Author: Michael Hathaway, Co-Founder, CEO
In a must-read paper published by the prestigious Institute of Electrical and Electronics Engineers (IEEE), authors Michael Mylrea and Sri Nikhil Gupta share insights on “Blockchain for Smart Grid Resilience: Exchanging Distributed Energy at Speed, Scale and Security.”
By leveraging blockchain’s innate ability to support smart contracts, the co-authors posit the theory that “blockchain based smart contracts…help remove the need to interact with third-parties, facilitating the adoption and monetization of distributed energy transactions and exchanges, both energy flows as well as financial transactions. This may help reduce transactive energy costs and increase the security and sustainability of distributed energy resource (DER) integration, helping to remove barriers to a more decentralized and resilient power grid.”
More and more consortiums for renewable and distributed energy are coming online, including one of the largest, the California Independent System Operator (a non-profit Independent System Operator serving California since 1997), creating microgrids where energy can be exchanged based on availability, peak time usage and more, and technology is required to make the exchange of energy possible, including a means to operate, interconnect and bill in advanced ways.
The IEEE’s paper is important and timely, in that it explores complex problems related to “securing the integrity and trustworthiness of rapid, distributed, complex energy transactions and data exchanges. In a move towards grid resilience, blockchain commoditizes trust and enables automated smart contracts to support auditable multiparty transactions based on predefined rules between distributed energy providers and customers.”
For transactive energy platforms, blockchain is an ideal companion given the nature of blockchain’s decentralized, distributed databases, or digital ledgers, that record transactions using public and private cryptographic keys.
Applying blockchain through smart contracts makes ecosystems more efficient, provides more resiliency in tandem with decentralized energy grids, and can control and even manage Energy Internet of Things (E-IoT) edge devices.
It is hard to argue with the value of optimizing the energy grid and innovating with modern energy exchanges, but none will work if security is an afterthought. This is, after all, critical infrastructure essential to our entire built world and virtual economies, and a clear target for cybercriminals and terrorists.
Given the sheer variety of edge devices connected to energy grids, the attack surface is growing and requires security mechanisms to ensure devices are authorized, authenticated, controlled by policy and rules, with data integrity made possible through an immutable ledger that ensures truth and enables auditing of that truth.
“Blockchain based smart energy contracts can help fill these optimization and security gaps and improve the state of the art in grid resilience by providing an atomically verifiable cryptographic signed distributed ledger to increase the trustworthiness, integrity, and resilience of energy delivery systems at the edge,” the authors write.
Their paper provides a framework for the application of smart contracts to energy grid business relationships, while also touching upon the challenges at the edge of the grid.
Sharing early results from test beds at the Pacific Northwest National Lab (PNNL), the authors itemize the reduction of transaction costs and improvement of security for distributing energy exchanges, while also illustrating how blockchain technology can track and validate (or refute) compliance with service level agreements.
Blockchain for the energy grid has evolved beyond the academic and test bed phase in the United States. Last year, the increasingly open grid forced the U.S. Department of Energy to invest in blockchain technology to secure the edge of the grid, with a multimillion-dollar push “to develop blockchain cybersecurity technology to help secure distributed energy resources at the grid’s edge,” according to a press release from Guardtime, a partner of the US DOE.
Mylrea, another of the project partners, said at the time one goal was to develop a keyless signature infrastructure (KSI) based on blockchain. This would be used to verify exchanges within a grid edge energy-delivery system. “Grid edge devices lack visibility, control and security to conduct real-time energy transactions with the required security, speed and scale,” Mylrea explained.
The KSI would form part of a keyless infrastructure security solution that could be plugged into a distributed control and sensing software platform, called VOLTTRON, which PNNL developed for the DOE.
Michael Hathaway, co-founder and CEO of Windmill Enterprise, the developer of the Cognida Network and Platform, has been serving the energy markets for years, connecting equipment and devices when IoT was called “Machine-to-Machine” or “M2M” technology.
His pioneering work led to his insight on blockchain as the ideal way to secure data, and a portion of his code is being contributed to the non-profit Cognida Foundation, built to support open-source enterprise blockchain projects, including those designed to advance and protect the grid.
For more information on Cognida’s Network and Platform technology, view our technical white paper here.