blockchains in energy€¦ · smart grid and blockchain expert european technology & innovation...

Blockchains in Energy Ioannis Vlachos, PhD

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

Presentation Overview

Blockchains

Smart Contracts

Applications of Blockchains

Blockchains in Energy

Decentralization

Digitalization

Decarbonization

Democratization

4Ds

History of Blockchain

1991

Digital timestamps Like a notary

History of Blockchain

2009

Bitcoin By “Satoshi Nakamoto”

“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

The Blockchain

Distributed ledger

Data

Hash

Hash of previous

block

Block

From: A To: B Amount: $

Hash: e12f4271d0b792ea1bdb621a038f8c22

Hash: f67c2bcbfcfa30fccb36f72dca22a817

The Blockchain

1

Hash: 1DET Previous Hash: 0000

Hash: 5G7Y Previous Hash: 1DET

2

Hash: GT90 Previous Hash: 5G7Y

3

The Blockchain

1




2 3

The Blockchain

1




2 3

Genesis block

Attacking the Blockchain

1


Hash: 5G7Y T1R8 Previous Hash: 1DET


2 3

Proof of Work

1 2 3

10 minutes 10 minutes

P2P Network

• 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

New Block!

Consensus

Smart Contracts

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

Smart Contracts • Smart contracts are simply programs stored on the

blockchain • Used to automatically exchange coins based on

certain conditions

Traditional Crowdfunding Example

Supporters

Product Team


Trusting a third-party is required

Product Team


Supporters Smart Contract

Product Team

Funded!



Product Team

Failed



Smart Contracts are stored on the blockchain!

Immutable

Distributed

Cannot be edited

Consensus

Trust is embedded in the network

Applications of Blockchains

• 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

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

Blockchains in Energy

$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

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

$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

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

$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

5 21

322

522

229

2014 2015 2016 2017 2018

Application Filing of Blockchain-related Patents

Number of Applications Filed

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.)


Wholesale and Retail Markets

Trading Platforms

Customer Satisfaction

Loyalty Programs

Customer Data

Management

Billing

Publishing Customer

Data


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

Asset

Technology

Standards and Regulations

Ecosystem

Blockchain Feasibility Utilities Financial Services Agriculture Transport and Logistics


Revnue

Cost

Capital

Social

Value at Stake Utilities Financial Services Agriculture Transport and Logistics


“When the only tool you have is a hammer, everything begins to look like a nail”

The law of the hammer

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


• 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


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


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


Thank you! [email protected]

linkedin.com/ioannisvlachos

blockchains in energy€¦ · smart grid and blockchain expert european technology & innovation...

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