI
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Advantages in the Energy Sector
• By authenticating the sender of a message or the parties involved in a transaction, blockchain is able to certify the existence of an asset its owner and its transfer between two stakeholders.
Proof of Existence and Ownership
• By encrypting the transaction, blockchain ensures that only the authorized recipients will know its content.
Confidentiality and non-repudiation of exchanges
• By preventing modification of the transaction’s content and metadata (i.e., the date, time, and GPS coordinates), blockchain is able to substantiate the state of an asset at any specific time and location.
Proof of veracity and anteriority
Source: Opportunities for Blockchain in the Energy Sector – CGI