Blockchain, the technology that underpins cryptocurrency transactions, is about to get tested in a trading system for matching clean-energy buyers and sellers in the largest U.S. power market.
PJM Interconnection LLC and Energy Web Foundation are developing a digital ledger system to track electricity from wind and solar power plants as it’s produced, delivered, traded and sold, according to Jaclynn Lukach, vice president of PJM’s environmental information services unit. They expect to start a pilot program by the end of the first quarter.
It’s a big test for an emerging technology that developers say has the potential to make transactions faster and cheaper, through a secure trading platform that can attract more participation than existing mechanisms. PJM’s market trades wholesale electricity in megawatt-hours — one megawatt-hour is enough to power about 800 homes for an hour.
“Blockchain will give some smaller users the ability to trade,” Lukach said in an interview. “We’re also hoping it will reduce administrative costs.”
PJM will test a blockchain system that lets people trade the renewable energy credits that wind and solar farms produce as they generate electricity. The digital ledger technology will be used to keep track of the credits as they’re created, bought and sold.
PJM, which operates a grid from Washington, D.C., to Chicago, has been studying blockchain for energy-trading platforms for about a year and sees an opportunity to reduce the cost of renewable-energy investments. Energy Web Foundation, a nonprofit co-founded by the Rocky Mountain Institute, has developed blockchain trading systems for smaller markets from Belgium to Singapore, said Douglas Miller, a senior associate at RMI, .
“This one’s larger in scope and scale,” Miller said in an interview. “In a year or so, we hope PJM will want to build it out more.”