Power Ledger and Silicon Valley Power to Track EV Low-Carbon Credits via Blockchain
Blockchain’s use in the energy space gets a new proof-of-concept deployment in Silicon Valley.
Blockchain technology offers a potentially vital tool to securely track and exchange data across millions of participants in the new energy economy. But first, it needs to be tested out on a smaller scale.
One emerging use case: tracking the charging of electric vehicles at a big parking garage with solar panels and batteries, and creating “digitized tokens” of their value.
That’s the application being plotted by Santa Clara, Calif. municipal utility Silicon Valley Power (SVP), Australian energy blockchain startup Power Ledger, and its North American partner Clean Energy Blockchain Network. On Tuesday, the partners unveiled a pilot project to use Power Ledger’s blockchain platform across two key proof-of-concept use cases.
The first is to track the production and use of energy at the solar PV and battery-equipped six-story parking garage in the heart of the city’s entertainment district, including the energy being consumed by EVs parked at its 48 Level 2 chargers and one DC fast charger.
The second is to “digitize” those EV charging transactions to help the utility earn credits under the California Air Resources Board’s (CARB’s) Low Carbon Fuel Standard. This program offers EV fleet owners or EV charging network operators a potentially lucrative way to sell credits to fossil fuel refiners and producers — as long as they can handle the administrative costs and accounting challenges of adhering to its rules.
But these complications have proven too challenging for most potential players in the Low Carbon Fuel Standard (LCFS) electric vehicle credit market, according to Rick Kubin, vice president of the Clean Energy Blockchain Network.
“The Low Carbon Fuel Standard as administered by CARB is currently a pretty onerous process,” he said. The accounting process for earning credits is complicated and conducted in real time, using metering data or other referents to calculate the amount of fossil fuel displaced per unit of EV charging.
At the same time, “It’s managed via spreadsheets, and it’s only reconciled once a quarter,” he said. Making mistakes in this ongoing accounting process could lead to serious problems further down the road in the LCFS credit-trading process, exposing participants to significant risk.
“Because of these issues in managing it at scale, although the program is available to any utility, it’s only been the big three investor-owned utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric— that have done anything with it,” said Kubin.
Blockchain to measure “cradle to grave” value of EVs, solar, storage
The new project with SVP is meant to replace that cumbersome and error-prone process with Power Ledger’s “transparent, auditable and automated record of energy generation, storage and consumption,” as the startup describes its blockchain platform.
In its simplest terms, blockchain technology is “a combination of technologies that used to be separate — specifically, a combination of network, database, a cryptography layer, and a compute layer,” Kubin said. “Those things come together in a unique way that hasn’t been done before.”
In the case of Power Ledger’s work with SVP, the company is combining all the data required to account for a unit of EV charging’s value as a LCFS credit, in a way that’s secure from being altered, he said.
The concept is quite similar to using blockchain to track renewable energy credits — one of the uses that’s been identified as an early-stage energy industry application for the technology.
“It’s ascribing some value to the use of clean energy as a fuel versus dirty fuel, and a market for the trading of the credits,” he said. “Companies like Shell and Chevron buy the LCFS credits to offset their use of dirty fuels. So you can think of them as an arbitrary, theoretical thing to begin with.”
“So creating a token to represent the credit makes a lot of sense, versus doing it via Excel and a whole bunch of accounting,” he said. “It’s one record that kind of flows through from cradle to grave.”
Today’s LCFS doesn’t differentiate between the source of electricity used to charge EVs, noted Kubin. But CARB is interested in creating an “enhanced credit, where if you can show if the energy used to charge the EV came from a clean source, they’re willing to provide some percentage increase in the credit.”
That’s where the tracking of the solar PV and batteries in Santa Clara’s parking garage comes in. Power Ledger’s technology can track how many kilowatts of electricity are being generated, stored and dispatched in real time, and how that profile aligns with EV charging at the time.
Tracking that kind of interplay between different resources would likely require a significant investment in sensors and telemetry, as well as the IT and business processes to manage the sensitive and private data being carried across it — all tasks that blockchain is well designed to carry out, he noted.
The Clean Energy Blockchain Network has worked with Power Ledger to bring its technology to North American projects, including its first commercial-scale project announced last month with Northwestern University, Kubin said. That project will enable four buildings to trade excess solar energy, in hopes of proving out the startup’s technology for use in a potential campuswide energy trading network.
The two are also working with some unnamed parties to use Power Ledger’s blockchain to manage solar, batteries and EV chargers in California multi-tenant properties. Announcements are expected in the next two to three months.
Power Ledger got its start in the competitive Australian energy retail market, enabling energy retailers and their customers to trade energy generated by rooftop solar or behind-the-meter batteries. It started with a 15-home trial in Western Australia in fall 2016, and moved to a 500-site project with New Zealand utility Vector in late 2016. Last summer, it started a commercial deployment in a residential development in Fremantle to “facilitate electricity trading across the meter and manage settlements without going through an electricity retailer.”
Beyond North America, the startup announced its first trial with Japanese utility Kansai Electric Power Company, matching a similar move by Tokyo Electric Power, which invested in German blockchain startup Conjoule last year.
Power Ledger also tapped into the craze of initial coin offerings by raising $34 million Australian (USD $24 million) in an October ICO that exchanged POWR tokens — units of ownership of the company traded on the Ethereum cryptocurrency network — for real currency, as well as the bitcoin and litecoin cryptocurrencies.
Energy blockchain companies raised $324 million in 2017, according to GTM Research analyst Colleen Metelitsa. Initial coin offerings make up 75 percent of that total, leading onlookers to worry about a bubble.
However, a significant amount of this total is serious investment by energy companies seeking solutions to real and pressing problems, she said. Centrica, RWE, Innogy and Tokyo Electric Power have made investments in blockchain startups within the last year, and many others are working with consortia like the Energy Web Foundation.