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Blockchain – energy sector solution

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Department of Energy

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Blockchain enables solutions not previously possible. It is perceived to be a transformative technology.

AUDITABLEProvides full audit trail of data capturing all

transactions

IMMUTABLE

Validated, single, timestamped,

tamper-proof data

VALUE TRANSFERReal-time rule based verification by multi-party confirmations

TRUSTED INTERACTION Trusted digital

signature based peer to peer interactions

TRACEABILITY

Event monitoring and asset or product tracking in secure environment

COMPLIANCE

Evidence of regulatory conditions compliance

BUSINESS LOGICSmart contracts used for transactions, establishing ownership, measuring impact and task automation

STAKEHOLDERP2P Communications, risk reduction, lower costs and trust between all parties

Unique capabilities

of Blockchain

What is blockchain?

► A blockchain is a digital, secure public record book of transactions (or a ledger)

► A “block” is the way a ledger organises transactions into blocks of data

► The blocks link into a sequence that cannot be changed and is shared with everyone in the network.

► The network and data is distributed. There is no one single controlling authority. The data is shared across the network, protecting against illegal transactions.

Blockchain creates trust in data

► Who’s who? - Identity is established using digital signatures with public and private keys

► Who owns what? – Ownership is established using “cryptographic hashing” data stored in short form on the block. If attempts are made to change it, the system rejects it

► What’s true? – Transactions are verified using distributed consensus mechanisms.

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How does Blockchain work?

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What does Blockchain work?

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Hash

SHA-2 (Secure Hash Algorithm 2) is a set of cryptographic hash functions designed by the United States National Security Agency (NSA).They are built using the Merkle–Damgård structure, from a one-way compression function itself built using the Davies–Meyer structure from a (classified) specialized block cipher.

https://en.wikipedia.org/wiki/SHA-2

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Block

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Chain of Blocks

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Breaking the Chain of Blocks

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Broken Chain of Blocks

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Blockchain is based on a distributed network, with no one centralisedcontrolling entity enabling multiple use cases across all industries

A transactionIs requested

The transaction is broadcast to a network of Peer-2-Peer computers called nodes. The nodes can be an ecosystem of servers belonging to companies

VALIDATION AND VERIFICATIONAll the networked nodes validate the transactions, the users status and business rules

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IMMUTABLE BLOCK Block is combined with other transactions to create a time-stamped block of data on the ledger 4

A transactionis complete 6

NODE

The new block is added to the existing blockchain creating a permanent record 5

Supply Chain Risk,

Sustainability and Resilience

TOKENISATION AND CRYPTOCURRENCY

Verified transactions can involve cryptocurrencycontracts as a medium of exchange or tokens to reward behaviour and engender loyalty.

Cryptocurrency is created and secured electronically in the blockchain.

Encryption techniques are used to control and create units of exchange and to verify the funds.

NODE

NODE

NODE7

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Summary use cases within the energy sector

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Decentralised energyTransaction and supply

system

► Decentralised buying and selling of energy

► Consumers of energy are also producers, representing new opportunities

► No supplier-switching process

► Cryptocurrency integration

Other smart contract

Applicationslike

electric mobility,smart devices

Applications with a focus on transactions and smart contracts enabling automated execution of contracts

Guarantees of origin, certification of emission

allowances

Guarantees of origin, certification of

renewable energy

Register recording ownership and current state of assets

Applications with a focus on documentation of ownership

Billing of electric mobilitywith roaming and geo-location

Metering and billing of heating

Metering and billing of electricity consumption

Applications with a focus on distributed transaction records

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Distributed energy

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Consumers of energy are also producers. Using blockchain technology it is possible to dispose of spare generation capacity by selling to other entities on the tradingplatform using energy exchange tokens

STORAGE

BIO FUELS

HYDRO

WIND

SOLAR

TOKENISED ENERGY TRADING MARKETPLACE

BLOCKCHAIN PLATFORMSmart Meters

SmartDevices Sensors Smart-

Phone Apps

Secure storage of

energy records

Energy networks controlled by smart contracts

Secure, distributed record of

transactions

Payment using Crypto

currency tokens

Emission allowances, renewable energy certificates, asset management

Crypto-tokens used interchangeably with traditional payment methods

Transaction data is stored on the blockchain using the distributed ledger, with each party identified using digital identities

Supply and demand are balanced by smart contracts – balancing market, microgrids, virtual power plants, storage

ENERGY SECTOR USE CASES

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Smart contracts and tokenisation

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Encourage mass adoption of electric mobility solutions,

using simplified billing at charging stations, for parking or vehicle

sharing

BLOCKCHAIN BASED BILLING

SMART DEVICES AND SENSORS

Peer to peer communications between devices. Capture data on

energy efficiency and metering. Data driven decision making s and

improved resource management

VALUE EXCHANGE WITH ENERGY TOKENS

Energy tokens can be used to trade carbon

credits, or usage credits. They can be

used to reward reduced emissions and pursuit of clean energy

sustainability

VALIDATION AND VERIFICATION FOR ENERGY

INVESTORS

Blockchain and smart contracts enables

investors to see the impact at each phase of

a project. Lowers investment risk and enables funds to be

released only when key objectives are met

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