Originally written as my proposal for Chapman University’s Nachman Innovation Challenge grant.

Abstract

The energy sector, a critical component of the United States’ infrastructure, is at a crossroads due to evolving consumption trends and demand for renewable generation. This transformation brings to light the limitations of traditional, large-scale energy grids, which are vulnerable during critical moments, inefficient due to their centralized nature, and hurt energy producers and consumers alike. Originating from an effort during the summer of 2021, when I conceptualized this idea, the initiative seeks to decentralize and democratize energy distribution within a community by providing a technical solution that enables efficient transactional energy capabilities. The project aims to tackle the inefficiencies and inequities of centralized energy distribution by developing a platform that uses blockchain technology and smart contracts, enabling autonomous community management of energy resources and promoting local generation — reducing costs and fostering equitable participation in an energy market. The goal of securing the Nachman Innovation Challenge grant is to further develop the concept into a scalable, real-world application, exploring opportunities to enhance sustainability and reduce dependency on legacy energy systems.

Background

The Problem with Existing Power Distribution

In our current system of transacting energy resources, both producers and consumers rely upon the same large-scale, utility-owned energy grids. The infrastructure set by these parties is necessary for any and all power distribution, but it can reveal its vulnerabilities during critical moments.1 2 Power is typically generated far away from where it is consumed, delivered by massive transmission systems which cover large geographical areas, creating risky points of failure which can black out entire regions.3 Despite the pitfalls of this system, it creates a lucrative structure for utility companies, whose transmission fees billed to consumers account for billions of dollars in ratepayer costs.4

Incumbent utility companies, backed by regulatory frameworks and legal monopolies, often resist transitioning to local renewable energy sources. Policies define markets, and utilities are very influential in policymaking, which means many existing policies are friendly to utility interests — and those are hard to change, because the utilities will fight hard to maintain policies that they like. Individuals with solar generation frequently encounter regulatory barriers that prevent them from selling their energy at fair rates,5 hindering public equity and the adoption of sustainable energy alternatives.6

Smart Contracts and Blockchain

A blockchain is a type of distributed computing network that processes the flow of information. Various networks exist, each boasting different capabilities in transaction speed, uptime, privacy, parallel processing, and cost. Blockchain platforms often lack cross-compatibility, necessitating the selection of a single platform for implementation.

In a blockchain ecosystem, special programs called smart contracts play a key role in network interaction. Smart contracts are contractual agreements written into code. They contain predefined, immutable conditions, and execute programmatically when their terms are met, without the need for intermediary parties.

In the context of energy distribution, smart contracts have the potential to establish rules and conditions for energy trading.7 This research opportunity seeks to determine whether we can use the blockchain model to create a more equitable system of energy generation and transaction.

Proposed Activity

The concept is a comprehensive platform for autonomous community power management, leveraging blockchain technology and smart contracts to streamline energy transactions and overcome the limitations of legacy energy grids. By embedding the operational parameters of an energy market within smart contracts, a target community could use this platform as a plug-and-play solution to foster power interaction among all of its entities. The system would reduce transmission costs by focusing on locally generated power, and aim to incentivize private generation by offering an open market to producers.

My goal in receiving the Nachman Innovation Challenge grant is to extend this concept into a tangible solution with real-world applicability. The developed solution should not only be capable of deployment but also incorporate realistic market mechanisms to ensure its effectiveness. Subsequently, I will develop a thesis evaluating the effectiveness of this solution and its impact on energy management practices.

Project Technical Specification

The platform will derive its mechanics from established energy and resource markets. Producers share their energy capabilities with the network, showing availability for power provisioning. Agreements are established both in advance, in anticipation of demand, and on demand, to accommodate dynamic consumption needs.

Consumers will share their power needs with the network, and based on the established day-ahead preparation and on-demand provisioning, power will be provided to the grid for consumption. The blockchain will serve as an immutable accounting ledger, ensuring wholly transparent and verifiable recording of transactions.

Addressing this proposal extends beyond software development, however. Moving electrons requires physical distribution infrastructure. A target community might need to establish its own power grid, overseen and managed by a designated manager. Whether this responsibility falls on the developer, a homeowners’ association (HOA), or another committed entity is of secondary importance. What matters most is a dedicated commitment to maintaining the requisite infrastructure for energy distribution within the community.

Furthermore, the project will likely introduce the concept of a community grid-service aggregator. This entity will play a crucial role in market-making for the entire local area, ensuring effective energy transactions and optimizing resource allocation within the community grid. The community grid aggregator will also oversee the management of energy storage systems and coordinate grid balancing activities to maintain stability and reliability within the network.

Research Questions

The project aims to address specific vulnerabilities of legacy energy grids, such as resilience against grid outages and distribution efficiency. The research questions are:

  1. How can community energy platforms mitigate the inherent vulnerabilities of traditional grid systems?
  2. What are the key components necessary for developing a realistic and deployable community energy platform?
  3. What is the feasibility and impact of implementing blockchain-enabled autonomous energy distribution systems?

Research Objectives

  • Develop a functional blockchain energy trading platform: Leverage blockchain technology and smart contracts to establish a functional energy transaction system, facilitating independent energy resource management within private energy distribution areas.
  • Implement realistic market mechanisms: Research and implement realistic market mechanisms that align with existing energy markets and regulations, ensuring the platform’s practicality and potential deployment in real settings.
  • Empower high-density, small-scale providers: Specifically focus on empowering high-density, small-scale energy providers, such as residential households, to actively participate in local energy generation and transactions.

Potential for Innovation

Advancement of the Field of Study

This project contributes to the energy sector by challenging and potentially reshaping the conventional paradigms of energy distribution and management. By using blockchain technology to facilitate energy transactions, we not only advance the theoretical framework surrounding transactive energy systems, but also provide a practical model for their implementation.

Advances in Technology

At the core of the project is the innovative use of blockchain technology to create a secure, transparent, and efficient platform for energy transactions. This project pushes the boundaries of blockchain applications, moving beyond traditional financial uses to address real-world energy distribution challenges, demonstrating its versatility and potential to revolutionize sectors of society.

Societal Relevance

The project directly addresses several pressing societal challenges, including the need for sustainable energy sources, the reduction of carbon emissions, and the improvement of energy access in remote or underserved communities. By facilitating the local production and distribution of renewable energy, the project promotes energy independence, reduces reliance on fossil fuels, and can contribute to more equitable energy access.

Alignment with Larger Efforts

The proposed effort is a continuation of a project I worked on in the summer of 2021. The project, dubbed EnergyChain, was conceptualized by me and a partner from the company ElectriqPower to address the IEEE Blockchain Transactive Energy (BCTE) Initiative.7

The project makes use of the emerging blockchain technology sector, and strives towards the broad societal goals of reducing dependence on centralized grids, fostering local energy generation, and promoting sustainability.

This space has opportunity for real-world adoption, as well as further grants offered by both IEEE and various blockchain providers, which I intend to pursue with a more established project.

Timeline

  1. Research all requirements of the system (2–4 weeks)
    • Review concepts from the previous effort
    • Think thoroughly about how the project would work in the real world
    • Determine all necessary variables and components of an energy distribution market
    • Select a blockchain platform
    • Solidify the technical specification
  2. Build out software components and work through unforeseen blockers (1–3 months)
    • Implement smart contracts reflecting accurate market mechanisms
    • Establish methods for entities to participate in the market
    • Create a simulation environment
    • Create a visual interface
  3. Fine-tune the platform (1–4 weeks)
    • Ensure realistic market mechanisms
    • Seek further improvement of the platform
  4. Testing and validation (1–4 weeks)
  5. Write-up
  6. Seek interested parties for deployment of the project

Budget

Item Detail Total Comments
Personnel      
Salary (undergraduate or graduate students) Tyler Lewis (lead); second student TBD (co-lead/assist) $8,350.00  
Fringe benefit rate for students (5%)   $450.00  
Other direct costs      
Materials and supplies Blockchain tokens to facilitate testing of smart contracts $200.00 Blockchain tokens used for running smart contracts
Travel (domestic)   $1,000.00 Potential domestic conferences (RE+, ETH Denver); potential meetings for informational interviewing and with interested energy solution providers
Request total   $10,000.00  

Personal Statement

Hello.

My name is Tyler Lewis. I am a proud member of the Chapman EECS program. In my two decades I have observed rampant change in the world. Amid fast-paced societal and technological growth, I have learned that change is inherent in our modern lives. Change holds the potential to continuously improve and revolutionize human civilization. Alas, growth is hindered by entities who do not prioritize change — they might even get left behind if they can’t. Those motivated to embrace change for the betterment of society must adapt solutions to increasingly complicated problems.

I pursue this program, and subsequent research, because I am motivated to seek solutions to power a better world.

References

  1. Pourbeik, Kundur, & Taylor (2006). The anatomy of a power grid blackout: Root causes and dynamics of recent major blackouts. IEEE. ↩

  2. Penn, Eavis, & Glanz (2019). California Wildfires: How PG&E Ignored Risks in Favor of Profits. The New York Times. ↩

  3. Fotis, Vita, & Maris (2022). Risks in the European Transmission System and a Novel Restoration Strategy for a Power System after a Major Blackout. MDPI. ↩

  4. Lewis (2020). How Two Simple Fixes Can Fairly Compensate the True Value of DERs in California. T&D World. ↩

  5. Thoubboron (2023). NEM 3.0 in California: What You Need to Know. EnergySage. ↩

  6. Osaka (2022). This little-known bottleneck is blocking clean energy for millions. The Washington Post. ↩

  7. IEEE (2021). IEEE Blockchain Transactive Energy (BCTE) Position Paper. ↩ ↩2