possibilities for blockchain in the energy...

Possibilitiesforblockchainin

theenergytransition

Creatingaclassificationforexistingblockchaininitiativesandasearchfornewopportunitiesforvalueaddedapplianceofblockchainintheenergytransition

DavidLamers

January10,2018–Version2.4

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MASTER THES IS

BUS INESS INFORMATION TECHNOLOGY

DAV ID LAMERS

SUPERV ISORS :

J .M . MOONEN ( FACULTY OF BMS , UN IVERS ITY OF TWENTE)

N . S IKKEL ( FACULTY OF EWI , UN IVERS ITY OF TWENTE)

J . VAN DER GRAAFF (ENERGY EXCHANGE ENABLERS )

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MANAGEMENTSUMMARY

PurposeTheenergytransitionisaconstantlymovinganddevelopingendeavourimpactingeverypersonworldwide.Developedcountriesaretransitioningfromacentralsupplywhereenergyisgeneratedfrom(mostly)fossilfuelstoadecentralizedsupplybyrenewableenergysources,likesolarpanelsandwindturbines.Thechallengetokeepagridinbalance,soastomatchdemandandsupply,isbecomingmoredifficulteveryday.Sincerenewableenergysourcesdonotofferflexibilityinsupply–astraditionalproductiondoes–top-downregulationsarethesafetynetoffirstworld’senergygrids.Areliableandaffordableenergygridisnowadaysmaintainedthroughbalanceresponsiblepartiesandgovernmentsubsidiaries.Itmakescustomersunawareofthemostimportantaspectsoftheenergytransitionwhileenergypricesrise.Thedecentralizationcreatesgridloadsonpartsofthegriditwasnotmadeforandso,cancausegridcongestion.Increasingpeaksinuncontrollablesupplyanddemandrequiresflexibilityinboth,and(near)real-timesettlementinordertomaintainanaffordableandsustainableenergygrid.Also,localitybecomesmoreimportanttoreducegridcongestion.Decentralization,flexibility,localityandtimebeingthemostimportantaspectsoftheenergytransition,thisreportinvestigatesthepossibilitiesforblockchainassupportingtechnologyintheenergytransition.Itsreal-timepeertopeertransactionscouldsupportinthedecentralization,flexibility,localityandtime.

Blockchaintechnologyempowersafullydecentralizedplatformforpaymentsanddataexchangeandwascreatedin2008.In2009itwasfirstappliedinBitcoinandnowadaysithasevolvedtoasmartcontractplatformbeingabletoexecutescriptsondecentralizedmachines.Despiteitslimitationsinscalability,securityanditssignificantenergyconsumption,itisapromisingtechnologyalreadybeingappliedinmultiplefieldsincludingtheenergysector.Solutionsforexistingproblemsarebeingdevelopedandanother,newgenerationofblockchains,thedirectedacyclicgraphs,arealsoprovidingnewopportunitieslikefeelesstransactions.Start-upsaswellasestablishedcompaniesareworkingoninnovativeandnovelsolutionswithintheenergytransition.ThisreporttakesaperspectiveatalllevelswithintheelectricitymarketsandelaboratesontwodetailedsolutionsforEnergyeXchangeEnablers(EXE),astart-upfocusingontechnologysolutionsinenergytransition.

ResearchdesignThisstudyfirstsketchesatheoreticalframework,basedonthecharacteristicsofblockchaintechnology,theenergymarketsandtheenergytransition.Withthoseaspectsinmind,currentblockchaininitiativeswithintheenergysectorareanalysedandclassifiedandstate-of-the-artinitiativesareemphasised.Alsosomenewopportunitiesfittingtheenergytransitionandblockchain,notyetdescribedinliterature,areanalysed.Existingaswellasnewopportunitiesformtheclassificationofblockchainintheenergytransition.TheEXEproductportfolio,focusedontheenergytransition,isanalysedandismappedontotheclassificationmade.Forpossibilitieswiththehighestpotential,fittingtheproductsstrategyandblockchainaddinghighvalue,ablockchainpropositionisdesignedandvalidatedamongnineenergymarketprofessionalsandblockchainexperts.

FindingsTheclassificationofexistinginitiativesandnewopportunitieshasledtonineopportunitiesforblockchainwithintheenergytransitionasshowninthetableonthenextpage.

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EnergytradingEnergytradingontheblockchain,eitherpeertopeer,withbidcurvesordirectlyontheenergymarkets

LocalmarketsCreatinggeographicallycloseclustersbeing(almost)self-sufficient,tradingenergyontheblockchain

RewardingcryptocurrencyTherewardingofpeoplefortheirsupplyofrenewableenergytothegridwithcryptocurrency

PayingorreceivingwithcryptocurrencyLettingpeoplesharetheirenergyconnectionandreceiveandpayforeverykWh

GridbalancingDecentralbalancingofthegridbyusingdeviceagents,possiblywithcryptocurrencyreward

DemandresponsecommunicationDemandresponseovertheblockchainwithothergoalsthangridbalancing,forinstancerespondingonthecurrentenergyprice

Real-timeguaranteeoforiginGuaranteeoforiginonreal-timebasisinsteadofaggregatedyearlybyinstantcreatingdealsbetweensupplyanddemand

SharingmeterdataShare(live)meterdataontheblockchaintoreplacecentralpartieslikeEDSN

MultiplesuppliersatoneconnectionVariablesuppliersatonecertaingridconnectionwithchangingsupplier,andsosettlement,everyPTU

WithintheEXEproductportfolioandeachproductstrategy,significantopportunitiesaretheretofocusonenergytrading,localmarketsandmultiplesupplierswiththeirproductnamedEntrnce.Forenergytradingaswellasmultiplesuppliers,apropositionwascreatedandademowasbuiltusingtheEthereumblockchain.Sincetimeplaysanimportantroleintheenergytransition,thedesignforthemultiplesupplierpropositionalsoincludesareal-timeguaranteeoforiginsolution.Regulations,however,makeitdifficultforanyblockchainpropositionwithintheenergysectortofullyreleaseitspotential.Inthecurrentenvironment,alotofadministrativepartieswithcomplexprocessesnotmadeforrenewableenergyarepresent.Inanunregulatedenvironmentthesewouldnotberequiredanymore.Somepartiesinvolvedintheenergygridandmarketsalsodonotentirelyfacilitatetheenergytransition.

RecommendationsForEXE,themainrecommendationistoactivelyparticipateinpossibilitieswherepotentialwasfoundwithinthecurrentproductportfolio.ThedesignedpropositionswerecreatedstartingofffromEXE’ssoftwarearchitectureandarethereforerelativelyeasilyadaptable.Sinceenergiecoöperatiestakealotofeffortintheenergytransitionbyfocusingonlocalandrenewableenergy,itwouldbeusefultofacilitateanenergytradingsystemaffordableforsupplierswithbelow10.000customers.Thisrequestfromthemarketisbecausecommonsystemsaretooexpensive.Athigherlevel,itwouldfurthermorebeusefultoreducetheregulationsapplyingforenergysupplierssoenergiecoöperatiescanoperateinamoreflexibleenvironment.EXEcannotfacilitatesuchasystemdirectlytothemarketduetoregulations.Thereforeitisadvisedtoworktogetherwithanorganizationspecializedinblockchainorenergy.Sinceotherinitiativesfacilitatingenergytradingontheblockchainwillalsoarise,EXEshouldtakeanactiveroletocooperatesotheycanfulfiltheBRProlefortheirportfoliossotheotherpartydoesnotbecomeacompetitor.

Ingeneral,tofullyenableanenvironmentforblockchainappliancesacceleratingtheenergytransitioncreatingarealsmartenergygrid,thefollowingstepsarerequired;(1)real-timedataaccessisrequiredatgridconnectionlevelandatlowandmediumvoltagegrids,(2)regulationsforenergysuppliersshouldbeloosed,(3)bottom-upexperimentsoutsidecurrentregulationsshouldbeallowedmoreat

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governmentlevel,(4)electricvehiclechargestationsshouldplayanimportantroleincontrollingthesmartgrid,(5)demandresponsesystemswithanopeninfrastructureshouldbeavailableand(6)partiesshouldnotbelimitedtocertainroles.

Mostcurrentlimitationsoftheblockchaintechnologyarewidelyknownandaresolvedpresumablyinafewyears.Currently,privateblockchainsaremostusefulinadevelopmentandtestenvironmentandconsortiumblockchainscanalreadysuccessfullybeusedinlower-scaleproductionenvironments.Inanydevelopmentenvironmentitisadvisedtorevisethestate-of-the-artblockchainsregularlysincetheyquicklyimprove.

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TABLEOFCONTENTS

1 Introduction 121.1 Backgroundinformation 121.2 Problemstatement 121.3 Researchquestions 131.4 Researchmethodology 141.5 Researchdesign 15

2 Blockchain 162.1 Blockchaintechnology 16

2.1.1 Thechain 162.1.2 Generationofblocks 182.1.3 Transactions 182.1.4 Reachingconsensusontheblockchain 202.1.5 (Dis)advantagesofusingablockchain 222.1.6 Directedacyclicgraphs 22

2.2 ApplyingBlockchain 232.2.1 Cryptocurrencies 232.2.2 Industries 252.2.3 Vendors 26

3 Theenergymarket 283.1 Theenergygrid 283.2 Involvedparties 303.3 Electricitymarkets 32

4 Theenergytransition 364.1 Arisingproblems 364.2 Theenergytransition 374.3 Localcommunities 384.4 Flexibility 38

4.4.1 Demandresponse 404.5 Regulatoryframework 404.6 Prospect 41

5 Blockchainenergysolutions 435.1 Currentinitiatives 435.2 Lessonslearned 485.3 Classification 49

5.3.1 Mapping 505.3.2 Energytrading 515.3.3 Localmarkets 565.3.4 RewardingCrypto 595.3.5 Pay/ReceiveCrypto 605.3.6 Gridbalancing 60

5.4 Moreopportunities 615.4.1 Demandresponsecommunication 615.4.2 Real-timeGoO 615.4.3 Sharingmeterdata 62

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5.4.4 Multiplesuppliers 62

6 OpportunitiesforEXE 636.1 EXEproductportfolio 63

6.1.1 Enwire 636.1.2 R.E.X. 646.1.3 Entrnce 65

6.2 Opportunities 656.2.1 Enwire 656.2.2 R.E.X. 666.2.3 Entrnce 67

6.3 Conclusion 68

7 Solutiondesign 707.1 Energytrading:BlockEnergy 70

7.1.1 Design 707.1.2 Advantagesforthesupplier 717.1.3 Technicaldesign 727.1.4 Advantagesofblockchain 757.1.5 Validation 75

7.2 Multipleenergysuppliers:SmartCharge 777.2.1 Design 777.2.2 Technicaldesign 787.2.3 Advantagesofblockchain 837.2.4 Validation 84

8 Prospect 868.1 Blockchaintechnology 868.2 Regulatoryframeworks 878.3 EXE&blockchainconcepts 87

9 Conclusion 899.1 Answerstoresearchquestions 899.2 Lessonslearned 929.3 Recommendations 939.4 Discussion&limitations 95

References 97

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LISTOFFIGURES

FIGURE1:RESEARCHDESIGN 15FIGURE2:STRUCTUREOFTHECHAIN 17FIGURE3:THEMAINCHAINWITHREJECTEDSIDECHAINS 18FIGURE4:GENERATIONOFTHEPRIVATEKEY,PUBLICKEYANDADDRESS 19FIGURE5:SIGNINGTRANSACTIONS 19FIGURE6:VISUALIZATIONOFTHEIOTATANGLE(POPOV,2017) 23FIGURE7:ELECTRICITYSOURCES1998–2013(CBS,2015) 29FIGURE8:ELECTRICITYSOURCES2010–2016(CBS,2017) 29FIGURE9:PERCENTAGEOFRENEWABLEELECTRICITY2000–2015(CBS,2015) 30FIGURE10:CENTRALANDDECENTRALPRODUCTIONOFELECTRICITY(CBS,2015) 30FIGURE11:PARTIESINVOLVEDINTHEDUTCHENERGYMARKET 32FIGURE12:BRPPHASESFOREVERYMARKETDAY 32FIGURE13:POSSIBLEELECTRICITYMARKETTRADINGDURINGTHEPREPARATIONPHASE 33FIGURE14:POSSIBLEELECTRICITYTRADINGDURINGDAYD 34FIGURE15:THEFLOWOFKWHANDEUROINTHECURRENTMARKET 35FIGURE16:THIRTYDAYTIMESERIESDATAFORGENERATIONANDDEMAND(BARNHART,2013) 36FIGURE17:AMBITIONSINTHEENERGYTRANSITIONOFEUROPEANDTHENETHERLANDS(DONKERETAL,

2015) 37FIGURE18:OPPORTUNITIESFORFLEXIBLEDEMAND(TNO,2015) 39FIGURE19:ARCHITECTUREWITHANDWITHOUTAPPLICATIONHOST(POWERLEDGER,2017) 52FIGURE20:WORKFLOWGRID+AGENT(CONSENSYS,2017) 53FIGURE21:GREENEUMLANDSCAPE(GREENEUM,2017) 55FIGURE22:PARTIESINTHENRGCOINNETWORK(MIHAYLOVETAL,2017) 56FIGURE23:ARCHITECTUREOFTHELOCALANDWHOLESALEMARKETS(STEDIN&ENERGY21,2017) 57FIGURE24:MAPOFTHECEUVEL 58FIGURE25:HANZENETFUTUREVISION(HANZENET,2017) 59FIGURE26:POWERMATCHERARCHITECTURE 64FIGURE27:COMMUNICATIONPOWERMATCHERINSTANCES 67FIGURE28:GENERALIZATIONOFENERGYTRADING 71FIGURE29:BLOCKENERGYDEMO 75FIGURE30:UMLSEQUENCEDIAGRAMSMARTCHARGE 81FIGURE31:INTERFACESMARTCHARGEDEMO 82FIGURE32:APPINTERFACESMARTCHARGEDEMO 83

LISTOFTABLES

TABLE1:BLOCKSTRUCTURE 17TABLE2:BLOCKHEADERCONTENT 17TABLE3:MARKETCAPITALIZATIONOFTHETOPTHREECRYPTOCURRENCIES,AUGUST2017 23TABLE4:TYPESOFTRANSFORMATIONATDIFFERENTLEVELS(VANDERSCHOORETAL,2016) 38TABLE5:FLEXIBILITYOFENERGYRESOURCES(TNO,2015) 39TABLE6:BLOCKCHAINENERGYINITIATIVES 43TABLE7:MAPPINGINITIATIVESONTOCLASSIFICATION 50TABLE8:BLOCKCHAINPOTENTIALEXEPRODUCTPORTFOLIO 69

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LISTOFSOURCECODES

CODESNIPPET1:ERC-20TOKENINTERFACECONTRACT 72CODESNIPPET2:ORACLIZEIMPLEMENTATION 73CODESNIPPET3:BLOCKENERGYINTERFACECONTRACT 73CODESNIPPET4:ABSTRACTCONTRACTSMARTCHARGEFORTHESOURCE 79CODESNIPPET5:ABSTRACTCENTRALCONTRACTSMARTCHARGE 80

GLOSSARY

ACMAuthorityforConsumers&Markets

APXEnergyexchangespotmarket

B2B2CBusinesstobusinesstoconsumer

BRPBalanceResponsibleParty

C-ARCentraalAansluitingenRegister(centralconnectionregister)

ConsortiumblockchainPermissionedblockchaintocooperatingparties

CPOChargePointOperator

DAGDirectedAcyclicGraph

DSODistributedSystemOperator

EANEuropeanArticleNumber(usedtoindicateameter)

EDSNEnergyDataServicesNetherlands

Energiecoöperatiecooperationpromotingrenewableenergy,mostofthetimesatsmallergeographicalareas

eMSPe-MobilityServiceProvider

E-programElectricity-program

ERC-20TokenstandardfortheEthereumblockchain

EVElectricVehicle

EVMEthereumVirtualMachine

GoOGuaranteeofOrigin

GrassrootCommunity-ledsolutionforsustainability

IRMAIRevealMyAttributes

kWhKilowatthour

KYCKnowYourCustomer

M2MMachinetoMachine

ODEOpslagDuurzameEnergie(renewableenergystorage)

ODAOnafhankelijkeDienstenAanbieder(independentservicesprovider)

P1Portonasmartmeterprovidingreal-timedata

P2PPeertoPeer

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P4PortonasmartmetertransmittingdataoverGPRS

PrivateblockchainPermissionedblockchain

PTUProgramTimeUnit

PublicblockchainBlockchainaccessibleforeveryone

RGORegionalGridOperator

Salderingsregelingsettlementofthesuppliedenergywithdemandedenergyatyearlylevel

TokenAcryptocurrencyonablockchain

TSOTransmissionSystemOperator

V2GVehicletoGrid

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1 INTRODUCTION

Inthischaptertheresearchisdescribedbyfirstsummarizingtheenergymarketsandblockchaintechnology.Inthesecondsectionthemostimportantproblemsintheenergytransitionareoutlined.Theresearchquestions,methodanddesignareoutlinedintheconsecutivesections.

1.1 BACKGROUNDINFORMATION

Theenergymarketsaswellastheblockchaintechnologyarebothcomplexconcepts.Customersinthefirstworldareluxuriatedwithenergyondemand.Inthepast,centralizedsupplyandpartieshavemaintainedtheelectricitygriddeliveringenergycreatedfromnonrenewableenergysourceslikefossilfuels.Sincesupplyhastomeetdemandtokeepthegridinbalance,alotofpartiesareinvolvedinthedeliveryprocessofelectricity.Suppliershavebalanceresponsiblepartiespredictingusageandsellingandbuyingenergyfromuptofouryearsupfront.Transmissionsystemoperatorstakecareofthehighvoltagegridandmakesurethroughreserveandregulatingcapacity,andinemergenciesemergencypower,thatthegridisinbalance.Distributedsystemoperatorsmaintainthemediumandlowvoltagegrids,createconnectionsforcustomersandshouldprovideenoughcapacitybytakingaproactivecongestionmanagementrole.Withthecurrentendeavorintheenergytransition,adecentralizationisoccurringandcustomersshouldtakeanactiveroleinthesupplyanddemandofenergy.Thisoffersopportunitiesfortheblockchaintechnology.

Blockchainsaredistributedledgerswithtechnologiesthatallowtoreachconsensusandimmutablestateswithoutacentralorthirdparty.ItsolvestheByzantineGenerals’problemanddoublespendingproblemoftenfacedindigitalcurrencieswithoutthirdparty.Besidesthetransferofvaluethroughacryptocurrencyortoken,italsoallowstorunapieceofcodeonthevirtualmachinecreatedbyallnodesintheblockchainnetwork.Thiscode,asmartcontract,canforinstanceautomatethetransferofvalueundercertainconditions.Sinceablockchainisimmutable,itcanalsobeusedtosaveimportantdata.Incasesofprivacysensitivedataitoffersthepossibilitytosavehashesofforinstancecertificatessowhenonereceivesacertificateoffblockchain,onecanvalidatetheauthenticitybycomparinghashes.

TheresearchwasexecutedatthecompanyEnergyeXchangeEnablers(EXE)whichfocusesontheenergytransition.Withtheirthreesoftwareproducts,theywanttosupportlocalenergy,demandresponseanddirectenergytradingbetweendemandandsupplyandtotheenergymarkets.PossibleopportunitiesforblockchainwithintheenergytransactionsarefoundandalsofortheEXEproductportfolio.

1.2 PROBLEMSTATEMENT

Theenergytransitionhasbecomeanimportantpartofmostgovernment’sfocus.Inmostcountriesthetransitionisbehindschedule,mainlyduetothehighfinancialcostsinvolvedandtheestablishedcompaniesnotalwaysfocusingonthetransition.Itrequiresalotofefforttocreateagridwith100%renewableenergywhichisalsoaffordableandreliable.Mostimportantrenewableenergysources

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requirealargeinvestmentandareuncontrollableintheirsupplywhileoneexpectsenergywhendemanded.Tomaintainthisreliablegrid,storagecapacityisrequiredandaflexibleorshiftindemand.Electricvehiclescanplayanimportantroleintheenergytransitionduetotheirabilitytostoreandsupplyenergyfromandtothegridandflexiblechargingopportunitiessincemostofthetimestheyarenotused.Thesefactors,togetherwiththeworld-wideincreaseinelectricitydemand(duetoforinstanceEVandhouseswithoutgasconnection),alsorequireactivegridmanagementbyDSO’s.Gridsarehavingmorepeakmomentsduetothehighsupplybyrenewableenergysourcesandmoreextremepeaksduetothehigherdemand.Congestionmanagementcouldbeenabledbyflexibleanddecentralizeddemandresponsesystemsandahigherfocusonlocalenergy.

Mostoftheactionswithintheenergytransitionaredecentralizedandrequireanactiverolefromthecustomers.Energypricesarerapidlyincreasingwithhigherenergytaxandspecialtaxesforrenewableenergy.Customersareencouragedtoinstallsolarpanelsandgetforinstancesubsidiarywiththesalderingsregeling,requiringalotofmoneyfromthestate’streasury.Timeplaysanimportantroleintheenergytransitionandisforinstanceinthesalderingsregelingnottakenintoaccount.Itisquestionediftheseregulationsaresustainablesincetheywillrequireanincreasinglyamountofmoneyanddonotfitwiththecharacteristicsofthetransition.Alsoanationwide,ornowadaysevencontinentfocusistakenwhilelocalenergyisveryimportant.Blockchaincanaddvaluebyforinstancecreatinglocalself-sufficientareas,real-timesettlementofsupplyanddemandandreal-timeguaranteeoforigin.Itsdecentralizedcharacter,valuetransferandcontractsareimportantaspectsfittingtheenergytransition.

1.3 RESEARCHQUESTIONS

Thegoalofthisresearchistofind,analyzeanddesignpossibilitiesforblockchainintheenergytransition.Thisgoalisachievedbyansweringthefollowingmain-andsub-questions.Themainresearchquestionis:

Howcantheblockchaintechnologysupportandacceleratetoday’senergytransition?

Themainresearchquestionisansweredbyfirstansweringthefollowingsubquestions:

1. Whatarethecharacteristicsoftheblockchaintechnology?Aliteratureresearchanswersthemostimportantaspectsoftheblockchaintechnology,itsmostimportantadvantagesanddisadvantagesandcurrentlimitations.Anexploratorystudyisdonetolookatthecharacteristicsofcurrentblockchainimplementations.Thisquestionisansweredinchapter2.

2. Whatisthecurrentarchitectureoftheelectricitymarketandhowarereliableelectricityconnectionsprovidedbyallparties?Thisquestionwasansweredwithaliteraturestudyandcombinedwithknowledgefromenergymarketprofessionals.Theelectricitymarketsandallinvolvedpartiesareoutlined

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togetherwiththeirresponsibilitiesinchapter3.

3. Whatarethechallengesoftoday’senergytransition?

Themaindrivers,reasons,effortsandcomplicationsoftheenergytransitionareoutlinedinchapter4.Thiswasachievedbyaliteraturestudywhichbesidesscientificliterature,alsofocusesalsoonresearchreportsofconsultancycompanies.Aprospectisalsogivenonthefutureenergygrid.

4. Whatarethelessonslearnedfromtheblockchaininitiativesfocusingontheenergytransitionandhowcanweclassifythem?

Thisexploratoryresearchquestionwasansweredbylookingintothirtyexistinginitiativesusingblockchainintheenergysector.Thestate-of-the-artinitiativeswereanalysedandthetotalsetwasclassifiedintofivecategories.Furthermore,fournewopportunitiesnotfoundincurrentinitiativesareoutlined.Thisimportantdeliverableofthisthesiscanbefoundinchapter5.

5. WhatisthepotentialforblockchainfortheEXEproductportfolio?

EnergyeXchangeEnablersprovidesthreesoftwareproductssupportingandacceleratingtheenergytransition.Theseareanalyzedandmappedontotheninepotentialopportunitiesforblockchain.TheopportunitieshavingthehighestpotentialforEXEareexplainedinmoredetail.Thisresearchquestionisansweredinchapter6.

6. HowtodevelopablockchainpropositionforEXEthatfitstheirproductportfoliobest?

FortwoopportunitiesfoundforEXEhavingsignificantpotential,adesignismadefortheconcept,itsarchitectureandthearchitecturalfitwithintheEXEproduct.Theconcepts,designsandvalidationaregiveninchapter7.

7. WhichnextstepscanbetakenbyresearchandbyEXEtoextendblockchainsupportintheenergytransition?

Opportunitiesforsuccessiveresearchinthefieldsoftheblockchaintechnology,regulatoryframeworksandEXEaregiveninchapter8.

1.4 RESEARCHMETHODOLOGY

TheresearchwasexecutedaccordingtothedesignscienceresearchmethodologyaspublishedbyPeffersetal.(2007).Anobjective-centeredsolutionistakensincetheresearchwasmainlytriggeredbytheindustrysincetherewasanopportunity.However,evenmoreopportunitiesareresearchedtoacceleratetheenergytransition.Theanswerstothefirstthreeresearchquestionsformthetheoreticalframeworkforthisresearchandincludetheblockchaintechnology,energymarketsandenergytransition.Anexploratoryresearchwasexecutedtoresearchexistinginitiatives.Possible

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blockchainsolutionwereidentified,eachsolvingadifferentaspectoftheenergytransitionwithdifferentobjectivesanduniquedesigns.

Twodesignsareproposedinchapter7fortheblockchainconceptswiththehighestpotentialforEXE.Thesedesignswerevalidatedwithenergyandblockchainexperts.

1.5 RESEARCHDESIGN

Theresearchdesignisvisualizedinfigure1.Thebluerectanglesindicatethecorrespondingchaptersofthisthesis.Thechaptersinthisthesisfollowtheorderoftheresearchquestions.

FIGURE1:RESEARCHDESIGN

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2 BLOCKCHAIN

Inthissectiontheblockchaintechnologywillbeoutlinedand(dis)advantagesarediscussed.Differentconsensusalgorithmsarecomparedandexplainedishowtransactionsaresavedinthefirstsubsection.Insection2.2,differenttypesofexistingblockchainimplementationsareanalyzed.Thissectiongivesanswertothesubquestion:

1. Whatarethecharacteristicsoftheblockchaintechnology?

2.1 BLOCKCHAINTECHNOLOGY

TheblockchaintechnologyisfirstmentionedbyNakamoto(2008)whoappliedthetechnologyinthedigitalcurrencybitcoin.Ablockchainisadistributedledgerwhichsavesalltransactionsinblocks.Inthenextsubsectionsthemostimportantaspectsoftheblockchainwillbeoutlined:thechain,generatingnewblocksandthetransactions.Toreachconsensusofthetruthmultiplealgorithmsaredeveloped,theseareexplainedinsection2.1.4.Section2.1.5discussestheadvantagesanddisadvantagesoftheblockchaintechnology.

2.1.1 THECHAIN

IntheblockchaineachblockcontainsalistofvalidtransactionsthatarehashedandencodedintoaMerkletree(Nakamoto,2008).Ahashisaone-wayfunctionthathasaninputwhichisfedtothealgorithmthatcalculatesanoutputoffixedsize.Ahashfunctionalwaysgeneratesthesameuniqueoutputforeachinput.Whentheinputdiffersalittletheoutputistotallydifferent.Sinceitisaone-wayfunction,itisnotbycalculationpossibletoderivetheoriginalinputwhentheoutputisknown.TheMerkletreeinblockchainisatreeofhashesinwhichtheleavesarethehashesofatransaction.ThenodesfurtherupinthetreearethehashesoftheirchildrenandtheMerkletreesarebinary,sothereareonlytwochildnodesundereachnode.Atthetopofthehashtreethereisthetophashorroothash.Thishashissavedintheblockheaderandalsotheroothashofthepreviousblockissavedintheblockheader.Thus,withtheroothashonecanverifythatthetransactionsintheblockarenotmanipulatedsinceablockwithamanipulatedtransactionwillgiveadifferentroothash.Andsinceablockcontainstheroothashofthepreviousblock,achainiscreatedpersistenttomodificationofthedata.ThestructureoftheblockchainwiththeroothashgeneratedfromthetransactionsthroughaMerkletreeisshowninfigure2.Table1containsthestructureofablockofwhichonefieldistheblockheaderwhichisshownindetailintable2.

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FIGURE2:STRUCTUREOFTHECHAIN

TABLE1:BLOCKSTRUCTURE

Field Description Size

Magicnumber Value,always0xD9B4BEF9 4bytes

Blocksize Numberofbytesfollowinguptoendofblock 4bytes

Blockheader Seetable2 80bytes

Transactioncounter Integer 1–9bytes

Transactions Listoftransactions variable

TABLE2:BLOCKHEADERCONTENT

Field Description Size

Version Blockversionnumber 4bytes

hashPrevBlock hashMerkleRootofpreviousblockheader 32bytes

hashMerkleRoot Roothashofcurrentblock 32bytes

Time Timestamp 4bytes

Bits Target 4bytes

Nonce Numberincreasingwitheveryhashindicatingdifficulty 4bytes

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2.1.2 GENERATIONOFBLOCKS

Ablockinthechainisgeneratedeverytimewhenthemathematicalsolutiontothepreviousblockwasfound.Mostblockchainshaveagoalinsolvinganaveragenumberofblocksperhour,Bitcointargetsatsixblocksperhourforinstance(Donet,Pérez-Sola,&Herrera-Joancomart,2014).Tocreateablockonehastosolveamathematicalpuzzlewithcomputationalpower.Sincecomputationalpowerisincreasingordecreasinginthewholenetwork,blockgenerationisgoingfasterorslower.Tokeepclosetothetargetoftenminutes,thedifficultyofthemathematicalpuzzleischangedeverytwoweekssoitbecomesmoredifficultoreasiertofindthesolution.Itisimportanttonotethatthereisnothingasbeingclosetothesolutionsinceyoudonotmakeprogresstowardssolvingit;onejusthastobelucky.Itislikethrowinghundreddicesandalldicesrollasix,eachtimeyoutrythechanceisthesame.

Whenstartingwithanewblock,aminercollectsunconfirmedtransactionsinthenetworkandwhenthemathematicalsolutionisfoundbyaminer,theblockisbroadcastedtothenetworkandaddedtotheblockchain.Toeverytransactionatransactionfeeisincludedandthesumofalltransactionfeesintheblockisrewardedtotheminer.Sotheminershavetheincentivetoincludetransactionsintheblockstheyaretryingtosolve.Itispossiblethattwoormoreminersfindthesolutionatthesametimewhichresultsinasplitinthechain.Thenodesinanetworkhaveadifferenttruthsincetheirtruthofthechainisbasedonthefirstsolutiontheyreceive.Thesesplitswillberesolvedinshorttimeafternewblocksaregeneratedsincethenetworkwillacceptonlythemostcomplexchainasvalid.

FIGURE3:THEMAINCHAINWITHREJECTEDSIDECHAINS

2.1.3 TRANSACTIONS

Atransactionintheblockchainisatransferofvaluebetweenoneormultipleinputsandoneormultipleoutputs.Theinputofatransactionisareferencetotheoutputfromaprevioustransaction.Theblockchaindoesnotkeeparecordofaccountbalances.Sowhenmakingatransaction,thetotalvalueofthepreviousoutputsisaddedupandthetotalisusedbyalloutputs.Toensureanaccounthasenoughbalancetoexecutethetransaction,thefundhastobeverifiedthroughthelinkofprevioustransactions.

Atransactionismadebetweentwobitcoinaddresses.Anewaddresscanbegeneratedbyanyuserbycreatingaprivatekeywhichshouldbearandom32byteslongnumbergeneratedfromtheSHA-256algorithm.Theprivatekeyisthemostimportantonesincethisisthekeyrequiredtosendmoney.The

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publickeyiscreatedthroughtheellipticcurvemultiplicationwhichisthenhashedthroughtwoalgorithmsandsmallothermanipulationswhichgivesthebitcoinaddress(Antonopoulos,2014).Allstepsareirreversibleandshowninfigure4.

FIGURE4:GENERATIONOFTHEPRIVATEKEY,PUBLICKEYANDADDRESS

Besidesgeneratingpublickeys,theprivatekeyisusedtosigntransactionswhenmoneyiswithdrawnfromtheaddress.Withthepublickey,onecanverifythatoneisindeedtheaccountholderoftheaddresswithoutrevealingtheprivatekey.Nowtheuserwillbeabletosignthetransactionandspendmoneyfromthecorrespondingaddress.Thetransactionsaremuchmorecomplexwithforinstancescriptsthataresendinthetransactionsandexecutedduringthetransactionsforverification.Fornow,thecurrentdescriptionofatransactionissufficient.

FIGURE5:SIGNINGTRANSACTIONS

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2.1.4 REACHINGCONSENSUSONTHEBLOCKCHAIN

Atthemomenttherearetwopopularprotocolsexistingtoreachconsensusontheblockchain.Animplementationofachainhastochooseaprotocolforhowusersofthechainreachconsensusofthevalidtransactionsinthechain.ProofofWork,whichisalsodescribedbefore,requiresuserstosolvemathematicalproblemsandthusrequiresresources.Theotherprotocol,ProofofStake,requiresfromminerstoputupastakeandletthemcreatethenewblock.Thefollowingtwosectionsexplainbothprotocols.

2.1.4.1 PROOFOFWORK

Theconceptoftheproofofwork(PoW)systemwaspresentedbyDwork(1992)andthetermPoWwasformalizedbyJakobsson&Juels(1999).Thissystemwasdesignedtodeterdenialofserviceattacksandserviceabusesbyrequiringsomeworkfromtheservicerequester.Thisworkisoftenprocessingtimefromacomputerandinmostappliances,doesnotresultinausefulresult.Sotheuseoftheseresource,thecomputerandtheelectricityusage,iswasted.

WhenablockchainnetworkisusingtheProofofWork(PoW)algorithmtoreachconsensusonthenewstateofthenetwork,theworkexistsinmostofthenetworksofsolvingamathematicalproblem.Thesecalculationshappenthroughminerswhoallhaveacopyoftheblockchain.Unverifiedtransactionsonthenetworkarebundledtogetherintoablock.Theseminersverifythatthetransactionswithinablockarelegitimate.Toverify,theyhavetofindtheinverseofahashandtheonewhofindsthesolutionannouncesthistothewholenetwork.Sincethisisnotpossiblebycalculation,onejusthastoguessavalueandputthisintoahashfunction.Theminergetsarewardandtheverifiedtransactionsarestoredinthepublicblockchain.ThisProofofWorkmechanismwasthemostimportantideabyNakamoto(2008)behindthebitcoinsinceitallowstrustlessanddistributedconsensus.

Thedifficultyofthecalculationisinmostimplementationsofablockchainincreasingovertime.Forbitcoin,thegoalistoreleaseanewblockeverytenminutesbutcomputingpowerinthenetworkisaddedbyuserseverytimesoblockgenerationgoesfaster.Therefore,everyfourteendaysanewestimationismadeforthedifficulty.Difficultyissetinanumber(nonce)andhowhigherthenumber,howsmallerthechanceoffindingthesolutionandso,increasingtheaveragenumberofcalculationsneededtocreateanewblock.Thisincreasesthecostofblockcreationsominersneedanefficientsystem.

2.1.4.2 PROOFOFSTAKE

Theproofofstake(PoS)algorithmisanotheralgorithmwhichiswellknownandbecomingmorepopular.Tocreateanewblockinablockchainusingtheproofofstakealgorithm,onehastoownanamountofcoins(BitFury,2015).Thecreatorofanewblockischoseninadeterministicwayandisdependingonitswealth.Nomathematicalproblemshavetobesolvedsoinsteadofmining,theblocksare‘forged’.Forinstance,whenoneowns2%ofallcoins,thisaccountisabletoforge2%ofthetransactions.Specificimplementationsofthisalgorithmslightlydiffer;forinstance,somechainsaddedarandomizationtopredictthefollowingforgerwhileothersimplementedacoinageadvantage:whencoinsareheldforlongertimeinthesameaccountonehasagreaterprobabilityofsigningthenextblock(King&Nadal,2012).InaPoSblockchaintherearealsonoblockrewardssoforgerstakeonlytransactionfees.Thismeansthatnonewcoinsaregenerated,sotheyareallcreatedinthebeginning.

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Adistinguishmentcanbemadebetweenchain-basedproofofstakeandBFT-styleproofofstake.Thedifferencebetweenthosetwoliesinwhenthetruthofthechainisdetermined;inchain-basedproofofstakethisisdecidedaftermultipleblockswhileinBFT-stylethisisdecidedwithinoneblock.Thechain-basedalgorithmblockspointtosomepreviousblock,normallytheblockattheendofthelongestchain.Thelongestchainhereisthetruth.InBFT-style,theforgerproposesablockbutthenetworkstillhastoagreebyvotingiftheblockispartofthechainornot.

AsecurityaspectofPoSisthenothingatstakeproblem.Whenthereisaconsensusfailureorthereisamaliciousattemptandanewforkiscreated,theoptimalstrategyforaforgeristoforgeoneverychain.Youcantrytoforgeoneveryforksinceitdoesnotcostanything.Inthisprocessanattackercanforinstancecreatedoublespending.InPoWthereiscostsresourcestominesothiscannothappen.Multiplesolutionsarecreatedtosolvethenothingatstakeproblem,forinstancebypunishingtheattacker(Poelstra,2015).

2.1.4.3 STRENGTHSANDWEAKNESSES

ThePoWalgorithmisappliedintheBitcoinblockchainandisthemostpopularalgorithmatthemoment.TherearestillsomeissueswithPoSaboutsecurityandincentiveswhichshouldbesolvedbyfuturetweaks.Atthesametime,moreandmorepeopleareturningagainstPoW,mainlybecauseofthehighconsumptionofelectricity.InpopularchainslikeBitcoinpeoplearespendingthousandsofdollarsforspecialhardwarewhichrequirelotsofenergytosolvethemathematicalproblemsinthePoWalgorithm.

Howmuchenergyisusedexactlyisnotknown,butthemostextensivecalculationwaspublishedinBitcoinMagazine(2017).ExpectedisthatBitcoin,soonlyonecryptocurrencyoftheexistinghundreds,isusingabout4,4TWhannuallywhichisthesameashundredsofthousandsofU.S.households.Alsothehardwarecostofmachinesabletomineissignificant.InPoSthishardwareandsoelectricityusageisminimalsoitcanrunonthesimplestsingle-boardcomputerslikeaRaspberryPi.

Animportantissueintheblockchainissecurityandpossiblemethodsforattackerstosomehowinsertinvalidblocks.InthePoWalgorithmthiscanonlyhappenwhenonemineroraminingpool(agroupofminerssharingtheblockreward)control51%ofthecomputationalpower(Goodman,2014).Thisgivesfullcontrolofthenetworksothechaincanbemanipulatedbyforinstanceallowingdoublespending.Itisalmostimpossibletogain51%ofthecomputationalpowersincethisrequiresahugeamountofmoney.InPoS,onehastoown51%ofthecurrencytoperformanattack.Besidesthat,thisalsorequiresahugeamountofinvestmentinthecryptocurrencyandtheattackwilldestabilizethecryptocurrencywhichdiminishesthevalueoftheirstake(Houy,2014).

AnotheraspectofPoWisthatwhenthepriceofthecryptocurrencydrops,peoplehavelessincentivetominewhichreducesthesecurityofthesystem.Thisincentivedropcanalsohappenafter21millionbitcoinshavebeenminedsincenomorenewbitcoinswillbegeneratedafterwards.

AtthemomentBitcoin,LitecoinandEthereumarethemostpopularcryptocurrenciesusingthePoWalgorithm.EthereumisusingPoWbutontheroadmapisachangetoPoS.PeercoinandNXTforinstanceusePoSalthoughalotofcryptocurrenciesareimplementingahybridformofPoSandPoW(e.g.Bentov,Lee,Mizrahi,&Rosenfeld(2014)applyingProofofActivity)whichshouldpreventsecurityissuesinthePoSalgorithmsandatthesametimesolvetheelectricityusageinthePoWalgorithm.

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2.1.5 (DIS)ADVANTAGESOFUSINGABLOCKCHAIN

Theblockchainofferstwoimportantgeneralsolutions;theByzantineGenerals’Problemandthedoublespendingproblem.TheByzantineGenerals’Problemistheproblemthatyoudonotknowwhichtransactionsarevalidinadistributednetwork(Miller&Jr,2014).ByusingthePoWorPoSalgorithmoneensuresthatonlyvalidtransactionsareaddedtotheblockchain.Indigitalcurrenciesthedouble-spendingproblemistheoccurrenceofspendingthedigitalmoneytwice.Thesolutionincentralizedsystemsisthatatrustedthirdpartyverifiesifthemoneyhasalreadybeenspent.Blockchainresolvesthisproblembyverifyingeachtransactionaddedtotheblockchainbycheckingiftheinputforthetransactionisnotalreadyspent.

Themaindisadvantageofblockchainisstillcybersecurityconcerns.ThePoWalgorithmisalreadyappliedonlargescalebutpeoplearestillworriedaboutforinstancethe51%computationalpowerscenario.PoSisnotprovenatalargescaleasPoWbutmightforthefuture,whensolutionsforcurrentproblemsarecreated,solvethelargeenergyconsumptionofPoW.Bitcoinisalsocreatingblockseverytenminuteswhichstillhavetobeconfirmed,soforsomeimplementationsablockchainlikeBitcoinwillbetooslow.Furthermore,applyingblockchainatlargescalestillrequiresculturaladoption,largeinitialcostsandaclearregulatorystatus.

Besidesthis,ablockchainoffersingeneralthefollowingbenefits(Iansiti&Lakhani(2017)andEY(2016a)):

• Transparencyforalltransactions• Immutability;transactionscannotbechangedordeleted• Reducingrisksincethirdpartyareeliminated• Highqualitydatawhichiscomplete,consistentandwidelyavailable• NocentralpointoffailuresocanwithstandDDoSattacks• Onesingleledgerinsteadofmultipleledgers• Fastertransactionsworldwidesincetheblockchainisprocessing24/7• Lowertransactioncostssincethirdpartiesareeliminated

2.1.6 DIRECTEDACYCLICGRAPHS

Inthesecondhalfof2017blockchainsusingadirectedacyclicgraph(DAG)emerged.TheamountoftheseisstillverylowsotoexplaintheirconceptstheIOTADAGisusedinthissectionasexample.ThisDAGisthemostmatureoneatthemomentandiscalledthetangle(Popov,2017).UniqueconceptsofIOTAarethattherearenotransactionfeesandzerovaluetransactionsarepossibleonthetangleinordertoonlysenddata.Transactionfeesareeliminatedbynotusingminersbutlettheuserthatdoesthetransactionperformalittleproofofwork.Auserdoinganewtransactionhastovalidatetwoothertransactions.Theseareselectedaccordingtoanalgorithmandarecalledtips.Anexampleofthetangleisshowninfigure6whereeachsquareisatransactionandthegreysquaresaretipswhichstillhavetobevalidatedbyupcomingtransactions.Unlikewithblockchain,therearenoblocksortransactionsfees.Itispossibletosenddatawitheverytransactionandextensioninterfacesallowforinstanceforquantumproofdatatobesendoverthetanglewithoutthetransactionhavingvalue.Flashchannelsallowforpaymentstreamswithoutanydataformicropayments.IOTA’smainfocusisonmachinetomachineinteraction.

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FIGURE6:VISUALIZATIONOFTHEIOTATANGLE(POPOV,2017)

2.2 APPLYINGBLOCKCHAIN

Inthischaptertheapplianceofblockchainwillbeanalysedatdifferentlevels.Firstofall,thethreemostpopularcryptocurrenciesbymarketcapitalizationwillbeoutlined.Atthelevelofapplianceinindustries,thefinancial,energy,andpublicserviceindustrieswillbeexplained.SomebigsoftwarevendorslikeIBMandMicrosoftareofferingblockchainintheirplatformsaswell,thiswillbeshortlyexplainedinthelastsection.

2.2.1 CRYPTOCURRENCIES

Acryptocurrencyisanappliedblockchainwithcertainimplementedalgorithmsandisrunningoveralargeamountofnodes.Themarketcapitalizationofacryptocurrencyisthetotalworthofallcoinsandmightsignificantlyincreasecomparedtotraditionalsharemarketssincethecirculatingsupplyincryptocurrenciesisinmostcasesconstantlyincreasingbytheblockreward.Table3showstheinformationaboutthethreecryptocurrencieswiththehighestmarketcapitalization.Inthenextsubsectionstheiruniquepropositionsareexplained.

TABLE3:MARKETCAPITALIZATIONOFTHETOPTHREECRYPTOCURRENCIES,AUGUST2017

# Name MarketCap11-06-2017 Price CirculatingSupply

1 Bitcoin $48,351,627,929 $2950.87 16,385,550BTC

2 Ethereum $32,154,060,971 $347.99 92,400,710ETH

3 Ripple $10,321,601,091 $0.269308 38,326,381,283XRP

2.2.1.1 BITCOIN

Bitcoin(Nakamoto,2008)wasinventedbySatoshiNakamotoandwasthefirstblockchaindatabasewhichsolvedthedoublespendingproblemfordigitalmoney.Nakamotopublishedin2008‘Bitcoin:A

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Peer-to-PeerElectronicCashSystem’andreleasedthefirstbitcoinsoftwareafewmonthslater.RemarkableisthatitisunknownwhoNakamotoisorwhotheyareeventhoughheortheywereactiveinthedevelopmentofthebitcointill2010.HeclaimstobeamanlivinginJapanbutalotofspeculationsaregoingonanditsrealidentityisstillunknown.

BitcoinisadigitalpaymentsystembasedontheblockchainandworksaccordingtothePoWalgorithm.Newbitcoinsarereleasedtotheminerwhofindsthesolutiontothemathematicalproblemandthuswhenanewblockisreleased.Every210.000blocks,whichisapproximatelyfouryears,therewardis50%lower.Therefore,thetotalamountofBitcoinsisexpectednottoexceed21million.SinceBitcoinwasthefirst,andisstillusedasbasecryptocurrencyatexchanges,itisstillthemostpopularcryptocurrency.(Web)shopsaroundtheworldsupportbitcoinaspaymentmethod.Becauseofthehugepopularityitisfacingsignificantverificationspeedwithrecentresearchshowing43%ofthetransactionsarenotincludedintheblockchainafter1hourafterfirstappearanceandonly93%oftransactionsvaluebeingincludedafter3hours(Pappalardo,DiMatteo,Caldarelli,&Aste,2017).

2.2.1.2 ETHEREUM

Ethereum(Wood(2014)andButerin(2016))hasadifferentgoalthanBitcoin,itisoftendescribedascrypto-equitysinceitismorethanjustmoney.TheEthereumblockchainprovidestheEthereumVirtualMachine(EVM)whichcanexecutescriptsusinganetworkofpublicnodes.Thesescripts,calledsmartcontracts,canbewritteninSoliditywhichisaTuringcompleteprogramminglanguage.Thesesmartcontractsfacilitateonlinecontractualagreementsandcanbeexecutedbyusers.Besidesthesmartcontractsitalsooffersacryptocurrencylikebitcoincalledetherwhichcanbetransferredbetweenaccounts.

CurrentlyEthereumrunsthePoWalgorithmbutauniquetransitionisontheroadmaptoPoS.SinceEthereumisswitchingofalgorithmmid-flightthereisalotofcriticismofconcernedusers.ThediscussionhasledtothedecisionofdevelopinganimplementationofthePoSprotocolnamed'Casper'.Thisprotocolhasasolutionforthenothingatstakeproblemandpunishesparticipantswhicharenotfollowingseveralrules.Forgerscanvotefortherightblockandtheblockwhichhasthemostvotesisaddedtotheblockchain.Ifyouvoteformultipleblocksyouwillloseether.ThefirstversionoftheCasperprotocolisnow(end2017)testedonthetestnetworkandwillbereleasedin2018.

ThesmartcontractsEthereumisoffering,containfunctionstointeractwithothercontracts,makedecisions,storedataandsendether.Smartcontractscanbeaddedtothenetworkbyusersbutareexecutedonthenetwork(theEthereumVirtualMachine)andexistaslongasthenetworkexists.Toexecuteacontract‘gas’isneeded.Eachfunctioninthecodewillbemeasuredbyacostmeasuredingassinceitrequiresresources.Forinstance,aSHA3operationrequires20gasandatransaction500.Thegaspricediffersandcanalsobeexpressedinethers,sowhenoneaccountexecutesasmartcontractithastopayether.Thegasisrewardedtothenodessincetheexecutiontakestheirresources.Theideabehindgasisthatitstopsdenialofserviceattacksfrominfiniteloopsorinefficientcodewhichmakesanattackerpayforperforminganattack.

DappsaredecentralisedapplicationsthatcanbebuiltontopoftheEthereumnetworksincetheyrelyonself-executingsmartcontracts.ADappisopensource,sincethecontentofasmartcontractisvisible,andoperatesautonomous.Dataissavedinthedecentralisedchain.ExamplesofDappsareAugur,whichattemptstoforecasttheoutcomeofrealworldeventsbylettingpeoplebetandgamblinggameswherepeoplecanbetethersorothertokensinworldwideknowngamblinggames.

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AveryinterestingprojectthatwasrunningontheEthereumblockchainwastheDAO,adecentralizedautonomousorganization.Throughcrowdfundinghundredmilliondollarswereraisedtocreatetheorganizationthatreliedonasetofcontracts.InvestorsgotDAOtokenthatgavethemvotingrightsforprojectsintheorganizations.However,thecomplexityofthecodebasetogetherwiththerapiddeploymentbroughtalotofsecurityissues.Mostofthemweresolvedquicklybuton17June2016acombinationofexploitswasusedinanattackand3.6millionEtherwasstolen.TheEthereumblockchainwashardforkedandnowtwoEthereumchainsexist;EthereumandEthereumClassic.

SmartcontractsalsoallowforthecreationoftokensontheEthereumblockchain.Onecancreateaowntokenwithitsownvalue.ThesesmartcontractshavebeenstandardizedinasocalledERC-20tokeninterfacecontract(codesnippet1)andallowscrowdfundingandpaymentsforabusinessconceptontheEthereumblockchain.

2.2.1.3 RIPPLE

ThegoaloftheRippleistofacilitateapeertopeerpaymentnetworklikeBitcoin.ThedifferencewithBitcoinisthatyoudonothavetowaittilltransactionvalidationsbythenetwork;thetransactionsareexecutedimmediately.ThisshouldalsoallowtoconnectaRippleaccountdirectlytoarealbankaccount.Especiallyininternationalbanktransactionsthiswouldprovidefastandfeelesstransactions.Itprovidesaflexibleplatformwhichoffersalsobridgestoothercurrencies.OnepayswithUSDandunderwatertheUSDischangedtoXRPandthentoEURtoprovidequickbanktransactions.

ThegenerationofnewRipplecoinsisregulatedandso,noRipplesarerewardedformining.TheRippledoesnotusePoWorPoSbuthasitsownalgorithm;RippleProtocolConsensusAlgorithm(RPCA).Mostcryptocurrenciesarecreated,developedandmaintainedbythecommunity,buttheRipplenetworkisdevelopedbythecompanyRippleLabs.TheRipplechainitselfisasthirdcryptocurrencyworldwideverypopularbuttheprotocolisalsoincreasinglyadoptedbybanksandpaymentnetworkstoinvestigateintheblockchainasnewfinancialplatform.SowhenbanksusetheRipplenetworkthisdoesnotmeantheRipplecryptocurrencyisusedforinternationalcurrencies.Therefore,thevalueoftheRipplecoindoesnotnecessaryincreaseinvalueandisnotconnectedtothesebanks,butitdefinitelyprovesthetrustandsafetyintheRippleblockchainimplementation.

2.2.2 INDUSTRIES

StartedastechnologybehindtheBitcoincryptocurrency,itispredictedthatblockchainwilldisruptalmosteveryindustryintheworld(PwC(2016),EY(2016b)andIansiti&Lakhani(2017)).Wheretheblockchainimplementationinbitcoinisratherslowandonlyallowsdigitalfinancialtransactionstherearenowhundredsofcryptocurrencieswithmostofthemhavinganotheruniqueproposition.Differentalgorithms,extensionsandconnectionstotherealworldareinplacewhichdistinguishesthecryptocurrenciesfromeachother.Blockchainscanalsohavelimitedaccesssoonlyalloweduserscanuseitandlargesoftwarevendorsareofferingplatformswhereonecaneasilysetupan(private)blockchain.Inthenextsectionstheopportunitiesforeachsectorwillbeshortlyoutlined.Anotheroptionistocreateaconsortiumblockchainwhereonlyaccessisgrantedtocompaniesinvolvedintheblockchainproject.

Thefinancialserviceindustryisshowingthemostinterestinblockchainthroughpublicaswellasprivateblockchains(Deloitte,2015a).Thedistributedledgerwhichisofferedbytheblockchaincantakeoverthefunctionofbanks,stockexchangesandpaymentprocessors(Trautman,2016).

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Blockchaincanreducetheinfrastructurecostofbanksandtheirrelianceoncentralsystems.Nowadays,banksrelyonacentralinfrastructurewhichisatargetforhackersandthesameholdsforsystemslikeSWIFT,whichfacilitatesallinternationaltransactions.Transactionsareimmediatelyprocessedworldwideatlowcost(Jaag&Bach,2017)andinternationaltransactionsdonothaveahighercostthannationaltransactions.RippleLabsisthebiggestindependentdeveloperofablockchaintechnologyfacilitatingsoftwareinthefinancialservices.Also,cryptocurrenciesareworldwideincreasinglyacceptedaspaymentmethodinphysicalshopsaswellaswebshops.ThedisadvantageofacceptingacryptocurrencylikeBitcoinaspaymentmethodisthattheexchangeratetoafiatcurrencyisveryvolatile.

PricewaterhouseCoopersperformedaveryextensiveresearchontheopportunitiesofblockchainforenergyproducersandconsumers(PwC,2016).Theyconcludethatinthefinancialservicesthedevelopmentofblockchainismoremature,butthatthereareawiderangeofenergyusecases(PwC,2016,p.3).Theblockchaincansupporttheenergytransitionwhereenergyisgenerateddecentralisedinawaythatenergycanbedirectlyboughtandsoldwithahighdegreeofautonomy.Importantherethattheynotelimitationsinthecurrentlegalandregulatoryframeworkintheenergysector.Thisframeworkshouldbeadjustedtofullysupporttherequirementsofthedecentralisedtransactionmodels.

ThemostnotablepilotwasexecutedinNewYorkwhereinaneighbourhood,decentralgeneratedenergywasdirectlysoldtoneighboursovertheblockchain.Theprojecthasasfinalgoaltoestablishafullydecentralisedenergysystemwithoutinvolvingathird-partyintermediary.Besidesdirectenergytransactions,blockchaincanbethebasisformetering,billingandclearingprocesses,guaranteesoforigin,emissionallowancesandrenewableenergycertificates.ProspectbyPwCisthatblockchainfirstchangesindividualsectorsandultimatelytheentireenergymarket.

Inalmosteverysectortheblockchaincanprovidenewopportunitiesinsomeway.Moreinterestingpossibleappliancesbeyondfinancialservicesandtheenergysectorprovidingdistinguishingfeaturesare:

• Blockchaincanprovideawork’sprovenanceorattributorssoitcansecureintellectualpropertyanddigitalcreativeworks.Forexample,Spotifyacquiredablockchainstart-upinordertoresearchpossibilitiestocreateadistributeddatabasewherecontributionstomusicarecapturedsoSpotifyknowntowhoitshouldpayroyalties(McIntyre,2017).

• InternetofThings(IoT)devicescanbeconnectedtotheblockchainfortransactionprocessing.Devicescaninteractaftertransactionsorwhenfunctionsinsmartcontractsareexecuted.Thiscanalsobeappliedatlargescalewhereforinstancealeasedcarisonlyabletostartwhenapersonisonhisorherleasepayments.

• Theblockchaincanalsobeappliedforrecord-keepinginthepublicsector.Forexample,thestart-upFantomdoingapilotwiththeHondurasgovernmenttorecordland-ownershipwhichshouldpreventcorruptionandfraudbyofferingadistributed,transparentledger(Prins,2016).Otherrecord-keepingimplementationsaretamper-proofvotingrecords,vehicleregistriesanddigitalidentities(Deloitte,2015a).

2.2.3 VENDORS

Multiplelargesoftwarevendorsoropensourcecommunitiesofferblockchainimplementationsinaneasytouseplatformorevenasaservice(BlockchainasaService,BaaS).

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BothIBMandMicrosoftareofferingBaaS.MicrosoftoffersBaaSasmoduletoitsAzurecloudplatformandtheirBaaSisbasedonopen-sourcecodeandsupportingdifferentblockchainprotocolswithapreferencetoEthereum(Microsoft,2017).SoMicrosoftreliesonanexternalplatformwherechangescanbemadewithoutinfluencefromMicrosoft.IBMontheothersideoffersBluemix,aso-called‘managedservice’forHyperledgerFabric(IBM,2017).HyperledgerisaprojectgovernedbyasteeringcommitteewhereIBMistakingaveryimportantplacesotheyrelylessonexternalparties.Acertaindangerliesinthesesmallblockchainssincetheremightbenotenoughminingpowerforasecureinfrastructure(Gencer,vanRenesse,&Sirer,2017).Gencer(2017)describesasolutionwhereaprivateblockchaincanbecreatedwhereonlyallowedusersgainaccessinordertoprevent51%attacks.ThisisalsothecaseinHyperledgerFabric;itisapermissionedblockchainusingthePBFTalgorithmtoreachconsensus.ItalsoprovidessmartcontractsbutinadifferentwaythanEthereumsinceitdoesnotusetheSolidityprogramminglanguage.

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3 THEENERGYMARKET

Thissectionoutlinesthecurrentstateoftheenergymarketsandallpartiesinvolvedandso,givesanswertothesubquestion:

2. Whatisthecurrentarchitectureoftheelectricitymarketandhowarereliableelectricityconnectionsprovidedbyallparties?

3.1 THEENERGYGRID

AlotofdifferentpartiesareactiveintheDutchenergymarketwithasmainpurposetosuccessfullygenerate,transmission,distributeandretailenergy.ThiscomplexmarketissetbytheElectricityact(1998)andwasatthattimeintroducedtocreateafair,liberalizedandstableelectricitygridbydecouplingbetweenutilitiesandelectricitysupply.However,thesystemoperator(TSO)Tennetandutilities(intheNetherlandssevencompaniesthateachtakecareoftheregionalenergygrid),haveamonopolypositionintheelectricitymarket.

Itisimportanttoknowthattheelectricitygridalwayshastobeinbalance.Thismeansthatthedemandhastomeetsupplyexactly.Thesupplyisthesumofproductionandimportminusexportanddemandtheuseofelectricityinthegrid.TheElectricityact(1998)distinguishesclearlybetweensmallconsumersandlargeconsumers.Smallconsumersarehouseholdsorsmallcompaniesandlargeconsumersarealmostalwayscompanieswithameterconnectionhigherthan3x80ampere.In2013,79%oftheelectricitywasusedbylargeconsumers(CBS,2015)

CBShasperformedaresearchonthecurrentelectricitysupply,demand,pricesandimportandexport.Sincetheresearchwilltakeintoaccounttrendsintheelectricitymarket,themostimportantfindingswillbeoutlinedfirst.Energyconsumptiongrewbetween1950and2013withanaverageof4,5%to119billionkWh.In2016theNetherlandswasstillproducingelectricityfromfossilfuelsfor81%,whichisshowninfigure7and8.Itwasnotpossibletocombinethedatainthesefiguresinonefiguresinceusagetill2010wasnotavailableinnumbersforeachyear.Remarkablehereisthatenergyproductionwasgrowingtill2010butbecauseoftherecessionandnewpossibilitiesininternationalenergytrading,theproductionwas15%lowerin2013.

Therenewableenergycomesmainlyfromwindandbiomassandasmallerpartfromhydropowerandsolarascanbeseeninfigure9.Sincerenewableenergysourcescanbecreatedinsmallerinitiativesthantheoriginalfossilfuelelectricity,thisismoreandmoregenerateddecentral(figure10).Localcommunitiesorindividualsinvestinsolarpanels,biomasselectricitygenerationandwindturbinesinordertogenerateenergyforthemselves.Sincetheywillnotbeabletousealltheenergythemselvesatthemomentitisavailable,theyoftenalsoproduceenergyforthegrid.

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FIGURE7:ELECTRICITYSOURCES1998–2013(CBS,2015)

FIGURE8:ELECTRICITYSOURCES2010–2016(CBS,2017)

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FIGURE9:PERCENTAGEOFRENEWABLEELECTRICITY2000–2015(CBS,2015)

FIGURE10:CENTRALANDDECENTRALPRODUCTIONOFELECTRICITY(CBS,2015)

3.2 INVOLVEDPARTIES

Figure11showsallrolesinvolvedintheelectricitysupplytoacustomerintheDutchmarket.Inpractice,onecompanycantakemultiplerolessuchasbeingasupplierandbalanceresponsibleparty.Inthissectionwewillshortlyoutlinewhatallinvolvedpartiesdo(Cace&Zijlstra,2003):

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• Thecustomerhasacontractwithanelectricitysuppliertobuy,orinsomecasesalsosellenergy.Acustomerhastohaveanelectricitysupplierandcanchosetheenergysupplieritself.IntheNetherlandstherearealotofsupplierslikeNuon,Vandebron,GreenchoiceandEssent.MostsuppliersofferfixedpricesperkWhordistinguishbetweennightandday,onlyafewofferflexibleperhourpricing.Decentralstorageisbecomingmorepopularwhichmeanspeoplecanstoretheirowngeneratedenergyandusethislaterorsellitatamomenttotheirsupplier.

• Theregionalgridoperator(RGO)connectsthecustomertotheelectricitygridandinordertodoso,theybuild,maintainandmanagethegrids.Furthermore,theyareresponsiblefortransportationofelectricityoverthegridandshouldbeabletoassigntransportedelectricitytoallpartiesintheirarea.InTheNetherlandstherearesevenRNB’soperatingeachinadifferentarea.

• Eachconnectedcustomerhastheresponsibilityformeasuringtheirmeterinacorrectwayandontime.ThisshouldbedonebyapartywhoisrecognisedbythecompanyTennet.ThesepartiesarecalledMeterResponsibility(MR)parties.Theyalsohavethetaskstodeliver,installandmaintaintheenergymeter.

• Thecustomerpaysonlytheenergysupplierwhopaystheregionalgridoperationandmeterresponsibilityparty.Inthecaseofsmallconsumers,themeterresponsibilityisdonebytheregionalgridoperator

• Eachpartythathasoneormultipleconnectionstothegridisbalanceresponsible.Involvedtaskscanbeexecutedbytheelectricitysuppliersorcanbeexecutedbyspecialbalanceresponsibleparties(BRP).TheseBRPshavetocreateanelectricityprogram(e-program)whichistheexpectedsupply(createdbytheirproducers)anddemandofthegrid(TenneT,2014)perPTU(15minutes).Thesee-programsarecommunicateddailytoTennetforthenextday.AfterthedaytheBRPsaresendingtheirrealsupplyanddemandtoTennetandthesearecomparedtothee-programs.Iftherehasbeenadifference,therewasanimbalanceonthegridcausedbytheBRPwhichmighthavefinancialconsequences.BalanceresponsiblepartiescantradeontheelectricitymarketwithotherBRPsinordertomatchsupplyanddemandintheirportfolio.Theseenergyexchangesallowtobuyandsellenergyfrom4yearsbeforetillthedaybeforeandareexplainedinmoredetailinthenextsection.

• TennetistheTransmissionSystemOperator(TSO)whichhasthreeimportanttasks(Electricityact,1998):

o Buildandmaintainthehigh-voltagegridintheNetherlandso FacilitateefficientandstabileelectricitymarketsintheNetherlandso Balancedemandandsupply24/7withthecorrectsystemsusingSRRandSEparties

• SRR/SEpartiesareusedtoprotectthegridagainstdifferenceine-programmes.TenneTletthesepartiesuseorgenerateenergyinthe15-minutetimeslots.

o SRR:supplierregulatingandreservecapacityEverylargeproducersandusersabove60MWareobligedtoofferflexiblepowertoTenneT,haveitavailablewhenneededandtoofferaprice(UniversityofAmsterdam,2014).Howthisflexiblepowerisusedisexplainedinthenextsection.

o SE:supplieremergencypowerIncaseofalargerpoweroutrageTenneTcanfallbackonatleast20MWemergencypower(TenneT,2017)

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FIGURE11:PARTIESINVOLVEDINTHEDUTCHENERGYMARKET

3.3 ELECTRICITYMARKETS

Abalanceresponsiblepartnerisresponsibletokeepbalancebetweensupplyanddemand.Inordertodoso,aBRPwalksthroughthestepsshowninfigure12foreverymarketday.Inthereminderofthisreport,amarketdaywillbegivenas‘D’.

FIGURE12:BRPPHASESFOREVERYMARKETDAY

Prepare

PreparingfordayDcanstart4yearsbeforedayD.InthepreparationphasetheBRPestimatestherequiredelectricityandwheretheelectricityhastocomefrom.Theycanbuyandsellelectricityinfourdifferentways(KEMA,2011)duringthepreparationstep:

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Ø TheNetherlandshasanelectricityexchangewheretrustedpartiescantradeinenergy.Thefollowingmarketsareavailable:

o ENDEX:futuremarketwhereonebuyslongtermcontracts(foraweek,month,quarteroryear).Thereistradedfromfouryearstill1daybeforeD.TheENDEXhasthreedifferentproducts:

§ Baseload:constantsupplyforthewholeday§ 16-hourpeakload:constantsupplyfrom7:00till23:00§ 12-hourpeakload:constantsupplyfrom8:00till20:00

o APXDay-Ahead:Day-Aheadisthemarketwhereelectricityistradedonedaybeforesupplyandthishappensinblocksof1hour.Onecanbidfrom8:00till12:00andat12:40theAPXpublishesthepricesforeachhour.TheAPXsumsallbidsforsupplyanddemandforeachhourwhichcreatetwooffercurves.Themarketpriceforthehourisdeterminedbytheintersectionofthetwocurves

Ø OverTheCounter(OTC)market:traderscantradeenergywitheachotherwithouthavingtheelectricitybeenonthemarket.Thiscanhappenfrom4yearsbeforetillD+110:00.

Ø Powerstation:somesuppliersalsoownapowerstationsotheycanproduceandtradeintern.

Ø Foreigncountries:TheDutchelectricitygridhasaconnectiontoBelgium,Germany,EnglandandNorway(KEMA,2011).Eventhoughthecross-bordercapacityislimitedsoonehastopayfees,itmightbecheapertobuyitinaforeigncountrysinceelectricitypriceshighlydiffer

AtD-114:00allBRPshavetodelivertheirE-programtoTenneTandtheseE-programscontainallelectricitytheBRPisgoingtosupplyanddemandintheirportfolio(Frontier,2015).Thishastobeonthelevelofeveryprogramtimeunit(PTU,whichisalengthof15minutes).AfterthesehavebeenvalidatedbyTenneTtheyareusedfordeliveryforthenextday,theexecutionday.

FIGURE13:POSSIBLEELECTRICITYMARKETTRADINGDURINGTHEPREPARATIONPHASE

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Execute

Attheexecutionday,dayD,theenergyisdeliveredandused.TheE-programsthatTenneTreceivedfromallBRPareestimates.Inordertomaintainthebalanceonthegridtheelectricityisconstantlymeasuredreal-timeinMW.Whenthereisanimbalance,thegridisbroughtintobalancebypartiessupplyingregulatingandreserve(SRR)capacity.ThesepartieshavetheabilitytouseorsupplyelectricitywhenrequiredbyTennetwithin15minutes.ApartycanplacebidsinabidcurvewhichcanbeacceptedbyTenneT.

InthecasethattheSRRcapacityisnotsufficient,TenneTalsohastheabilitytoenablethesuppliersofemergencypower.TenneTcontractspartiesthatareabletoincreaseordecreasetheirusageforatleast20MWin15minutes.Whenapowerstationfailsorthereisaprobleminthegridthisisusedtomaintainthebalance.

Furthermore,aBRPhastheabilitytousetheIntradayexchangemarkettotradeinelectricitywhentheyexpectdifferencesbetweentheirE-programandtherealelectricitydemandandsupply.ThismarketisalsoconnectedtotheBelgium,FrenchandScandinavianmarketandthereisalsoanexchangemarketwithGermany.

FIGURE14:POSSIBLEELECTRICITYTRADINGDURINGDAYD

Finish

TheMeterResponsiblepartiessendtheirmeasurementdataatD+110:00totheRGOswhichthenassignsusagetotheBRPswhosendsittoBRPsandTenneTat16:00.Thisprocessiscalledtheallocationprocess.TenneTcannowcomparetheE-programwiththerealelectricityusageandsendstheBRPsatemporarilyinvoice.TheBRPhasthepossibilitytoaskforacorrectionoftheallocationbytheRGO.AtD+5atemporarilyallocationinsentatD+10thefinalallocationissenttotheRGO.

TheMeterResponsiblepartiesdeterminethetotalusedelectricityatDby3factors:telemetricusage,profiledusageandnetloss.Largeconsumershaveameterwithdataavailableperhour.Smallconsumerusageiscalculatedbycreatedprofileswhichisamodelthatpredictstheelectricityuse.

35

WhentransmittingenergyoverthegridapercentageislostwhichispaidbytheRGOandhavetobetakenintoaccountintheallocationprocess.

TheRGOmeasuresalsothesupplybythehigh-powergrid.Thishastobeinbalancewiththetotalusage.Therefore,theprofiledusageisoftencorrectedbyameasurementcorrectionfactor.

Settle

AtD+10theallocationfromthefinishphasehasreacheditsfinalstate.TheBRPreceivesaninvoiceforthecreatedimbalanceandthereconciliationprocessstarts.Thereconciliationprocesssettlesthedifferencebetweenthecalculatedconsumptionofprofiledcustomersandtheactualconsumptionwhenthisisknown(VanderVeen,2007).ThepriceperkWhdifferenceissetbyareconciliationpricewhichistheweightedmarketprice.

FIGURE15:THEFLOWOFKWHANDEUROINTHECURRENTMARKET

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4 THEENERGYTRANSITION

Inthissectionthetransformationmadeintheenergytransitionisanalyzed,togetherwithproblemscausedbythetransitionandpossiblesolutions.Thissectiongivesanswertothesubquestion:

3. Whatarethechallengesoftoday’senergytransition?

4.1 ARISINGPROBLEMS

Theenergysectorisfacingseriousproblemsintheirfossilfuelsdependency,reliabilityandenvironmentalproblems.Therefore,theenergytransitionistakingplacewithashifttothesupplyofrenewableenergy.Asshowninfigure7and8,morerenewableenergyisproducedeveryyear.Windandsolarenergysuppliedmorethanhalfoftherenewableenergyin2015,butdependhighlyontheweathercircumstancesasshowninfigure16.Thissectionwilloutlinethereasonsfortheenergytransition,problemscreatedbythetransitionanddiscussITsolutionsthatcanhelptheenergytransition.Whatdowedowithoursurplusofenergyonwindysunnydaysorat9:00wheneveryonearrivesattheofficetochargetheircar,taketheelevatorupandheatorcooltheiroffice.Orhow,inthisscenario,doweuseaslessasgreyelectricityaspossible.

FIGURE16:THIRTYDAYTIMESERIESDATAFORGENERATIONANDDEMAND(BARNHART,2013)

BLUE=WINDPOWERGENATION,GOLD=SOLARPOWERGENERATION,RED=POWERDEMAND

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4.2 THEENERGYTRANSITION

Foryearstheideathattheworldwasrunningoutoffossilfuelswasgivingurgencytotheenergytransition.Butfornowthisisnotthemostcriticalfactor.Productionoffossilfuelsisrelativelygettingdirtiersinceitisbecomingmoredifficulttofindthemandthesourcesfoundarerelativelysmall.Thisisincreasingtheprice(TNO,2011).Therefore,theworldisfocusingmoreontheharmfuleffectsontheuseoffossilfuelsthatthreathumanhealth(Armaroli&Balzani,2007)suchaspollutionandgreenhousegasesassociatedwithglobalwarming.Withtheenergyuserisingpercapitaandthetotalincreasingpopulation,thetotalenergyconsumptionworldwidegrows2%peryearfromwhich80%originatesinfossilfuels(Johanssonetal,2012).

Atworldwide,regionalandcountrylevelagreementsandgoalsaresettoreducegreenhousegasemissionsandincreasetheshareofrenewableenergy.TheParisagreementwassignedby195partiesinJune2017whoallhavetocommittomitigateglobalwarmingandreporttheircontribution.However,thisagreementleavesallcountriesfreetosettheirowngoalsatcertaindatesandthereisnoforcingmechanism.Atlowerlevelslikecontinentorcountrylevelspecificgoalsareset.TheEuropeanUnionhasasgoaltogenerateenergyfor20%fromrenewableenergyby2020andin203027%(Energy,2010).TheNetherlandshasagoalof14%forrenewableenergyby2020andsoislaggingbehindcomparedtomostEUcountries(Deloitte,2015b).

Figure17showstheambitionsintheenergytransitionwhicharealsochallengessinceonedoesnotcontributetotheother,ortheyareevencounteractinginthecurrentenergysystem.AsTNO(2015)describes;sustainableenergyislessreliablesincewedependonsunorwindandtomakeitreliableitmightnotbeaffordableanymoresincesolutionslikebatteriesarestillveryexpensive.

FIGURE17:AMBITIONSINTHEENERGYTRANSITIONOFEUROPEANDTHENETHERLANDS

(DONKERETAL,2015)

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4.3 LOCALCOMMUNITIES

Theenergytransitionwillnotbedonebylargecompanies.Itrequiresfromtheconsumertobecomeaprosumerandtobecomeenergyaware.Theprosumerintheenergyworldisnowadaysmainlydescribedastheoneinvestigatinginenergygenerationthroughforinstancesolarpanelsorforlargeconsumersbybiomassorbywindenergy.However,thiskindofprosumersarenotachievingtherequiredrenewableenergyspeed.Localcommunitiesareahugedriver(Walker,2008)forenergyinitiatives.VanDerSchooretal(2017)performedanextensiveresearchofpassiveconsumersorsimpleprosumersmovingtowardsactivecreatorsofnewenergysystems.Mostoftheseinitiativesaregrassrootinnovationswhichmeanstheyarecommunity-ledsolutionsforsustainability(Hargreavesetal,2013).Thesebottom-upinitiativestakecontrolovertheproductionanddistributionofenergy.Table4showsthesegrassrootinnovationsatthelevelofprosumerandcommunitiesbesidesthetop-downpossibilities.ThegrowoflocalandregionalinitiativesissupportedbyaresearchfromTNO(2015)whoperformedresearchtowardsafuture-proofenergysystem.Theyrecallatrendtowardsanenergeticsocietywithwealthy,cooperatingandautonomouscitizensandinnovativecompanies.Localcommunitiescancontributetothethreeambitionsandchallengesasshowninfigure17sincetheenergytheygenerateissustainable,theycreateamorereliablegridbyhavingalocalgridandthusreducetransferofenergyoverthelargegridthusalsoreducingthepricesincelesstransportationisrequired.

TABLE4:TYPESOFTRANSFORMATIONATDIFFERENTLEVELS(VANDERSCHOORETAL,2016)

4.4 FLEXIBILITY

Sincesustainableenergyisnotalwayspresentwhenrequiredflexibilityshouldbeoffered,onecanreachflexibilitythroughthreemainmethods;flexibilitythroughproduction,usageandstorage.Whenusingflexibilityinproduction,theenergysuppliercanmatchthedemandbyincreasingproduction.Thedisadvantageofsomeresourcesisthattheyhaveasignificantrampupordowntimewhichmeansthetimethatisrequiredtousetheirfullpotential.Table5showsthedifferentrampup/downtimesforthedifferentresourcesavailabletogetherwiththeaverageelectricitytheycanproduce.

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TABLE5:FLEXIBILITYOFENERGYRESOURCES(TNO,2015)

Intheworldweliveintoday,energyisproducedwhenrequired.Amoreandmoreembracedideaistostartusingenergywhenitistherightmoment.Thismeansthatenergyshouldbeusedwhenwidelyavailableandnotatpeakmomentswhenthegenerationofenergyisnotshowingthesamepeak.Therearemultipleimportantaspectsinvolvedhere:

- Oneortwo-waycommunication:onecanchoosetosendamessagetotheusertoadjustusageoronecanhavea‘conversation’inwhichthepossibilitiesatdifferentpricesareexchangedandtheuserchosesanopportunity

- Certaintyofresponse:doesauseralwayshavetorespondwhenadjustedusageisaskedorcanitalsojustdotheopposite

- Directorindirect:thesignalsaredirectandnodecisionispossibleorisforinstanceaformulagivenforthepriceandthesystemchoseshowmuchtouse

FIGURE18:OPPORTUNITIESFORFLEXIBLEDEMAND(TNO,2015)

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Otheropportunitiesforflexibilityarestorageofenergyinforinstancebatteries,hydrogenfuelcells,pumpedhydrostorage,orcompressedairenergystorage.Orinterconnectiontoforeigngridsorsystemintegration(powertogas,powertoheat)ispossibleincombinationwithstorage.

AnextensiveresearchonflexibilityoptionsinTheNetherlandshasbeenperformedby(Triple,2014)forTNO.TheflexibilityintheNetherlandsseemstoberelativelyhighanddiversecomparingtoneighbouringcountries.Ahighshareofcombinedcyclegasturbineandcombinedheatandpowerplantsandtheinterconnectiontoothercountriesprovidealotofflexibility.However,withtheincreasingpartofrenewableenergytheyforeseeanincreasedrequestforpower-to-heatanddemandresponsesystemssoon.

4.4.1 DEMANDRESPONSE

Theideaofend-usersreducingorincreasingtheiruseofelectricityinresponsetopowergridneeds,demandresponseisexpectedtoincreasebyanaverageof1to1.25%peryearuntil2030(Triple,2014).Especiallyreducingpeakdemandsisofcommoninterest.Withtheincreasinguseofelectriccars(42.000inusein2014andanexpecteduseof1millionby2020bytheDutchgovernment)the‘vehicle-to-grid’(V2G)ideaisofferinglotsofpossibilitiesforflexibility.Theirbatteriesofferflexibilityinconsumingandfeedingthegrid.DemandresponsecanalsoaddvalueforDSOsinordertoreducegridcongestion.Congestionisanoverloadofthegridwhichcanleadtooverheatedcablesandsodamagethem.DSOsshouldincreasethecapacityofthecableswhichisaveryexpensiveandtime-consumingprocesssopreventingcongestionwithdemandresponseisbecomingmorepopular.

4.5 REGULATORYFRAMEWORK

Especiallysmallconsumersaresubjectedtoawiderangeoflawsandregulations.Withtheincreasingpopularityofgrassrootsthisisbecomingaproblemsincetheycannotfullyutilizetheopportunitiesortheirinvestment(UniversityofAmsterdam(2011),UniversityofAmsterdam(2014),VanderVeen(2007)).TheElectricityact(1998)intheNetherlandswascreatedtoensureareliable,sustainableandefficientelectricitynetworkwithmarketforcesenablingthecustomertochoosetheirownsupplier.Allpartiesshowninfigure11arerequiredtobeinplaceintheelectricitymarketandthiscollideswithoneofthemostcorefunctionofblockchain:eliminatingthirdparties.

Beinglimitedinpracticedoesnotmeaninitiativesshouldbelimitedbylawandregulationssincelawandregulationscanandwillchangeovertime.Also,partiescanstartusingtheblockchaintechnologywithallrequiredrolesstillbeingfulfilledbytheelectricityact.PwC(2016)describesrolesthatarenotrequiredanymorewhenblockchainwouldbeappliedatlargescaleintheenergysector.Whendirectrelationshipsareestablishedbetweenenergyproducersandenergyconsumers,theconsumershavetobecomebalanceresponsibleparties.Thismeanstheyhavetomakeforecastsabouttheirusagethemselvesforthenextdayorlongerterm.Furthermore,thepartiesproducingtheenergyhavetobecomeanelectricitysupplier.Therolethatisperformednowbymeterresponsiblepartiescanbeautomatedpartlysincemeterdatacanbepublisheddirectlytotheblockchainbuttheirfunctionfor

41

providingthemeterswillstillberequired.TheTSOfurthermoredoesnotneedanyclearingprocessessincetransactionscanbefinishedreal-time.

PwC(2016)foreseesthatsmallorlocalbusinesseswillhavereducedbarriersformarketentryintheenergysectorduetotheregulationscreatingabarrier.Thiswouldmatchthegrassroottrendexplainedin7.2wherelocalcommunitiesaretheonesstartenergyinitiativesfrombottomdown.Anotherobstacleisuncertaintyregardinglegalrecognitionofblockchainasatechnologyandpaymentmethod.Atthemomenttoday’slegalsystemsarebasedonclearallocationoforganisations(PwC,2016)whileblockchaindoesnotrelyoncentralorganisations.

Somepapersarealsocallingthecurrentinfrastructureandregulationsaregime(DENA(2016),VanderVeen(2007)),andDENA(2016)seestheimplementationofblockchain,andinspecificP2Ptrading,forthemediumtoshortterm.Soitwilltakesometimebeforebeingappliedatlargescaleatallparties(TSO,RGOandlocal).

4.6 PROSPECT

Atindividual,company,regional,nationalorinternationallevel,thegoaltoachieve100%renewableenergyisincreasinglyset.Attheindividualandcompanylevelthisgoalisalreadyachievedandevenregionsareachievingthisgoalformultipleweeksinayear.Toachievesuchgoalsahighflexibilityinproduction,usageandstorageisrequired.Thissectionwillshortlyoutlineimportantgoalsthathavetobeachievedfor100%renewableenergy.

Flexibilityinproductionisachievedbyusingresourceswithalowrampup/downtimeasshownintable5.A100%renewableenergyenvironmentiscomingfrombiomass,solarpanels,wind,hydropowerandfuelcells.Hydropowerandfuelcellshavelowrampup/downtimesandthusareveryflexible.Biomasscanfulfilthebaseloadpowersincedispatchtimeisslowandproductionthroughsolarpanelsandwindturbinesisuncontrollable.Thismeansthatfuelcellsandhydropowerareveryimportantincreatingasustainablereliablegridsincetheycanbothproduceaswellasuseenergyfromthegridwithlowrampup/downtimes(hydropoweronlywhenitispumpedstorage).

Aninterestingdevelopmenthereistheincreasinguseofelectricalcars.Withonlyarough42.000carsdrivingaroundintheNetherlandsatthemoment,thegoalistohave1millioncarsin2025(RVO,2015).Withallofthemhavingfuelcellsthatcanfulfilinflexibleproductionaswellasusagetheyplayanimportantroleinareliablesustainableenergygrid.Whenthereisapeakinproductiontheycanstartchargingandwhenthereisademandpeaktheycanfeedthegridbydischarging–aslongastheyknowwhentheyhavetobeavailablefordriving.Moreflexibilityinusagecanbeachievedbycontrollingforinstancecoolhousesorheathpumps.

Tocreatemoreflexibilityinstorage,decentralstorageinspecialfuelcellsisbecomingmorepopularalthoughtheyarenotusedatlargescaleyetduetohighcosts.AninterestingdevelopmenthereisforinstancetheTeslaPowerwall(Tesla,2017)whichoffersfuelcellsforhomes.Thisallowsindividualsto(almost)become100%poweredbyrenewableenergy.

Besidesthestoragecostofenergybeinghigh,thereisanotherimportantbarrierlimitingtheadoptionspeedofrenewableenergy.Thecurrentmarket,establishedpartiesandregulatoryframeworkonlyallowsconsumerswithsolarpanelstoproduceenergyforthesupplierthecustomerhasacontractwith.Whenoneproducesmorethanisusedinayeartheprosumercanselltheirenergytothesupplierbutnottoitsfamilyorneighbourswithoutsolarpanels.Sotheypaythefullamountfortheir

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energywhiletheprosumergetsasmalleramount.Alsomostenergysuppliersonlyofferfixedpricingsocompaniesorconsumersuseenergywhenevertheywant.Whenpricingwouldbeflexibletheyaremoreencouragedtouseenergywhensupplyishigh.

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5 BLOCKCHAINENERGYSOLUTIONS

Inthelastyearsseveralprojectsareapplyingblockchainintheirprojectcontributingtotheenergytransition.Thissectionanalysesallinitiativesfoundandclassifiestheminfivecategories.Furthermore,fourmorenewpossibilitiesforblockchainintheenergysectorareoutlined.Thissectiongivesanswertothesubquestion:


5.1 CURRENTINITIATIVES

Thechangingenergymarketdescribedintheprevioussectioncanutilizetheblockchaintechnologyatfullpower.Atthemomentalotofpartiesareinvolvedwhoallhavetheirowndatabaseseventhoughtheycommunicateondailybasis.Blockchaincancreateadecentralisedplatformatdifferentscaleseliminatingthirdparties,creatingafasternetworkwithifrequireddirect(financial)transactionsandhigh-qualitydata.Inthischapter30companiesenrichingtheirenergyinitiativeswithblockchainareoutlinedintable6.Thesecompanieshavebeenfoundbysearchingontheinternetforinitiativesandcompaniesworkingonblockchainintheenergysectorandhaveaspecificproduct.Thelistisnotcompletebutgivesageneraloverviewonhowandwhyblockchainisapplied.

InthetablethetermP2Pisused.P2Pstandsforpeertopeerandmeansthetransferorsaleofenergyfromoneconsumertotheotherandisadealthatisnotprovidedbyalargeparty.

TABLE6:BLOCKCHAINENERGYINITIATIVES

Company What,howandcurrentstate WhyblockchainAdptEVE(Freeelio)

WhatEnablingrooftopenabledhousestooptimizeelectricityusagebycreatingaself-learningsysteminGermany.SellingsurplusinalocalP2PmarketplaceHowSupportingEthereumandotherchainslikeSolarCoinCurrentstateIdea,companyfoundedOctober2016CountryGermany

CreatingadecentralledgersystemandsupportotherinitiativeslikeSolarCoins,GunstromjetonsandECOins.

BankymoonUsizo

WhatCrowdfundingutilitiesforneedyschoolsinAfricaHowEnablingschoolswithblockchainawaremeterssowhenacryptocurrencyiscomingin,theygetenergyorwaterCurrentstateSuccessfulpilotin2016,companyfoundedin2015.CountrySouth-Africa,globalfocus

EnablingfasttransactionsworldwideandenablingaIoTdevicetoimmediatelyactonblockchaintransactions

BCDCEcochain WhatBlockchainbasedinvestmenthubconnectinginvestorstorenewableenergyprojectsHowUsingBCDCtokens,smartcontractsandbitcoin

Executingfinancialtransactionsundercertainconditions

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CurrentstateIndevelopmentCountryWorldwide

BrooklynnMicrogrid

WhatCreatingamicrogridwithaP2Pmarketplace.TogetherwithLO3TransactivegridandConsensys.Goalistosavetransactionlossandcreatefairerprices.HowUsingEthereumandself-executingsmart-contractsCurrentstatePilotdonein2016-2017,waitingforrightlicensesnowCountryUnitedStates

Sharingproductionandconsumptiondataandautomaticallypay.Lateron,builddemandresponsehardware.

ConsenSys WhatBlockchaincompanydevelopingvarietyofapplicationstogetherwithpartners.WorkingtogetherwithLO3ontheBrooklynprojectandwithInnogyfortheCo-tricityprojectCurrentstateMultiplepilotprojectsCountryWorldwide

-

Co-tricity WhatMatchmakingofrenewableenergybetweenlocalproducersandconsumers.Intheendcreatingblockchainstoredprofiles.MatchingconsumptioncurvesHowSharingmeterdatatoDappswithsmartcontracts(mainlyC2B).ProjectbetweenInnogy&ConsensysCurrentstateProjectranin2016,currentstateandplansunknownCountryGermany

SharingmeterdataScalableTransparencyAutomatedprofiling

Dajie WhatPeertopeerenergytrading,redeemcarboncreditsHowLetIoTdevicescreateanetworkofnodesdoingtransactionsontheblockchainCurrentstateIdeaCountryWorldwide

DecentralenergytradingDecentralcarboncredits

Electron WhatRecordandmanageenergyconsumption,P2Ptrading,balancethegridefficiently,real-timeaccess,profilingHowEthereumCurrentstateUnderdevelopment,simulateddatademoCountryUnitedKingdom

QuicktransactionsTransparencyDistributedledger

ElectricChain WhatSavedataaboutsolarpanelproductionforresearch(climatechange,weather,pollution)availableforeveryone.AlsorewardingSolarCoins.HowOwnblockchainCurrentstateLookingforpartnersandinvolvedinthirteendifferentprojectsCountryWorldwide

DistributedeasytoaccessdatabaseRewardforsolarpanelproduction

Energy21 WhatDevelopedanewenergymarketmodelwithasmartP2Pmarket,matchingproductionandconsumptionperPTUandletmachinesactonsurplusordeficientenergy.

NoneedforthirdpartyTransparentplatformPrivacyandsecurecommunication

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HowUnknownCurrentstatePilotCountryTheNetherlands

Verylowcost-to-serve

EnergyWebFoundation

WhatNon-profitorganizationfocusedonacceleratingblockchaintechnologyintheenergysector.Researchanddeveloptogetherwithpartners.CurrentstateStartingcollaborationsanddoingresearch,noproductCountryWorldwide

-

GridSingularity WhatCompanywithenergymarketandblockchainprofessionalsdevelopingadecentralisedenergydatamanagementandexchangeplatformsupportingalllevels(balancing,trading,validation,real-timeinformationrecording).Thisshouldalsofacilitateenergydataanalysisandbenchmarking,smartgridmanagement,tradeofgreencertificates,investmentdecisionsandenergytradevalidationHowEthereumsmartcontractsCurrentstateUnderdevelopmentCountryAustria

TransparencyReal-timetransactionsRemovingthirdpartiesReducingcostReducingcomplexity

GrünStromJeton WhatEnergyconsumptiontokenissuedtoenergyconsumers.Whenacustomerconsumesattimeswithahighavailabilityofgreenenergytheconsumerreceivesgreentokens,otherwisegreytokens.HowSmartcontractsenablingtokensonEthereumCurrentstateLiveCountryGermany

Traceabletokens

Hanzenet WhatDutchcompanythatdevelopedanewDutchenergymodel.Localenergygridintheneighbourhoodthatcreatesprofilesanddividessurplusfromonehousetotheothers.Intheendalsoresponsedemandtechnology.HowUsingtheDisneyDragonchainforsmartmeterdatastorageandsmartcontractsCurrentstatePrototypeforsavingsmartmeterdataintheDisneyDragonchainCountryTheNetherlands

TransparencyTransactions

Innogy WhatCreatingasharingeconomywhereeveryonecanbuy,sellandownenergyresourcesina(local)P2Penergymarket.HowConnectingsmartmeterstotheblockchainandenableEthereumsmartcontracts,takingintoaccountweatherforecasts,topay/distributeenergyCurrentstatePilotCountryGermany

Simplifiedarchitectureanddatavisibleforeveryone.Shouldcreateinsightforeveryone.SuitableforIoTdevice.Acoincanrepresentenergy;1kWh=1coin

Ponton:Enerchain

WhatTradingflexibility,smartbalancingproducts,P2PmarketHowBringingtogether23companiesinterestedintheplatform;theirownEnerchainframework/chainCurrentstatePrototypeCountryGermany,butglobalfocus

Notransactionfees

46

PowerLedger WhatAllowrenewableenergyassetownerstoselltheirsurplusattheirownprice.SoP2PtradinginAustraliaHowPermissionedhybridblockchaindevelopedbyLedgerAssets,PoSCurrentstateSuccessfultrialfinishedend2016,currentlyunderdevelopmentCountryAustralia

TransparencyofwhereenergyisgeneratedEasytransactions

Powermatcher WhatDistributedenergyauctionforbalancingsupplyanddemand,nodetailsknown.HowDappbeingdevelopedusingEthereumsmartcontractsCurrentstateWorkinprogressCountryTheNetherlands

Payments

Qiwi WhatEnablingblockchainenergytransactionsinRussia.PaymentforenergyovertheblockchainHowUnknown,startedmay2017CurrentstateUnknownCountryRussia

Payments

Share&Charge WhatCreatingasharingeconomybymakingprivatechargingstationsforelectriccarspublic.PartnershipwithSlock.itandInnogy.HowEthereumsmartcontractswithanowntoken(worth1euro).Onecanpurchaseandearntokenbyprovidinganduseservices.CurrentstateAlmost12.000chargingpointsinGermanyareenabledwiththistechnologyCountryGermany

TransactionsIoTdevicesTokens

Smappee WhatCompanycreatingtechnologytomakeyourhomeenergyefficient(withoutblockchain)butnowalsosupportingSolarCoinwhenusershavesolarpanelsHowIoTdeviceCurrentstateInuseCountryBelgium,globalfocus

Cryptocurrency

Solarcoin WhatSpecialcryptocurrencywhichisrewardedforeveryMWhgeneratedbyasolarpanel.Peoplehavetosendtheelectricitybillatthemoment.HowTheirownchainandcoinCurrentstateInuse,improvingtheirwalletsandintegrationwithsolarpanelsCountryworldwide

Cryptocurrency

Solether WhatAutonomouselectricalenergyentities.Asingle-boardcomputerischeckinganEthereumaddressandwhenonepays,heorshegetspowerthroughanUSBportproducedbyadirectconnectedsolarpanel.HowRunningaEthereumnodeandcheckingonespecificaccountbalanceCurrentstateWorkingopensourceprototypeCountryOnlineproject

InternetofThingsintegrationCryptocurrency

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Stedin WhatDutchRGOworkingtogetherwithEWFtolookhowblockchaincanbeappliedintheenergysectorHowAlloptionsarestillopenCurrentstateIdeaCountryTheNetherlands

SmartcontractsPayments

StromDAO WhatADAOisadecentralizedautonomousorganization.ThisDAOshouldoperateautomaticallybycreatingalocalgrid,fullyautomatedtransactionsthroughsmartcontractsandbalancing.Whenlocalgridisnotefficient;useenergyexchangemarkets.HowSmartcontractsinEthereumCurrentstateOpensourceimplementationavailableforsimulation,availableandstillunderdevelopmentforimprovementCountryGermany

SmartcontractsTransactionsDAO

Sunexchange WhatAllowpeopletoinvestinsolarpanelsandleasethemtoschoolsandcompaniesinthirdworldcountries.Projectsinthesecountriesarecrowdfundedandonecanbuysolarpanelswithfiatcurrencyorcryptocurrency.Oneisrewardedincryptocurrencies.HowPayandrewardinBitcoinCurrentstateInuseCountryFoundedinSouth-Africa,globalfocus

Transparency

TenneT WhatTenneTworkingtogetherwithVandebroninordertobalancethegridoverblockchain.Byusingblockchaintheywanttousecapacityofelectriccarsandhouseholdbatteries.HowHyperledgerFabricCurrentstateIdeaCountryTheNetherlands

TransparencyFlexibility

TransactiveGrid(LO3)

WhatTheTransActiveGridisaprojectfromLO3andoffersanopenenergyplatformforreal-timemeteringofgenerationandusage.EnablingP2Penergytransactions.IsappliedintheBrooklynproject.HowTheirownTAGproductCurrentstateDemoandsuccessfulPoCCountryUnitedStates

TransparencyAuditableNon-repudiable

Vector WhatP2PtradinginNewZealandbyapplyingandworkingtogetherwithPowerLedgerHowApplyingthePowerLedgerconceptCurrentstateTrialCountryNewZealand

TransparencyofwhereenergyisgeneratedEasytransactions

Voltmarkets WhatOpentradingplatformforrenewableenergy.Everythingsavedintheblockchainenablestoverifytheresource.HowSmartcontractsinEthereumCurrentstateConcept CountryUnitedStates

TransparencyTrackingenergyassets

WienEnergie WhatUsingtheBTLInterbitplatformWienEnergieusesblockchainmainlytostreamlineprocessesandto

Reducingtransactioncost

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createasavedistributedplatformagainstcyberthreats.HowUnknownCurrentstateSuccessfulpilot,lookingformoreparticipantsfordevelopmentCountryAustralia

Distributedplatform

ZF(CareWallet) Whatablockchain-basedpaymentsystemforcars.Thecarcanautomaticallypayforitsenergyusage,parkingandtoll.DoesnotfocusonenergysolelybutcreatesanopenintegratedsystemHowUnknownCurrentstateIdeaCountryGermany

DistributedledgerTransparency

5.2 LESSONSLEARNED

Largeestablishedenergycompaniesaswellasnewinitiativesandstart-upsaretryingtousetheblockchain.Theinitiativesareatdifferentlevelsandsoaretheblockchainimplementations.MostofthemarestillinpilotphaseandmostofthemarebasedonEthereumsinceitisthemostmature,accessibleblockchainandenablingsmartcontracts.

Wecanconcludethattherearealotofideasandpilotstryingtoapplyblockchain.Withtheenergytransitiontakingplaceblockchaincansolvealotofchallengesandprovidesolutionsinalotofdifferentways.Theinitiativesareactiveinthefollowing:

• Savingdata(frome.g.smartmeters)totheblockchain• P2Ptradingofrenewableenergy• Payforelectricityinreal-time(billingprocessoverblockchain)• Creatingaflexibleenergygrid• Balancethegrid• Creatingmicrogrids• Rewards(aspecialcryptocurrency)forgenerationofrenewableenergy• Guaranteeoforigin(greenand/orlocal)

Thereasonforimplementationofablockchainaremainly:

• Immersescalability(usingoff-chaintransactions)• Directaccesstoimmutabledata• Directaccesstoaccounts(holdingmoney)throughsmartcontracts• Traceabilityofenergybycreatingtransparentdeals• Reducingcost• Eliminatingthirdpartiesintheory(notalwaysallowedyet)• CreatinganetworkwithIoTdevices

Remarkableisthatblockchaincanbeappliedinalotofdifferentways.ButstillwhenforinstanceimplementingblockchainforP2Ptradingonecanapplyacoinindifferentways;acoincanrepresent1kWhor1eurooritmightfluctuateinvalueandthereisanexchangetotradeeurosforacoin.Almost

49

alltypesofimplementationsofblockchaincanalsobedonetogetherandworktogether.WhenalldataissavedintheblockchainandP2Ptradinghappensovertheblockchain,onecanalsobalancethegridwithdatafromtheblockchainandinordertodosobycreatingaflexiblegridovertheblockchainbymakingdevicesblockchainenabled.

AdvantagesachievedbyimplementingblockchainmightalsobeachievedwithothertechnologieslikeanAPIandcentralizeddatabase.However,multipleoftheblockchainadvantagesareinthepastnotachievedbyanyothertechnology.Atthemomentthereisnota100%successful–fullyoperational–blockchaininitiativeintheenergysector.Thisismainlyduetothefactthattheblockchaintechnologyisdevelopingquicklyandstillhastoreachmaturityandthefactthattheenergymarketiscomplexwithalotofbarriers.Therearealotofimplementationspossibleandduetorestrictionstheonesapplicableatsmallscale,forinstanceaneighbourhoodorcity,aretheonesmostsuccessfulintheshortterm.

Wheretransparencyisoftengivenasadvantage,intheenergysectorthismightbeadisadvantage.Sincesmallaswellaslargeconsumersmightnotappreciatetheirusageisvisibleforeveryonebecauseonecandeterminewhenasmallcustomerisonholidayorforacompanyhowenvironmentallyawaretheyreallyare.However,thiscanbesolvedbyspecificblockchainalgorithmsalreadyimplementedintwopopularcryptocurrencies(MoneroandZcash).ThetransactionspeedproblemissolvedbyRipple,scalabilityintheamountoftransactionbyoff-chaintransactionsandscalabilityintotalchainsizebysharding(splittingthedatabaseoverdifferentnodes).However,cybersecurityconcernsstillexistandattackersowning51%computationalpowerorstakearestillabletogeneratefraudulenttransactionsinmostblockchainnetworks.Sosmall,privateblockchainimplementationsareweakandaneasytargetforhackers.

5.3 CLASSIFICATION

Fromallinitiativesandtheconclusionsderivedfromthemasoutlinedinsection5.2,aclassificationhasbeenmadetogrouptheinitiativessincethereisalargeoverlapintheirgoals.Thesecategoriesarenotmutuallyexclusive,soaninitiativecanhavemultipleofthesegoals.Inthenextsectiontheseinitiativesaremappedontotheclassificationmade.Inthesections5.3.2till5.3.6eachcategoryisexplainedinmoredetailandinteresting,ifpossiblestate-of-the-art,initiativesarehighlighted.Insection5.4thisthesisprovidesevenfourmorepossibilitiesforapplyingblockchainwithintheenergysection.Thefivetypesofcommongoalsintheinitiativesthathavebeenfoundaredefinedasfollows:

Energytrading:creatingadecentralizedmarketplatformwhichallowsforpeertopeertradingbetweenprosumers

Localmarkets:havingafocusoncreatingsmallenergymarketsatneighborhoodormunicipalitylevel

Rewardingcrypto:uniquecryptocurrencycoinsarerewardedforthesupplyofrenewableenergy

Pay/receivecrypto:enablingtheusertopayforhisenergy,outsidehishome,withcryptocurrencyandonthereceiversidesharingyourenergysupplyandreceivecryptocurrency

Gridbalancing:balancethegridbymatchingsupplyanddemandanduseautomatedtechniquesinordertodoso

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5.3.1 MAPPING

Table7mapstheinitiativesthatwerefoundandexplainedintable6ontotheclassification.

TABLE7:MAPPINGINITIATIVESONTOCLASSIFICATION

Company Datasource

Energytrading

Localm

arkets

Rewardingcrypto

Pay/receivecrypto

Grid

balancing

AdptEVEFreeeloio Website&Slides BankymoonUsizo bankymoon.co.za BCDCEcoChain bcdc.online BrooklynnMicrogrid lo3energy.com Co-tricity Consensysslides Conjoule conjoule.de Dajie dajie.eu Electron electron.org.uk Greeneum greeneum.net GridSingularity gridsingularity.com Grid+ Whitepaper&Demo GrunStromJeton zoernert.github.io Hanzenet Interview&Slides Hive Whitepaperv1.0 Innogy innogy.com Lumenaza lumenaza.de NRGCoin Multiplepapers OneUp Interview PontonEnerChain enerchain.ponton.de PowerLedger Whitepaperv3.0 Qiwi News Scanergy scanergy-project.eu Share&Charge shareandcharge.com Smappee smappee.com Solarcoin solarcoin.org Solether solether.mkvd.net Stedin+Energy21 WhitepaperMay'17 StromDAO stromdao.de&Slides Sunexchange thesunexchange.com SunContract WhitepaperApril'17

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TenneT tennet.eu Vector vector.co.nz Voltmarkets voltmarkets.com WePower.Network Whitepaperv0.7 WienEnergie wienerstadtwerke.at

5.3.2 ENERGYTRADING

Mostinitiativesaredevelopingadistributedenergytradingplatformontheblockchain.Sincetheblockchaineliminatesthirdpartiesandsoenablespeertopeertrading,thisperfectlyfitstheenergytransition.Thisisalsoaveryinterestingdevelopmentintheenergytransitionsincesupplyismoredecentralizedwhereasitwasfirstcentralizedthroughthegenerationofenergyfromnonrenewablesources.Prosumersnowgeneratetheirownenergybutwanttosellsurplus.Intoday’senergymarketandframeworksitisnotpossibletomakedealsbetweenconsumers.Theonlyoptionistosellittoyourenergysupplierwhichdeterminesthepriceyouget.IntheNetherlandsmultipleregulationscreateapositivepricefortheconsumers.Butthisregulationisonlyactivetill2023whichmeansafterwardsconsumerswillgetaverylowpricefortheirsurplus.

Movementsintheenergytransitionthereforecreatesaperfectsuitableenvironmentfortheapplianceofblockchain.Intheenergytradingcategorythereisstillasignificantdifferencebetweeneachinitiatives’approach.Thereforetheapproachesandcapabilitiesoffiveinitiativeswithsignificantdifferenceswillbeexplainedinthenextsubsections.Theinitiativesareallcapableofthefollowing:

• Savingdatafromsmartmeterstotheblockchain

• P2Ptradingofrenewableenergy

• Payforelectricityinreal-time(billingprocessoverblockchain)

5.3.2.1 POWERLEDGER

PowerLedgeroffersaplatformthatofferstrustless,transparentandinteroperableenergytradingwithasuiteofapplications(PowerLedger,2017).Inthisplatformtheyhavetheirowncoin,calledthePowerLedgerToken(POWR).Thishigh-leveltokensareusedassoftwarelicensepricingandcanbetradedforSparkzwhichisthecointhatisusedtotradeenergy.AfterdoingsomepilotsinWesternAustraliain2016theyexpandedtheirplatformin2017andheldaninvestmentroundintheendof2017tostartthedevelopmentofmoreoftheirapplications.Theapplicationlandscapeexistsatthemomentofthefollowing:

• P2Ptrading:allowstoletconsumerstradeelectricitywithoneanotherandpayandsettleinreal-time.Itisalsopossibletoselectyourenergysource,tradewithneighborsandreceivemoneyforsurplus.Inaregulatedenvironment,therehastobeanenergysupplierorretailerthatoffersthisservicestocustomers.

• NEO-retailer:aretailerwhichsupportstheP2Ptradingplatformthroughsmartdemandandsupplymanagement

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• Microgrid/Embeddednetworkoperator:enablesmeteringintheblockchainandmanagesthegridthroughbigdataanalysis

• Wholesalemarketsettlement:applicationthattakescareofthereconciliationandsettelementprocessofwholesaleenergymarketplaces

• AutonomousAssetmanagement:allowsforsharedownershipofrenewableenergyassetsandtradingoftheownership.Itisabletobuyandsellelectricityanddistributeincomeovertheowners.

• Distributedmarketmanagement:afullyenabledblockchainmarketandnetwork,includingloadbalancing,frequencymanagement,demandsideresponseanddemandsideandloadmanagement

• Electricvehicles:settlementofEVchargepointsontheblockchainincludinguseridentification

• Powerport:enableEVstodischargewhenrequiredtosupplytothegrid• Carbontrading:tradecarboncreditsandcertificateswithsmartcontracts• Transmissionexchange:expandtothehigh-voltagelevelnetworkandprovidethemwithreal-

timemeterdata,transactionsettlementandnetworkloadbalancing

Allapplicationshavetobestilldevelopedortested,excepttheP2Ptradingwhichisalsothemostinterestinginthisresearch.InmostfirstworldcountriestherehastobeanapplicationhostthatadoptsthisPowerLedgerservicetooffertheP2Papplicationtoconsumerssincethereisaregulatoryframework.Withinthisframeworkthepartiesmakesurethenetworkisinbalanceandcostsaresplitbetweentheparties.IntheNetherlandsanenergysuppliercantaketheroleofapplicationhost.TheapplicationhosthastoprovidetheconsumerswithSparkztokenswhichcanbeboughtwithfiatcurrency.Theapplicationhostisalsoresponsibleforbuyingelectricityattheenergymarketsandhavingabalanceresponsibleparty.

PowerLedgerusesahybridpublicandconsortiumblockchainwhicharebothEthereumblockchains.ThepubliconeisusedforPOWRtokenswhiletheconsortiumblockchain(calledEcoChain)isusedtohandlethehightransactionvolumeinafee-lesswaywithaproofofstakealgorithm.

FIGURE19:ARCHITECTUREWITHANDWITHOUTAPPLICATIONHOST(POWERLEDGER,2017)

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TheirP2Pproductisofferedaswhitelabelservicewhichregulatesthebillingandinvoiceprocessandoffersprepaidenergyforconsumers.Intheapplicationconsumerscanseetheirusageandenergyinflowsandoutflows.However,inameetingwithoneoftheemployeesofPowerLedgeritseemedtheyassumedallsmartmetersareWi-FienabledbutinthiscaseintheNetherlands,asmartmeterprovidedbyanetworkoperatorisneverWi-Fienabled.ToconnectaconsumertotheirplatformadevicehastobeconnectedtothesmartmetertopublishmetervaluesinstantlytothePowerLedgerplatform.

5.3.2.2 GRID+

Grid+isusingadeviceagentthatisconnectedtoasmartmeterandalsohasitsowncoins,theBOLTtokens(Consensys,2017).Thedeviceagentisholdingthetokensinasafewaywhereonlytheownerhastheprivatekeyandusesthemtopayforelectricityattheenergymarkets.Itcantradeonitsownattheday-aheadandreal-timemarketsbycreatingandoptimizingitsownalgorithm.Itpredictsusageforthenextdayandnexthourdependingonhistoricalmetervaluesandbuystheamountofenergyneeded.Inthiswayflexiblepricesaregiventotheuserwithprepaidenergy.

Anotherfeatureisthattheywanttododemandresponsemanagementbycontrollingdevicesinahousethroughtheuseragent.Inthiswayitcanactivateordeactivatedevicesonbehalfofthesystemoperatorsorwhenmarketpricesareloworhigh.Inthefuturecapabilitieswillbeenhancedwithtrackingofpeopleinthehouse.

Grid+isusingthepublicEthereumblockchainwithmultipleinstancesofsmartcontracts.DeviceagentssetupapaymentchannelwiththecentralGrid+smartcontract(socalledKarabraxos)toexchangeBOLTtokens.Itisunknownhowthissmartcontractreallybuysenergyaccordingtothecountry’sregulatoryframework.IntheNetherlands,itwouldalsostillneedabalanceresponsiblepartywhichiscreatinge-programsforthenextday.Grid+isfocusingontheUnitedStatesandtheirwhitepaperdoesnotcollaborateonthisrole.Thewhitepapersstatesthat50%ofaretailerscostarenotassociatedwiththepurchaseofwholesaleenergyandsooffersacostreductionclosetothis.

FIGURE20:WORKFLOWGRID+AGENT(CONSENSYS,2017)

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5.3.2.3 WEPOWER.NETWORK

TheWePowersolutionfocussesonenergytradingaswellasinvestmentsforrenewableenergyprojects(WePower,2017).Theirmainfocusisthelatter,sincetheyfoundtheenergytransitionwasgoingtooslowduetoalackofcapitalsincefinancingisgoingdown.Withintheirplatformtheywanttosupportrenewableenergydevelopersbyprovidingconsumersdirectaccesstofutureprojects.Developerscansellenergyfromfutureprojectsupfronttoconsumerswhocanuseitlateronorsellit.AccordingtothewhitepapertheIRRis17-20%forinvestors.

Theenergyfromthefuturerenewableenergyprojectistokenized,soforeverysuppliedkWhonecoinortokenisproducedontheplatform.Thesetokensaredistributedovertheinvestorsaccordingtotheirshare.Onlyapartofthepredictedenergysupplyissoldupfrontduetouncertainty.Italsofacilitatesaconnectionwiththeenergymarketstosellenergywhenthereisnotenoughdemandonitsownplatformorbuyenergywhenthereisnotenoughsupply.

WePowerisusingtheEthereumblockchainwithasetofsmartcontractstomakeinvestmentstructuresclearandverifiable.ItisunknownhowpricingstructureswillworkandhowinvestorsshouldgainsuchahighIRR.Especiallysincetimeisaveryimportantroleinenergypricesitwouldbeimportanttoknowwhichpriceswillbeusedwhenbuyingenergyupfrontforsuchlargetimeframes.Withenergypricesfromlargesolarandwindparkssometimesbecomingnegative,theWePowerplatformwillgiveonenegativereturnswhenoneusesenergyatthesemoments.

5.3.2.4 SUNCONTRACT

TheprimaryobjectiveofSuncontractistocreateapeertopeertradingpool(SunContract,2017)whereonecanbuyandsellenergywithSuncontractTokens(SNC).PeoplecantradefiatcurrencytoSNCandregisterthemselvesinthepoolwithamobileapp.ThesameholdsforproducerswhichcansupplythepoolswithenergyandgetSNCtokensperkWh.Producerandconsumercandeterminebidandaskingpricesandatradingalgorithminsmartcontractswilltakecareofthematchingandsettlement.TheirfirststepistoimplementthisinSloveniaandafterwardsexpandtoothercountriesandtoalsotakecareofloadbalancinganddemandresponseservices.

TheSuncontractswhitepaperdoesnotstateanythingabouthowitwillgetinformationfromthemeters.Theirwhitepapersuggestsconsumersandproductsonlyhavetodownloadanappbutitisunknownhowtheywillretrievemetervaluesandiftheytaketheroleofanenergysupplierorbalanceresponsiblepartyintheenergymarkets.ThepoolisusingasetofsmartcontractsontheEthereumblockchainforsettlement.

5.3.2.5 GREENEUM

Greeneumwantstoofferadecentralizedsustainableenergymarketwithreal-timeenergytransactions(Greeneum,2017).Theirmarketplaceleveragessmartcontractsandusesartificialintelligence(AI)andmachinelearningtogeneratereal-timepredictionsforsupplyanddemand.WiththeirGREENERC-20tokenspeoplecantradepeertopeerwithoutfees.Furthermore,greencertificatesandcarboncreditsareprovidedtoguaranteepeopleuserenewableenergy.GreeneumisusingtheEthereumblockchainanddidnotreleaseawhitepaperyet.

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FIGURE21:GREENEUMLANDSCAPE(GREENEUM,2017)

5.3.2.6 NRGCOIN

NRGCoindistinguishesitselffromotherplatformssinceitwascreatedinascientificenvironment(Mihaylov,Radulescu,Razo-Zapata,&Nowe,2017)andnotacommercialonewhichgivesarealisticviewofthefeasibilityofsuchconceptsandresearchpaperswhichalsonamethedisadvantagesordifficultieswhenusingblockchainenabledenergytrading.IntheNRGcoinconceptonepays1NRGcoinfor1kWhofgreenenergytoasmartcontract.ThesmartcontractpaysthegridfeesandtaxestotheDSO.ProsumerscanalsoreceiveNRGcoinsforeverykWhinjectedintotheplatform.ThefiatvalueofaNRGcoinshouldbearoundtheretailpriceofonekWh.TheresearchpapersnorwebsitedonotstateanythingabouttheroleNRGcoinshouldtakeintheenergymarketsandwhoshouldtakecareaboutbalancingthegrid.

Experienceddisadvantagesaremainlytheblockchaintechnologysinceitisrapidlydevelopingitself.Also,regulationoftheblockchaintechnologyandcryptocurrenciesisstillunclearsoadaptionisslow.TheNRGcoinitselfstillhastobeworkedoutproperlytoo,liketheeconomicmodel,security,dataprivacyandtamperprevention.

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FIGURE22:PARTIESINTHENRGCOINNETWORK(MIHAYLOVETAL,2017)

5.3.3 LOCALMARKETS

Allinitiativescreatinglocalmarketsarealsoapplyingenergytradingbutonsmallerscales.Thisisfrompoolsof10householdstillmunicipalitylevel(tenthousandofhouseholds).Thisstimulatestheusageoflocalenergyusageandsocreatesamoredecentralizedenergygrid.Inthenextsubsections,themostimportantcharacteristicsofthemostextendedinitiativeswillbehighlighted.

5.3.3.1 STEDIN&ENERGY21

Stedin,aDutchregionalgridoperatorandEnergy21,acompanywithenergyexpertise,developedamodelforanewenergymarketwhichshouldsolvethenegativeeffectsoftheenergytransition(Stedin&Energy21,2017).Intheirmarketmodelblockchain,wasawaytosolvetheproblemandtheydidnotstartfromthepointofviewthattheywantedtodosomethingwithblockchain,apointofviewyouoftenseewithincompanies.Itdistinguishesthemselvesfromotherinitiativessincetheywanttocreateanopenmarketinsteadofpeertopeerdeals.Theirmaingoalistolowernetworkcongestionandtoreducepricesforcustomers.

Thisshouldbeachievedbycreatinglocalmarketsingeographicareas.Intheselocalmarketstheenergyshouldbecheaperthanthewholesalemarketforthewholecountry.Thisshouldbeachievedbychangingthelawandcreatetaxreductions,thesameashappenedwiththe‘postcoderoos’projects.Thepostcoderoosalsogivestaxreductionsforlocalenergy,butyouhavetoinvestintheenergysourcetogetthisreduction.Ifthereisnotaxreductionitwillbedifficulttomakethesmallerlocalmarketsmoreattractivethanthewholesalemarket.Thelocalmarketsshouldbeconnectedtothewholesalemarketincasethereisasurplusorshortcomingofenergyinthelocalmarket.Agatewaywillbebetweenthelocalandwholesalemarketstoaddthetaxfeeandmakesurethisis

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collected.Inthelocalmarketsenergywillbesoldwithauctionsandthesealsohappenintheblockchain.

Ademowasbuilttodemonstratethemodelbyusingaconsortiumblockchain.Atthemoment(September2017)theyarediscussingthemarketmodelwithallpartiesinvolvedintheenergymarkettogetfeedbackandtofindoutifitwouldbeusefultoimplementsuchamodel.

FIGURE23:ARCHITECTUREOFTHELOCALANDWHOLESALEMARKETS(STEDIN&ENERGY21,2017)

5.3.3.2 JOULIETTE

TheJouliette(Jouliette,2017)ismorethanjustanenergytradingconceptsinceitshouldalsobeusedasunitfortradingofoff-blockchainworkoritems.Butinthefirststepthegoalistouseittosettletheenergyofaprivategridbehindthepublicgrid.ThisisdoneintheCeuvel(Amsterdam,Netherlands)andisshowninfigure24.TheJouliettecoinisusedasunitwhichisgainbyprosumersforeverykWhproduced.ConsumerspaywiththeJouliettecoinfortheirenergy.SincethisisaprivategridtheCeuvelcouldbuildtheirownenergymeterswhicharealreadyblockchainenabled.Withaprivateblockchain,basedonmultichain,theyexperimentwiththissolution.

ThelaunchwasinSeptember2017andtheywanttocreateacommunitywheretheJouliettecoincanalsobetradedforgoodsorservice.FornowthetotalenergybilltothepublicgridissplitaccordingtotheamountofJouliettethatisholdbyeachhouseboatandthenthebalancesarereseteachyear.ItisthefirstannouncedalreadyhappeningblockchainenergytradingintheNetherlands.

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FIGURE24:MAPOFTHECEUVEL

5.3.3.3 HANZENET

Hanzenet(Hanzenet,2017)wantstointroducetheHanze,anownregionalcoinjustlikeJouliette.ThisinitiativeisinitsbeginphaseinDeventer,theNetherlands.ThedifferencewithJoulietteisthatallhousesareconnectedtothepublicgridsoregulationsdiffer.HanzenetisusingaforkoftheDragonchainwhichisdevelopedbyDisneybutisextendedalotbyHanzenetsoitnowalsosupportssmartcontracts.Atthecurrentmoment,August2017,theyaresavingthemetervaluesfromtenhousesintheirblockchain.ThishappensindirectlywiththeP4dataretrievedfromEDSNsotheyarealwaysonedaybehind.Theirfuturevisionistocreateateverysmartmeterablockchainnodewhichreadsthemetervaluesandpublishthemintheblockchain.

Theywanttocreatesmallclustersoftenhousesgeographicallyclosetoeachother,whotradewitheachother.Allclustersshouldbeclosetoself-efficient.InthefirstphasesallhousesshouldbestillconnectedtoaregularenergysupplierbutinthefuturetheywanttobuyshortcomingsorsellsurplusfromandtotheAPX.Itisunknownhowtheywanttodothiswithintheregulatoryframeworksincesmallconsumersarerequiredtohaveanenergysupplier.Theirmaingoalistocreateaguaranteeoforiginandtocreateself-sufficientlocalclusters.TheHanzeascoinshouldbetheadministrationfortheenergyusageandsoconsumersneedtobuythese.Thefuturevisionistobalancethegridatmicrolevelandcreatealsoademandresponsesystemonthislevel.

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FIGURE25:HANZENETFUTUREVISION(HANZENET,2017)

5.3.4 REWARDINGCRYPTO

Therewardingcryptocategorywasdescribedas‘uniquecryptocurrencycoinsarerewardedforthesupplyofrenewableenergy’.Thisprocessisprettystraightforwardsinceinitiativesinthiscategoryhavetheirownblockchainandifyoucanproveyouhavegeneratedrenewableenergyyougetacertainamountofthecryptocurrencyusedontheinitiatives’blockchain.Twosuchinitiativeswillbeshortlyanalyzed.

Solarcoinisthebiggestinthiscategoryandiswidelyused,theyaregrantingsolarcoinsin44countries.TheystartedwithanoffchainprocesswhereprosumerscouldsendtheirenergybillfromtheirenergysuppliertoSolarcoinandsoreceiveSolarcoinaccordingtotheirsupply.Solarcoinisnowfocusingonintegrationwithsolarinstallers,sosmallIoTdevicesimplementedinthesolarpanelsshouldsubmittheirsupplyandretrievetheSolarcoinsfortheprosumer.ItisalreadypossibletoconnectwithsmartmeterAPIsanditisalsointegratedinSmappee,acompanydevelopingsmartenergydevicesforyourhome.

GrünStromJetonisrewarding‘GrünstromTokens’and‘Graustromtokens’forthekindofenergyyouused.Theyhavenobusinessmodelandfocusmoreontheproofofyourgreenenergyusage.Sincetheystatethatitshouldbepossibletotradethesetokensitcanbeseenassubstitutefromgreencertificates.

Amainissueinthiscategoryisthatitisdifficulttocreatevaluefornotpopularcryptocurrencies.Theyaregainasby-productfromproducingenergyandsomoreorlessfree.However,theyareaproofofthegenerationoruseofrenewableenergyandso,canbeseenassubstitutefromgreencertificateswhichhavedecentvalue.However,inthecurrentenergymarketsonewillgetthetraditionalgreencertificatesandaSolarcoinorGrünstromTokens.Anaveragehousewithasolarpanelinstallationof3kWpwillsupplyabout2550kWh.Atthemoment,onegets1Solarcoinper1MWhandaSolarcoinisworth$0.28sothegainis$0.71yearly.Noneoftheinitiativesstatedtheywanttosubstitutegreencertificates.

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5.3.5 PAY/RECEIVECRYPTO

Initiativesinthissectorusecryptocurrencyaspaymentmethodtoenabletheflowofenergythroughanenergyconnection.Thiscanbeusedatpublicplaces,asconsumertoshareyourenergyortopaysomeoneelse’selectricitybill.

Share&Chargeisthelargestinitiativeinthiscategoryfacilitatingmorethan1200EVchargingstationswithcryptocurrencyaspaymentmethod.Itcreatesthepossibilitytomakeprivatechargingstationsatpeoples’homepublicforeveryoneandtogetpaidforthedeliveredelectricity.UsersdonotnoticethatitisusingtheEthereumblockchainsinceallbalancesareshowninafiatcurrency.TheprojectisnowexpandingtoEuropeandmightbeveryimportantwhenEVsaleshighlyincrease.Fewerpublicchargestationswillberequired.

SunExchangeisacompanywhereonecaninvestinsolarpanelsonthesunniestplacesonearthandpaytheirinvestmentincryptocurrencyandalsogettheirreturnpaidincryptocurrency.Thesolarpanelswillgenerateincomefor20yearsandthesepanelswillbeplacedindevelopingcountries.Bankymoon’sUsizoisanothercrowdfundingprojectbutisfocusingoncrowdfundingtheelectricitybillforschools.Metersintheseschoolsareblockchainawareandcanrespondtopaymentsreceived.Inthisway,youaresureyourpaymentsarereallyusedtofacilitateschools.

5.3.6 GRIDBALANCING

Asexplainedinsection3.1thegridalwayshastobeinbalance.Supplyhastobethesameasdemandandthisismeasuredbythefrequencyinthegridwhichshouldbearound50hertzandinpracticeisallowedtobebetween49.9and50.1Hz.ThereforeeachconnectiontothegridhasabalanceresponsiblepartythatsendspredictionsforthenextdaytoTenneTthroughane-program.TenneTwillbalancethenetduringthedayandpartiesdeviatingfromtheire-programwillgetfinancialsanctions.TenneTisusingregulatedreservecapacityandifrequiredemergencypowerthroughoutthedaytobalancethegrid.

Largeconsumerswithadirectgridconnectionandpartiessupplyingmorethan60MWarerequiredtoprovidereservecapacity.FortheemergencypowerTenneTcontractspartieswhogetpaidyearly,eveniftheyhavenotacted.DuetothehighershareofrenewableenergyTenneTislookingfornewsolutionssincefluctuationsindemandandsupplyarehigher(TenneT,2016).TheycooperatewithVandebron,anenergysupplier,tocreateflexiblechargingforelectricvehicles.Inapilot,theypromiseconsumers200till300eurosdiscountayearforjoining(Vandebron,2017).YourEVwillbeusedtouseandsupplyenergytoandfromthegridwhendemandedbyTenneT.IBMisalsocooperating,probablybyprovidingtheirhyperledgerblockchainsolution.Inthiscaseblockchaincanprovideatransparentdecentralsolutionforallpartiesinvolvedinthisprojectandcanrewardconsumers.

InPowerLedger’swhitepaper,theyalsodescribehowelectricvehicles’chargestationswillalsobefullyblockchainenabled.TheplatformsapplicationpowerportshouldbeusedtoalsoletEVsdischargetosupplyenergybacktothegrid.TheGrid+whitepaperalsostatestheirdeviceagentshouldbeusedinademandresponseenvironmentwhereitcancontrolthermostatorTeslachargerstobalancethegridandbydoingso,createrevenuefortheconsumer.

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ApublicationbytheTUDeflt(Hijgenaar,2017),incollaborationwithCGI,describesalsohowblockchaincanbeusedtogetherwithelectricvehiclestobalancethegrid.SimulationswithreallifesituationsusinganalgorithmforpeakshavingandshiftingtoletEVs(dis)chargeshowsthatcostforthechargesessionisbelowmarkettariffs.TheTendermintblockchainplatformisusedtosecurelystoretradedataandshouldgivetransparencyforconsumersandgridoperatorsfortradedataandbilling.

Inthefuture,whenbatteriesarecheaperanddevicescanbeeasilycontrolledfromdistance,itwillbepossibletousetheseaswellforgridbalancinginsteadofonlyelectricvehicles.Blockchaincanoffer,besidesadecentralizedcommunicationprotocol,rewardsforusersdirectlywithcryptocurrencywhentheyofferflexibility.

5.4 MOREOPPORTUNITIES

Remarkablefrommostinitiativesisthattheymissaclearvisiononhowtheywanttoimplementtheirsolutionsinanenvironmentwhere,inmostcountries,astrictregulatoryframeworkisinplace.Thisisdonesincethegridshouldbeinbalancebutthereshouldalsobeaderegulatedmarkettoensurefairpricesforconsumers.Theclassificationmadeinsection5.3doesnotmeantherearenomorepossibilitieswithblockchaininthesmartgridandenergymarkets.Inthissectionfourmorepropositionsarediscussedwhereblockchaincouldaddvalueintheenergysectorandmarkets.

5.4.1 DEMANDRESPONSECOMMUNICATION

Demandresponsecommunicationhappenstokeepthegridinbalanceorwithothergoals.So,anexternaltriggerincreasesordecreasestheenergydemandfromspecificdevices.Thiscategoryiscloseto‘gridbalancing’butwecandistinguishbetweengridbalancinganddemandresponsesincegridbalancingmightbeonepartyresponsibletobalancethegridwhereasdemandresponsemighthappenbymultiplepartiesonthesamegridwithadifferentgoalthengridbalancing.Forinstance,forgridcongestionmanagementorinordertoletdevicesrespondtothemarketpricesofenergy.TheIOTAtangleisfocusingonmachinetomachineinteractionandallowsforzerovaluetransactionsandso,couldbemostsuitableinthiscase.

5.4.2 REAL-TIMEGOO

CurrentlyGoO’sarerewardedonyearlybasedandthirdpartiesarecreatedlikeCertiQinordertodistributethecertificates.Sothishappensonyearlyaggregationandgreyenergycanbemadegreenbybuyingcertificates.ThebuyerisresponsibleforcrossingoutkWhoncertificateswhentheyhavesoldenergywithagreenlabel.Thesocietyismissingatransparent,decentralizedandhonestsystem.Bypublishingmeterdatafromrenewableenergysourcesintheblockchain,onecouldgeneratereal-timeGoOaggregatedonPTUlevelinsteadofyearly.Thisfitsrealitybestandismostfairtouseforeveryone.Energysupplierssellinggreenenergyhavetomakemoreeffortindeliveringgreenenergy24hoursadaybutcangiveanhonestguarantee,insteadofaggregatingalldataandusinga

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nontransparentsystem.Whenintroducingsuchasystem,oneshouldlookintohowtomaketheconversionfromthecurrentcertificatesystemtoareal-timeGoOsystemontheblockchain.Ifcertificatesarestillrewarded,theseshouldprobablynotbeused.

5.4.3 SHARINGMETERDATA

Asshowninfigure11,thereare9partiesinvolvedintheenergymarkets.Butevenmorepartiesareinvolvedwhenyouincludeadministrativeprocesses.Forinstance,apartylikeEDSN(EnergyDataServicesNetherlands)isretrievingallP4portdataoverGPRSandsavesthisinadatabase.Independentservicesproviders(ODA’s)cangetaccesstothisdatawhenacustomerhassignedacontract.Thisprocessiscomplex,non-transparentanddeliveringolddata.ThecustomeralsohasnocontroloftheirprivacysinceitcannotverifyifforexampleanODAhasstoppedreadinghisdataontheirrequest.Anewplatformbasedontheblockchaintechnologycouldprovideatransparentandsafesystemforallpartiesinvolvedintheenergymarkets,preferablybasedonreal-timeP1data.

5.4.4 MULTIPLESUPPLIERS

Havingmultipleenergysuppliersatoneenergyconnectionisbecomingapopularconceptintheenergytransition.TheACMhascreatedasystemwherethisispossiblein2018intheNetherlands,howeveritrequirestheinstallationofasecondmeter.Besidesthepracticalimplications,timeittakestoenrollsuchasystemandcosts,itdoesnotofferaflexiblesystem.EnergysuppliersarestillassignedforthelongertermintheC-AR.BlockchainhastheabilitytoprovideasettlementsystemwhichcansettleeasilyeveryminuteoreveryPTUandtakeresponsibilityforthedistributionofincome.Thiscouldforinstancebeimplementedatchargingstationsforelectricvehiclestocreateaseparatedcharginginfrastructure.Normallyathirdpartywouldberequiredtosetuptheadministrativesystem,forexampleintheEnexispilotcreatingaseparatedcharginginfrastructure,Elaadhadtobuildandmaintainthesystem.

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6 OPPORTUNITIESFOREXE

EXEisastartupfocusingontheenergytransitionandisdeliveringthreesoftwareproducts.Currentlytheseproductsarenotusingblockchainanditisunknowniftheycansupportanyexistingblockchaininitiative.Thissectiongivesanswertothesubquestion:


6.1 EXEPRODUCTPORTFOLIO

EnergyeXchangeEnablers(EXE)isaspinofffromDutchregionalgridoperatorAlliander.ThevisionofEXEistogivetheusercontroloftheirenergythroughthreedifferentITsolutions.Theyexperiencedtheenergytransitionwasgoingtooslowandforesawaproblemforgridoperatorstobalancethegridwiththeincreasingpowergenerationbyrenewableenergysources.Problemsthatwillariseareoutlinedinsection4andaremainlytheinflexibleproductionandhighcongestionlevels.Asexplainedinsection3alotofpartiesandcomplexprocessesareinvolvedintheenergysector.Intotal9partiesareinvolvedinthedeliveryandmeteringprocessofenergyandthisenergycanbeboughtandsoldbetweenpartiesbeforedeliveryin5differentwaysdependingonthetimeleftbeforedelivery.EXE’ssolutionsoffereasyaccesstothecontrolofyourownenergythroughenablinggrassroots,peertopeertrading,flexibilityanddirectaccesstoenergymarkets.Inthefollowingsubsections,theseITsolutionsareexplainedinmoredetail.

6.1.1 ENWIRE

Enwireisamarketplaceforsustainableenergytoenabletheusageoflocalenergy.Theproductisofferedtoenergysuppliersandlocalinitiativeslikeenergiecoöperaties.Onecancreateacustomizedmarketplacewhereconsumerscanchoosetheirownenergysourceasfixedenergysupplierfortheirhome.Thisaremostofthetimesthecooperatie’ssolarparksinthesamemunicipalityastheconsumerorfarmerswithbioenergy.Therearetwopossibilities:youfundasolarpanelormultiplesolarpanelsandconsumetheenergyassoonastheyareinstalledoryouselectasourcethatisalreadyinstalledandonlyconsumeenergy.Forthefirstoption,consumerscangetareductionoftheirenergytaxof9eurocentsintheNetherlands(knownasthe‘postcoderoos’or‘regelingverlaagdtarief’).Forthesecondoption,apredictionismadeoftheenergygeneratedbyasourceand90%ofthepredictedsupplyissoldtocustomers.Ifitisgeneratingmorethantheenergysoldtocustomers,thisissoldattheenergymarkets.

ThedealsaremadebetweentheenergysuppliersandtheconsumerwhereEnwireisonlythefacilitatingplatform.Itdoesnottakeanyoftherolesintheenergymarket.

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6.1.2 R.E.X.

RealtimeEnergyeXchange(R.E.X.)connectstheenergydemandandsupplyofflexibledevicestotheenergymarket.Flexibledevicesaredevicesthatcanprovidesomeflexibilityintheirtimeofenergyusage,e.g.shiftitonehourforwardorbackward.Inthisway,adevicecanreacttoenergypricesandso,useenergywhenthepricesarelowandsupplythenetworkwithenergywhenpricesarehigh.Thisisdonebyequippingdevicesthatallowflexibility,likeheatpumpsandcoldstores,withadeviceagent.ThesedevicesagentssendtheirflexibilitymarginstoR.E.X.whichaggregatesallthedata.Flexibilitymarginscanbeforinstancethatacoolinghouseshouldstaybetween-20°Cand-25°Candshouldnotswitchmorethan20timesadayonandoff.Thisprovidesflexibilityforwhenthecoldstorageshouldbecooleddownto-25°C.

R.E.X.usestheopensourcesoftwarePowermatcherwhichisdevelopedbytheNetherlandsOrganizationforAppliedScientificResearch(TNO).Powermatcherprovidescoordinationforasmartgridbylettingdevicescommunicatewhicheachothersotheycanbalancesupplyanddemand.Ithelpswithloweringnetworkcongestionandloweringenergyprices.Itdoessobycreatingahierarchyofthreelevels;deviceagents,concentratorsandanauctioneeragent.Thisisshowninfigure26.Deviceagentssendbidcurvestotheconcentratorwhichconcentratesoraggregatesallbidsandpublishesasinglebidcurveupwardinthehierarchywhichmakesanetworkmorescalable.Theauctioneeragentisatthetopofthehierarchyanddeterminesthemarketpricewhenallbidsarereceivedandthemarketpriceiscommunicateddowntoalldevices.

Inthiscase,R.E.X.createsalinkwiththeenergymarketpricestocreatefinancialadvantagetotheusers.Itdoesnotsellorbuyenergy,itonlyletthedevicesreacttothecurrentmarketprice.

FIGURE26:POWERMATCHERARCHITECTURE

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6.1.3 ENTRNCE

EntrncemakesdirecttransactionspossiblefromEANtoEANandgivestheuserdirectaccesstoenergymarkets.AnEANisasmartmeterconnectioninthegrid,soitfacilitatespeertopeertrading.Ittakestheroleofthebalanceresponsiblepartyasexplainedinsection3.2.ThismeansthatcustomersofEntrncesendtheirexpectedenergysupplyorconsumptiontotheEntrnceplatform.Ifacustomerhasonlysupplyoronlyconsumptiontheenergywillbesoldorboughtattheenergymarkets.Ifacustomerhasproductionfacilitiesaswellasconsumptionatdifferentplaces,EANtoEANtransactionsareexecuted.AlltransactionshappenperPTU(15minutes).Entrnceaggregatestheexpectedenergyflowsfromallcustomersandcreatesasinglee-programwhichissenttoTenneT.

AnydifferencesbetweenthecustomersexpectedandrealusageaswellasthecostorincomefrombuyingorsellingenergyatthemarketsissettledontheEntrnceplatform.ThemainfocusofEntrncearelargeproducersandconsumers,sinceforsmallconsumersitislegallyrequiredtohaveanenergysupplierandforlargeconsumersitisnot.ThisdoesnotmeanthatEntrncecannotsupportintheenergysupplyforcustomersbutinordertodoso,itbecomesaB2B2Cproductwhereitisusedbyanenergysupplier.

6.2 OPPORTUNITIES

Inthissectionfitsbetweentheclassificationmadeinsection5.3and5.4andtheEXEproductportfoliowillbeanalyzed.Foreachproductanditsstrategy,possibilitiesforblockchainwillbeanalyzedtogetherwiththeirpotential.Insection6.3aconclusionwillbederived.

6.2.1 ENWIRE

ThewhitelabelmarketplaceEnwirewhichisanB2B2Cproductisaplatformtoconnectconsumerstoaspecificenergysource.AftertheconsumerhasselectedhisfutureenergysourceontheEnwireplatform,alladministrationinthefutureisdonebytheenergysupplierandEXEisnotinvolvedanymore.Therefore,thereisnotarealpropositionwhereblockchaincanaddvalueinthecurrentEnwireproduct.However,itisafacilitatoroflocalenergyandadirectsupplyischosenbytheconsumer.Timeisnottakenintoaccountinsupplyanddemand,bothareaggregatedforoneyear.Soonecanbesurewhenselectingasolarsourcetheenergyintheeveningandnightisnotgeneratedbytheselectedsource.

WhenEnwirewouldliketocreatemoretransparency,therewouldbethefollowingoptions:

(1) Publishmetervaluesfromtheenergysourceandconsumersintotheblockchainyearly.Thiscreatesvaluefortheconsumerssincetheycanvalidatetheenergysourcehasindeedsuppliedenoughenergyforallconsumersconnectedtothesource.Ifnot,thesourceisoversoldandsomeconsumersshouldbedropped.

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(2) MatchsupplyanddemandperPTUbypublishingmetervaluesperPTUtotheblockchainandcreatematchesperPTU.Thismakesconsumersmorerenewableenergysourceawareandshowsthemtimingisimportant.Adashboardcanshowthematwhichtimestheyhavereallyusedenergyfromtheirselectedenergysource(whensupplywasavailable)andwhennot.Thisoptionfitswiththereal-timeGoOasexplainedinsection5.4.2.

Inthecaseof(1),consumerscanvalidatetheenergysourceisnotoversoldandso,tovalidatetheEnwireplatformandtheenergycooperationishonest.Butinmostcasesthesepartieswillalreadybeexperiencedastrustedbyconsumers.(2)isgivingtheuseramorehonestviewoftheirenergysource.Inrealitytimingplaysaveryimportantrolebutsupplyanddemandarenowaggregatedtoyearlylevel.Itwouldbeofinteresttoknowfortheirconsumeratwhichtimestheyusedenergywhentheirsourcewassupplyingit.Thismakesthemmoresourceawareandcreatesthemosttransparentsolution.

AtthemomentEnwireisonlyafacilitatingplatformtoconnectconsumerandsupplyanddoesnotmakeanyenergydeals.Solution(1)and(2)focusmoreontheprocessafterthecontracthasbeensignedandtherefore,areslightlyoffthestrategyoftheEnwireplatform.

6.2.2 R.E.X.

Asexplainedinsection6.1.2,R.E.X.isutilizingthePowermatchersoftwaretocreateademandresponseenvironmentwheredevicesactdependingontheactualenergymarketprizes.Figure26showshowdevicescommunicatetoeachotherinalayeredstructuretocreateascalableinfrastructure.Afamiliarcharacteristicwithblockchainisitsdecentralizedstructure.However,R.E.X.isusingmanageddatabasesforeachclusterofdeviceswhichishostedinthecloud.WiththestructureandvalueR.E.X.wanttocreate,onecouldenabletheusageofblockchaininthefollowingways.

(1) PublishingbidsandpricesintoasmartcontractorintheIOTAtangle.Asshowninfigure27,eachdevicehasanAPItoreceivebidsandpriceswhichareaggregatedorforwarded.AblockchainorDAGsolutioncreatesasecuredecentralizedsystemwhichisscalable.Concentratorsmightberequiredinalesserdegreeornotatall.AsmartcontractcanbethecentralplacetosendbidsandwheretheEquilibriumpriceissetandcanbereadbydeviceagents.Thiseliminatesestablishingconnectionsandsettingupsessions.Italsofitstheblockchainphilosophyofbeinganeventdrivensystemandnotascheduledone(notimedeventsarepossibleinablockchain).InthecaseofusingIOTA,onecanuseitsMAMprotocoltosendmessages.Channelscanbeusedtosendbidsandconcentratorsand/oraggregatorscanlistentothesechannelstodeterminetheequilibriumpriceandpublishthisinthesamechannel.Ifconcentratorswillstillberequiredisunknownsinceitisunknowntohowmanychannelsonecanlistensimultaneously.ThemainadvantageforEXEwillbethedecentralizationandhostedinfrastructure.Whenusingsmartcontracts,transactioncostmightbeadisadvantage.ThereforeIOTA,withitsfocusonmachinetomachinecommunicationmightbetheperfectfit.ItalsosupportsMQTT,aISOstandardizedpublish-subscribe-basedmessagingprotocol,usedinR.E.X.

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FIGURE27:COMMUNICATIONPOWERMATCHERINSTANCES

IfasystemlikeR.E.X.wouldbeusedtobalancethegridoritwouldincludefinancialrewardsforincreasingordecreasingthesupplyordemandfromthegrid,blockchaincouldaddvaluewiththefollowingpropositions.Fornow,thisisoutsidethescopeofR.E.X.butitcouldbevaluableindemandresponsesystems.

(2) Publishingmetervaluesfromadevice,oraconnectiontothegrid,intotheblockchaintovalidateadevice’sresponsetothedemandresponsesystem.Asolutionlikepowermatcherletdevicescommunicatetheirbidsandapriceisdeterminedtobalancethecluster.However,itisnotguaranteedthatdevicesindeedactaccordingtotheirbidwhentheequilibriumpriceisreceived.Whentheusageofadevicewouldbetransparentinthedemandresponsesystemonecouldvalidateitsadjusteddemand.Also,whenthesmartmeterwouldpublishitsmetervaluesintotheblockchainonecanvalidateadjusteddemand,eventhoughenergyusageisaggregatedfromalldevices,byrecognizingpatterns.Likely,thiswillbeusedtogetherwith(3).

(3) Awardinguserswithcryptocurrencyonademandresponserequest.Sinceademandresponsesystemlikepowermatcherdoesnotguaranteethedeviceagentdoeswhatitsaiditwilldo,itislikelythissolutionwillbeusedtogetherwith(2).ATSOhaspartiessupplyingregulatingandreservecapacityandsuppliersforemergencypowertobalancethegrid.RegulatingandreservecapacitypartiessenttheirbidsonedaybeforetoTenneTwiththeiravailablecapacityperPTU.WhenusedbyTenneT,onegetsthepriceaskedfortheirsupplyofregulatingandreservecapacity.EmergencypowerpartiesaregettingaphonecallwhentheircapacityisrequiredandshouldadjustaccordingtoTenneTrequirementswithin15minutes.Thesesystemsrequirenowhumanactionsbutcouldalsoeasilybesolvedwhenalllogicwouldbeimplementedinsmartcontracts.

6.2.3 ENTRNCE

TheEntrnceplatformfacilitatesdirecttransactionsbetweendemandandsupplyortotheenergymarket.Theyfulfilmultiplevaluepropositionswhichcannotallbenamedhereduetoconfidentiality.However,oneofthetopthreemostimportantvaluepropositionsisfacilitateenergyserviceproviders.Theywanttosupportnewpropositionscreatedbystartupsbyprovidingeasyaccesstotheenergymarkets.Bytakingtheroleofbalanceresponsibleparty,theycanfacilitatepeoplemakingpeertopeerdealsinthecurrentmarkets.SinceEXEispartoftheDSOAlliander,itisnotallowedtobuyorsellenergyitself.Therefore,partiesusingtheEntrncepartyplatformhavetomakepredictionsoftheirenergyusagethenextday.Afterwards,anydifferenceswillbesettledwiththeprepaidbalancesusershavewithintheEntrnceplatform.

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Takingintoaccountthecapabilitiesasplatformandwhatitprovidestoitsusers,thefollowingblockchainpropositionsarepossible.

(1) Entrnceasenablerofanyblockchaininitiativeusingenergytrading,locallyornot.Insection5.3.2themostmatureenergytradingblockchaininitiativeswereanalyzed.Acommonshortcomingisthattheyarecreatedwithouttakingthecurrentenergymarketsintoaccount.Inordertoimplementthisonthepublicgridithastotaketheroleofabalanceresponsiblepartywhenonlyhavinglargecustomersand/ortheroleofenergysupplierwhenhavingsmallcustomers.Inbothcases,EntrncecantaketheroleofBRPsotheseinitiativesdonothavetotakeintoaccountthecomplexenergymarkets.Entrncecanbuytheenergyfortheportfolioofconnectionsforaninitiative.Itdoesnotmatteriftheinitiativefocusseslocallyornationwide.

(2) EntrnceasBRPforgridconnectionswithmultipleenergysuppliersusingblockchainasadministrativeplatform.Havingmultipleenergysuppliersatoneconnectionisbecomingmorepopular,especiallyforEVchargingstations.Itoccursthattendersareheldforchargingstationsandthatthesechargingstationsareconnectedtoaspecificenergysupplier.EXEwantstocreateanopencharginginfrastructurewithafreechoiceofenergysupplierfortheuser.BlockchaincouldaddvaluebycreatingatransparentsettlementsystemforallpartiesinvolvedwhereEntrncecouldbuytheenergyforthechargingstationportfolio.

However,itcanalsobeseenascompetitorwhenpartiesaretakingtheBRProlethemselves.ThepeertopeertradingisasharedphilosophyofEntrnceandmostinitiatives.ItisnoteasytogetaBRPlicense,atthemoment(November2017)thereare48registeredBRPpartiesintheNetherlands.Therefore,itseemsunlikelythatworldwideblockchainenergytradinginitiativeswillchoosetogaintheirownlicenseandbuildtheirownsystemstofulfilltheBRProlewhenEntrncefacilitateseasyaccess.PossibilitiesforEntrncetocreateablockchainbasedsolutionintheirowninfrastructurecanbeasfollows.

(3) Useasmartcontractorasetofsmartcontractstosettledeals.Everydaythedifferencesbetweenpredictedandrealmetervaluesaresettledinfiatbalancesontheplatformandusershaveaprepaidaccount.Thewholeaccountandfinancialpartcouldalsoberesolvedbyusingablockchainandusinganowntoken.Whenmetervalueswouldbesavedreal-timeontheblockchainanyimbalancecanbesettledeveryPTU.SincetheEntrncesystemisalreadybuild,thebenefitsofimplementingblockchainareminimal.

6.3 CONCLUSION

Theconclusionderivedfromtheprevioussection,andsotakingintoaccounttheEXEproductportfolioandtheabilitiesofblockchainandinitiatives,hasledtothemappingshownintable8.ThefirstcolumnistheEXEproductportfolioandthe9consecutivecolumnsthedifferentpossibletypesofblockchainapplianceintheenergysector.Ofthese9,thefirst5arederivedfromcurrentblockchaininitiativesandtheconsecutive4areadditionalopportunitiesasoutlinedinsection5.4.Theplusesandminusesrepresentthepotentialinthemappingofproductsandblockchainopportunities.

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TABLE8:BLOCKCHAINPOTENTIALEXEPRODUCTPORTFOLIO

Energytrading

Localmarkets

Rewardcrypto

Pay/receivecrypto

Gridbalancing

Demandresponse

communication

Real-timeGoO

Sharingmeterdata

Multiplesuppliers

Enwire -- -- -- -- -- -- +- +- --

R.E.X. -- -- +- -- -- + -- +- --

Entrnce ++ ++ -- +- -- -- +- +- ++

ThepotentialisconcludedfromanalyzingtheproductstrategyEXEhasforeachproduct.Inmostcasesthisincludesforinstancepropositionwheelsandthemarketentryplan.Whentheoptionwouldincludebuildinganownblockchainbasedsolution,therewaslookedintoinwhichfactorblockchainwouldaddbenefitsorthatthegoalcouldalsoberealizedwithacentralpartyanddatabase.ThebiggestpotentialforEXEistoenableblockchainenergytradingbyofferingtheBRProletotheseinitiatives.Thesameholdsforinitiativescreatinglocalmarkets.Furthermore,thereispotentialinenablingmultipleenergysuppliersatoneconnectionwhereEntrncecantaketheBRProleandblockchainenablesatransparentplatformandfinancialtransactionsbetweenallpartiesinvolved.

Thenextsectionexplainsatmoretechnicallevelhowtosupportandimplementthemostpotentialoptions.

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7 SOLUTIONDESIGN

Intheprevioussection,multiplepotentialopportunitiesforEXEandblockchainareindicated.Thissectionanalysestheopportunitieswiththehighestpotentialandcreatesapossibledesignforeachsolution.Thissectiongivesanswertothesubquestion:


7.1 ENERGYTRADING:BLOCKENERGY

Thissectionexplainshowapropositionwhereenergyistradedontheblockchain,betweensuppliersorprosumersandconsumers,canbeappliedinthepublicgridwithinthecurrentregulatoryframeworkandusingtheEntrncesoftware.Todoso,thehypotheticalenergysupplierBlockEnergyisdesigned.

7.1.1 DESIGN

Allinitiativestradingenergyontheblockchainareusingmoreorlessthesameconcept,exceptGrid+.Grid+createsadirectconnectiontotheenergymarketwheretheotherscreatedealsbetweentheusers.BothcasesfittheEntrncephilosophy:EAN2EANdealsandadirectconnectiontotheAPX.NoneofthepartiestakeintoaccounttheenergymarketsandroleslikeaBRP.Therefore,Entrncecanbetheenableroftheseinitiatives.

Theconceptsasshownintable7andofwhichsomearefurtherexplainedinsection5.3.2,aregeneralizedandvisualizedinfigure28.ThisconceptcouldbeimplementedbythehypotheticalenergysupplierBlockEnergy.Ausercanbuytheinternaltokenthesystemisusingforfiatcurrencyandthistokenistradedforenergyinlaterstages.Incasetheuserisaprosumerorsupplierheorshegetstokensandthesetokenscan,ifnotused,beconvertedbacktofiatcurrency.Asmartcontractisresponsibleforcreatingdealsbetweenthesupplierandconsumer.Howthisisdoneisuptotheinitiative.Thiscanbeforinstancedirectdeals,sometimesevenwithapreferencegivenbytheuserandfixedprices,orflexibledealswithenergypools.Smartmetersshouldalwaysbeenabledwithadirectinternetconnectiontopublishmeterdataintheblockchain.Thereforeadevicehastobeconnectedtothesmartmeter’sP1port.Tradesaresettledonaselectedtimespan;inmostcasesbetweenevery1and15minutes.

Thepricingoftokensandenergyisdifferentforeachinitiative.Someuse1:1,so1tokengives1kWhofenergy.However,inthesecasestimingisnottakenintoaccountsinceonecanbuytokenswhentheyarecheaportheyevenhaveafixedprice.Thiswhiletimeplaysaveryimportantroleintheenergytransitionsincesupplyisfluctuatingmorethanbefore.Therefore,itismostacceptabletousefixedpricesfortokensandaflexibleratefortheexchangefromtokenstokWh.ThelatterwillbebasedoncurrentAPXpricesprovidedbyEntrnce.Tomakeituser-friendlyandclearitisadvisedtopriceatoken1cent.

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Mostcasesdonottakeintoaccountthecomplexityofenergyprices.IntheNetherlandsonepaysbesidesthepriceoftheenergy,alsofortheDSO,ODE(‘opslagdureenergie’),taxandenergytax.Inanidealdesigntheseadditionalfeesareautomaticallypaidbylogicincludedinthesmartcontract.Thiscanbedonebygivingthesepartiestheirownaccountandletthemreceivetokens.Onecanwithdrawthesetoreceivefiatcurrencyorthiscanbedoneautomatically.

Unfortunately,EXEcouldnotprovidesuchatradingsystemthemselvestosmallsuppliers.Duetothedecentralizedmarketstheyarenotallowedtobuyandsellenergyandso,totaketheenergysupplierrole.Thereforeanotherpartyshouldprovidethetradingsystem.Inthenextsectiontheopportunitiesandadvantagesofsuchasystemareoutlined.

FIGURE28:GENERALIZATIONOFENERGYTRADING

7.1.2 ADVANTAGESFORTHESUPPLIER

Theproblemwiththecurrentenergysuppliersisthattheyarebigestablishedcompanieswithlegacysystems,expensivesoftware,highoverheadcostsandtheyprovidemostofthetimesfixedpricesforenergyoradayandnightprice.Thisisbasedontheoldsystemwithcentralsupply.WhenbreakingdownthepriceperkWh,onepaysfor17%intheUK(EnergyUK,2017)and12%inAustralia(EnergyAurora,2017).

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AnenergysupplierusingthissystemdoesnotneedacomplicatedreconciliationprocessbetweenalotofpartiessincethisisautomatedwithEntrnceandthesmartcontract.Theenergysuppliercanofferprepaidenergywithflexiblepricing.DirectAPXpricescanbeprovidedoruserscanchoosetheirownprice,forinstancetofamilyorfriends.Itmightalsobepossibletogetareductiononenergytaxwhenthe‘postcoderoos’wouldbesupported.Peoplegetfreedominchoosingtheirenergysourcethroughanappandevery5minutesthesettlementcouldtakeplace.Theycanalsoseetheirreal-timeusageandactivedevicesconsumingenergy,sincetheycanberecognizedbytheirenergyusageprofiles.

Byofferingdirectaccesstotheenergymarketsandremoveoverheadcostoftheenergysupplier,peoplemightbeabletoreducetheircostswithprobablyupto15%.Currentenergysuppliercostsare17%intheUK(EnergyUK,2017)and12%inAustralia(EnergyAurora,2017)andsuchinitiativescouldgettaxreductionasforinstanceisthecasewithpostcoderoosprojectsandreal-timeenergytradesinEemnes(Binnenlandsbestuur,2018).Morecostreductioncouldbeachievedbyputtingeffortinreducingtheimbalancebetweenpredictionandactualinreal-time.Thiscanbeachievedintwoways.Thefirstoptionistousetheintradaymarkettobuyshortcomingsorsellsurplus,ortheenergysuppliercouldtrytobalancesupplyanddemandbyofferingfinancialbenefitstotheuserswhentheyincreaseordecreasedemandfromthegrid.

7.1.3 TECHNICALDESIGN

TheEthereumblockchainisinalmostallinitiativesusedastechnology.Itisalsoprocessingthemosttransactionspersecondworldwide.MostofthemalsousetheirowncryptocurrencywhichisachievedbyusingERC-20tokens(EthereumGithub,2017).AnERC-20tokenisaninterfacecontractdeclaringtherequiredfunctionsandeventstomeetthestandard.IntheBlockEnergyconceptthecentralsmartcontractimplementstheERC-20contractbyimplementingtheERC-20interfacewhichisshownincodesnippet1.

1. contract ERC20Interface { 2. event Transfer(address indexed from, address indexed to, uint256 value); 3. event Approval(address indexed from, address indexed spender, uint256 value); 4. 5. function totalSupply() constant returns(uint256 supply); 6. function balanceOf(address _owner) constant returns(uint256 balance); 7. function transfer(address _to, uint256 _value) returns(bool success); 8. function transferFrom(address _from, address _to, uint256 _value) returns(bool s

uccess); 9. function approve(address _spender, uint256 _value) returns(bool success);

10. function allowance(address _owner, address _spender) constant returns(uint256 rem

aining); 11. 12. function symbol() constant returns(string); 13. function decimals() constant returns(uint8); 14. function name() constant returns(string); 15. }

CODESNIPPET1:ERC-20TOKENINTERFACECONTRACT

Anysmartcontractcanonlyinteractwithothersmartcontracts.ItcannotreadAPI’sorwebservicesbycallinganURL.Togetdatafromaservicenothavingitsdataintheblockchain,oraclesarerequired.Oraclizeisacompanyprovidingon-chainoraclessoyoucanretrievedatafromoutsidetheblockchain

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throughtheirservices.Onecansendanurltotheirsmartcontractsandwhentheyhavepushedthedataintotheblockchain,thecallbackfunctionfromyourownsmartcontractiscalledwithasparametertheresult.TheOraclizesmartcontractisanabstractclassextendedbythecentralsmartcontractwhichisshownincodesnippet2.TousetheOraclizeservicesontheliveEthereumblockchainonehastopaythemfortheirservicesandso,thefunctioncallingoraclize_queryshouldbepayable.BlockEnergy’ssmartcontractusesOraclizetoretrieveP4,real-timeAPXdataandforecastdata.AllcallstotheOraclizeservicearesendingdatabacktothe__calbackfunctionwhichshouldhandledatafromthreedifferentcalls.Onecandistinguishbetweenthedifferentcallsbysavingthereturnvalue(anID)fromoraclize_queryandconnectingthetypeofrequesttoit.

1. contract A is usingOraclize { 2. function A() { 3. OAR = OraclizeAddrResolverI(0x6f485C8BF6fc43eA212E93BBF8ce046C7f1cb475); 4. call(); 5. } 6. 7. function __callback(bytes32 myid, string result) { 8. if (msg.sender != oraclize_cbAddress()) throw; 9. saveResult(result); 10. } 11. 12. function call() payable { 13. newOraclizeQuery("Oraclize query was sent, standing by for the answer.."); 14. oraclize_query("URL", "xml(https://url.ext/api?par1=a&par2=b"); 15. } 16. }

CODESNIPPET2:ORACLIZEIMPLEMENTATION

BlockEnergy’ssmartcontractshouldalsoprovidereadaccessfortheforecastmodule.InthiswaytheforecastmodulecanalsomakepredictionsbasedontheusageofthedaysbeforeinsteadofolderP4data.Withotherfunctionalities,theabstractedBlockEnergycontractshouldimplementthefollowingBlockEnergyInterface.

1. contract BlockEnergyInterface { 2. function registerMeter(uint _EAN, uint _time, uint _initialValue) public; 3. function newMeterValue(uint _time, uint _value) public; 4. 5. function getLastValues(uint[] EANs) public constant returns(uint[]); 6. function getValues(uint EAN, uint from, uint to) public constant returns(uint[]); 7. 8. function retrieveAPX() public payable; 9. function retrieveP4() public payable; 10. function retrieveForecast() public payable; 11. function settle() public payable; 12. 13. function validateP4() public; 14. function notifyAccount() public; 15.

/* Payment types: 1 = per kwh, 2 = per day, 3 = percentage over total */ 16. function registerParty(string name, uint paymentType, uint price, address account) publ

ic; 17. function removeParty(string name) public; 18. function payParties(uint kwh, uint totalDays) public; 19. }

CODESNIPPET3:BLOCKENERGYINTERFACECONTRACT

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Thesmartcontractcanregisterinvolvedpartiesinvolvedtopaythem.ThreedifferentpaymenttypeshavebeenclassifiedaccordingtoenergybillsintheNetherlands.TheseareafixedfeeperkWhorperdayandataxoverthetotalprice.Thishasbeenbasedonthefollowingparties:

• DSO–Fixedpriceperday.Priceisdependingontheconnectionbutforsmallcustomersitvariesfrom0,49till0,59eurocentsperday(excl.VAT)dependingontheDSO(Independer,2017).

• ODE–FixedpriceperkWh.Forsmallcustomers0,0074(excl.VAT)perkWhintheNetherlands(Belastingdienst,2017)

• Energytax–FixedpriceperkWh.Forsmallcustomers0,1013(excl.VAT)perkWhintheNetherlands(Belastingdienst,2017)

• VAT–Percentageovertotalprice.21%intheNetherlands(Belastingdienst,2017)

SincesmartmetersintheNetherlandsarenotequippedwithWi-Fi(November2017)anadditionaldonglewillberequiredtopublishmetervaluesliveintothesmartcontract.ThisisanoverallbarrierallinitiativesfaceandageneralsolutionistoprovideadonglewhichcanbeamicrocomputersmallerthanaRaspberryPisubmittingthedata.BlockEnergyshouldkeeparegistrationofwhichsmartmeterisconnectedtowhichEAN.Also,onecoulduseaP1asaserviceproviderlikeHelloDatawhoprovidedirectaccesstoP1data(HelloData,2017).SincedatacouldbemanipulatedbetweenP1portandthedongle,thereisaverificationprocessbuildintothesmartcontract.EntrnceprovidesthesmartcontractwithP4datafromtheday(s)before,thisdataisnowusedtosettledifferencebetweenpredictionsandactualusage.ThiscouldalsobeusedtosettleontheblockchaintoavoidintegrationswithExact’sfinancialsoftware,sendingandpayingbillsandtransactionscosts.

Therearenotimedeventspossibleinasmartcontract,soonehastocreateasolutionfortheloopshowninthedesignshowninfigure28.The5minutesloopischosenarbitraryandisuptothefurtherdevelopmentinthemarkets.Itcouldalsobeusefultotakethe15minutesfromthePTUbutprobablyitismoreattractivetochooseasmallertimeframebutnottoosmallduetoblockchaintransactionfees.Possiblesolutionsforthetimingeventare:

• Letdonglespublishtheirvaluesexactlyeveryfiveminutes.Iftheyalldoitatthe5th,10th,15th,etc.minutethirtysecondslateronecouldsettletheusagesofthe5minutesbefore.

• Letanexternalcronjob(ITtermforscheduledjob)callacertainfunctioninthesmartcontracttosettleusagessincethelasttimethefunctionwascalled.

• Everytimenewmetervaluesarereceived,checkif5minuteshavepassed.Ifmorethan5minuteshavepassed,interpolatetheusagetofitthetimeframe.

LimitationscurrentlyexistsintheEVMsinceapublicfunctioncannotreturndynamicarraysfromanykind.Thismightbeadisadvantageofthedesigninfigure28sincemetervaluesfromallmetersaresubtractedfromthesmartcontract.Inaddition,transactionfeesstilldelaytheadoptionofsuchsystemsbutEthereumisdevelopingsolutionsliketheRaidenNetwork.Anexample,minimalimplementationofBlockEnergyhasbeenmadetoprovideademo.Theimplementationusesthecodefromcodesnippet2andimplementstheinterfacesshownincodesnippet1and3.ThedemowasusedtocreatesupportandunderstandingoftheconceptamongEXEemployeesandwasusedasexampleforthevalidation.AscreenshotoftheDappisshowninfigure29.

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FIGURE29:BLOCKENERGYDEMO

7.1.4 ADVANTAGESOFBLOCKCHAIN

ThepotentialforusingblockchaininaconceptasBlockEnergyismainlyitsscalability,easyrepeatableforcreatingdifferentmarkets,costreductionandmicropayments.Itfitsthedecentralizationperspectivegrassrootstakesinceblockchainistotallydecentralized.Smartcontractscantakecareofsettlementbetweenusersanduseslowcostmicrotransactions.Peoplecanbecomeanactiveconsumersettingtheirownpriceandcreatedealsbetweeneachother.Thesedealscanbesettledinasmartcontract.Especiallywhenlookingatthefutureithashighpotentialwhenthereisnosalderingsregelinganymoreandprosumerswillalmostgetnovaluefortheenergydeliveredtothegrid.Ablockchainallowsforeasyandcheaptransferofvalueundercertainconditionsanditalsoprovidestransparencytoallinvolvedparties,ifrequired.

7.1.5 VALIDATION

ThevalidationoftheconceptwasdoneinasessionwiththegeneralmanagerofEXEand4energymarketexpertsfromwhomonewastheITarchitectofEntrnceandonewastheBusinessManagerofEntrnce.TheBlockEnergydesignandarchitecturewasdiscussedinasessionof2hoursandthereasonsforsuchsystemtobeusedintheNetherlands.ThediscussionwasachievedbypresentingBlockEnergyasapartywhowantstocooperatewithEntrncetoenablepeertopeerenergytrading.

Aboutthearchitecturethefollowingspointswerediscussed:

- Questionedwaswhattheaddedvalueofblockchainis.Asimilarconceptcouldalsohappenwithoutblockchain.Itisarguedthatacostreductionisachievedcomparedtoanon-

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blockchainsolutionbutthereisnocalculation.Butstillalotofpartiesaredevelopingsuchconceptssoitseemstobeprofitable.

- IntheNetherlandsasmartmeterisnotequippedwithWi-Fi(incontrasttoforinstanceAustralia)whichmakesintegrationofsuchconceptsmoredifficultandmoreexpensive.Thecostofadonglecanbesignificant.

- Whenusinganowntoken,itshouldbesidesbeingexchangeableforfiatcurrencyalsobepossibletoexchangeitwithothercryptocurrencylikeEthereum.Thiscreatesinteroperabilitybetweensmartcontractsandblockchains.Othercryptocurrenciesdonothaveafixedexchangeratesotheexchangeratetotheusedtokensdependsonthecryptocurrency/fiatrate.ForEthereumandERC-20tokensthisiseasytoimplementinasmartcontract.

- Theflowfromeuro’stoEntrnceisnotclearenough.EntrncehasawalletintheconcepttogetpaidbutusersfromtheEntrncesoftwareneedapositivebalancetousetheEntrncesystem.HowdoesthesystemmakesurethereisupfronttothestartapositivebalanceintheEntrncesystem?Whilethemoneyflowsthroughtheblockchainthefiatcurrencyhastobesavedonabankaccount.Legislationdeterminesthisshouldhappenthroughspecialthird-partyaccountsinceyoumanageotherpeopletheirmoney.

- IfenergyisboughtattheAPXthisisseenasgreyenergy.ThesystemshouldbuycertificatesatforinstanceCertIQtomaketheenergygreensoitbecomesmoreattractivetousers.

- Itisquestionedwhatwillhappenwiththeguaranteeoforigincertificatesgiventopeopleproducingenergy.Inthecurrentsituation,youcanrequestthecertificatesfromCertIQforyoursolarpanelsassmallcustomerandonecansellthesetoforinstanceenergysuppliers.

- Itisatthemomentobligatedtosendsmallcustomersclearinvoiceswiththeirusagesandcost.Thiswillrequireextrasystemsandoverheadcost.

- TheACMrequiresyoutosettleenergybillsbasedonP4data.SoayearlysettlementisalsorequiredtosettleanydifferencebetweentheP1andP4data.ThiscouldhappenbasedonanaverageAPXpricefromthatyear.

Furthermore,thereisthefollowingdirectimprovement:

- EntrnceonlygettheP4dataforthewholeportfolioperDSO.SoitisnotpossibletovalidatethemetervaluesreceivedontheblockchainthroughtheP1portwiththeP4datausingEntrnce.Forthisvalidation,adirectconnectionshouldbemadewithEDSNwhichcanprovideP4datapermeter.

Ingeneral,thefeedbackwasverypositive.ThereisforsurepotentialtointegratesuchasystemintoEntrnce.Aswasknown,Entrncecannotoffersuchasystemtosmallcustomersduetolegislation.Thereforetherearethefollowingoptions:(1)developandofferthisaswhitelabelsystemB2B2Cwithoutsupplierrole,(2)cooperatewithanexternalcompanytodevelopitandlettheexternalpartytakethesupplierroleor(3)letanexternalpartycreatesuchasystemandmakesureEntrnceisinvolvedquicklytotaketheBRProle(whitelabelornot).

Inthediscussion,themultipleoptionswereevaluated.Atthemoment,themanagementdetermineditmostattractivewhenapartywouldbuildsuchawhitelabelsystemandalsooffersthesupplierrole.AtthemomentERPsystemsforenergysuppliersareveryexpensiveanditisalmostimpossibletogeneraterevenuewhenyouhavebelow10.000customers.Awhitelabelblockchainsystemmightmakeitpossibletocreatesuchaleansystemthatisalreadyattractivewhenhavingonly1000or100customers.EXEexperiencesalotofthesepartiesduetothegrassrootsphenomenonwherecommunityledinitiativeshappenandforinstance‘energiecoöperaties’wanttocreatetheirown,selfsufficientregion.Fornon-whitelabelsystemsorinitiativesthatdotakethesupplierroleEntrncestill

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wantstotakeanactiverolesincetheyseeblockchainashighpotential,andintegrationwiththeirsystemsdoable.

Thepossibilityalsoexiststhatacompanywhobuildsthissoftwareandtakesthesupplierrole,alsotakestheBRProle.InthiscaseitbecomesacompetitorofEntrncesincetheybothfacilitateEAN2EANtransactions.TheroleofBRPiscomplexandnotthatmanypartieshavealicensesothedifficultymightbeanadvantageforEXE.

7.2 MULTIPLEENERGYSUPPLIERS:SMARTCHARGE

ThissectionoutlineshowtheEntrnceplatformcansupportthecasewheremultipleenergysuppliersareavailableatoneconnection.Thepotentialtouseblockchaininacasewithmultipleenergysuppliersishighsinceitprovidesatransparentplatformforallpartiesinvolved.Thecasehasbeenbuiltaroundelectricvehiclessincetheyplayanimportantroleintheenergytransitionduetotheirhighenergydemand,countriesbanningsaleoffuelcarsinafewdecadesandtheabilitytousetheirbatteriesinademandresponsesetting.Furthermore,EXEcooperateswithchargepointoperatorAllegotocreateanopencharginginfrastructure.Thereisalsoahighrequestfromthepublicsectorstocreateenergysourcetransparencyandasolutionformultipleenergysuppliersatoneconnection(Energeia,2017).

7.2.1 DESIGN

Inthisconcept,calledSmartCharge,acustomerisabletochoosehisownenergysourceattheelectricvehiclechargingstation.Eachenergysupplierthatisconnectedtothechargingstationoffersasetofenergysourceswhichareavailabletothecustomeronlyiftheysupplyenergytothegridatthatmoment.Thepricepersourceisflexibleandmadeupoftwodependencies:theenergysupplierpriceandtheDSOprice.Inthissituation,thepriceoftheDSOisdependingonthecongestionlevelofthelocalgrid.ThepropositionSmartChargeistaking,isasfollows.

SmartChargeenablesfreechoiceoftheenergysourceatEVchargingstations,

creatingsourceawareness, guaranteeoforigin,and supportDSO’sinloweringgridcongestion

Theguaranteeoforiginisgivenreal-timeandthisisachievedbypublishingmeterdatafromenergysourcesaswellasthechargingstationintotheblockchain.Thisisdonebytwodifferenttypeofsmartcontracts;thesourcecontractandthecentralcontract.Anenergysourcehasitsowninstanceofasourcesmartcontracttopublishmetervaluesintheblockchainandvalidatethereal-timeguaranteeoforigin.Onecentralsmartcontractisresponsibleforregisteringchargingstationsandtocreateandfinishdealsbetweensourcesandchargingstations.ThissmartcontractisalsoresponsiblefortheenergysettlementbetweenthesuppliersandvaluestreamsfromcustomertoenergysourceandDSO’s.

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Blockchainaddsatransparentplatformforallpartiesinvolvedandprocessespaymentsautomatically.Thecurrentlandscapeofpartiesinvolvedinchargestationsisverycomplex.BesidestheTSO,DSOandBRPthereisaeMSP(e-mobilityserviceprovider),clearinghouseandCPO(chargepointoperator).Inadvance,foursimilarcaseshavebeenanalyzedtolearnfromtheirexperience:

- Alliander‘openlaadinfrastructuur’wheretheywanttoprovethatitistechnicallyandadministrativepossibletoletuserschoosetheirownenergysupplieratthechargingstation.ThisprojectisstillrunningwithAlliander,EXEandAllego.Themostimportantstakeholderswereinterviewedtohaveanindicationofthebarrierstheyface.ThisseemedmostlythefactthatnotallchargingstationshavesmartsmetersandthedifficultyofgettingenergysuppliersandeMSP’sinvolved.

- Enexis‘logischeallocatie’casewheretheydidapilotinthesouthoftheNetherlandswithhavingmultipleenergysuppliersatonechargingstation.Theyhadsetupacentraladministrationbyathirdpartyforthesechargingstations.TheirmainproblemwastheregistrationintheC-ARandtoenablemultipleenergysuppliersatachargingstations.TheyproposedtoaddtransmissionconnectionstoanEANintheC-ARtosupporttheadministrativeprocessformultipleenergysuppliersatonechargingstation.

- Lianderresearchaboutblockchainusageforhavingmultipleenergysuppliersatchargingstationswheretheresultwasthatblockchainisstillnotmatureenoughtouseatlargescale.Casespecific,theyfoundthatsectorprocessesarenotmadeforityet,measuringtechnologyinchargingstationsisnotsufficient,marketpartiesaredifficulttoinvolveandoneshouldpayfortheimbalance.ThefirsttwoarenotexperiencedbytheinterviewedstakeholdersintheAlliandercaseandthefourthonecanbesolvedbyusingEntrnce.Thethirdisstillaccurateaccordingtotheinterviews.

- Elaadwasconsultedtotalkaboutthecaseandtheirexperiences.TheyareworkingoncasesandarealsoapplyingcertainblockchainprotocolsintheirEVchargingstations.However,theydidnotlookinto‘freechoiceofthesource’atchargingstationsusingblockchainyet.

SmartChargeisatotalnewconceptwhichisveryattractivefortheenergytransitionsinceitenablesthegrassrootsconceptssinceitfocusesonlocalenergyusage.Byofferingflexiblechargingasoption,wherepeoplecanselectthetimeframeinwhichtheircarischargedfortheselectedrange,peaksingridscanbereduced.Itextendstheideasoftheresearchedcasesbyofferinganenergysourcechoicetotheuser.

TheEntrnceproductfromEXEperfectlysupportssuchcaseswheretherearereasonsformultipleenergysuppliersatonechargingstation.Sinceonestillhastotakeresponsibilityforthegridstayinginbalanceforallchargingpoints,EntrncecantaketheroleofBRPtostaywithintheregulatoryframework.Itcandosointhesamewayasshowninfigure28.Byhavingacentralsmartcontractwithmetervalues,EntrncecanmakesuretheE-programsforthechargingstationportfolioissubmittedtotheTSO.Ifwantedbytheenergysuppliers,Entrncecouldalsoprovidetheappwithcurrentenergyprices.

7.2.2 TECHNICALDESIGN

Assaidintheprevioussectiontherearetwotypesofsmartcontracts,theseareshownincodesnippet3and4.Inthedesigntwoexternalpartiesarepresent,thesupplierandtheDSO.Bothprovide

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anAPIwhichisusedtomaketheirpricesavailabletotheusers’appandtheybothhaveanaddressontheblockchaintoreceivepayments.Therearealsothreeobjectswhicharealsopresentineverydaylive:thesource,appandchargestation.Inthedemo,theyarebuiltstandalonetocreateareal-worldenvironment.Ademocontrollertakescareoftheinterfaceandthethreeobjectsandtwosmartcontractsregisterthemselvesatthedemocontroller.

ThedemocontrollertakescareoftheinterfacerenderingusingJavaScriptandReactJS,aworldwidelibrarydeliveredbyFacebookformanaginginterfaceelementsthroughastatelibrary.Eventsinasmartcontractcantriggerfunctionsintheinterfacewhentheinterfaceislisteningtotheseevents.Figure30showsanUMLsequencediagramwiththeinteractionshappeningbetweenthecomponentswhenthedemostarts,acarstartschargingandfinisheschargingwhenitsbatteryisfull.Greenobjectsaresmartcontracts,redarereal-lifeobjectsandblueareinvolvedparties.

1. contract sourceInterface { 2. address public owner; 3. address public supplier; 4. uint public impossibleDeliveries; 5. mapping(uint => uint) public meterValues; 6. uint[] timestamps; 7. struct saleDeal { 8. uint chargeSpeed; 9. uint chargestationId; 10. } 11. mapping(uint => saleDeal) public saleDeals; 12. uint[] public activeDeals; 13. event DropUser(uint dealId, uint chargestationId, uint meterValue); 14. function sourceInterface (address _supplier) public; 15. function newMeterValue(uint time, uint value) public; 16. function validateAvailability(uint oldValue, uint newValue) public constant returns(boo

l); 17. function getLastMeterValue() public constant returns(uint); 18. function newSaleDeal(uint chargeSpeed, uint dealId, uint chargestationId) public; 19. function stopSaleDeal(uint dealId) public; 20. function getDeal(uint dealId) constant returns(uint); 21. function removeFromArray(uint[] array, uint index) internal returns(uint[] value); 22. }

CODESNIPPET4:ABSTRACTCONTRACTSMARTCHARGEFORTHESOURCE

1. contract dealInterface { 2. address public owner; 3. struct deal { 4. address source; 5. uint sourcePrice; 6. string supplier; 7. string dso; 8. uint dsoPrice; 9. uint chargeStation; 10. uint startValueStation; 11. uint etherPaid; 12. uint chargeAmount; 13. address user; 14. } 15. mapping(uint => deal) public deals; 16. uint[] dealIndex; 17. struct chargeStation { 18. bool isEntity; 19. address walletAddress; 20. mapping(uint => uint) meterValues;

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21. uint[] timestamps; 22. string dso; 23. } 24. mapping(uint => chargeStation) chargeStations; 25. event StartCharge(uint chargeStation, uint chargeAmount, uint dealId); 26. event StopCharge(uint chargeStation, uint endValueStation); 27. function FCSdealInterface() public; 28. function registerChargestation(uint id, string dso) public; 29. function newMeterValue(uint id, uint timestamp, uint initialMeterValue) public; 30. function getChargestationInfo(uint id) public constant returns(uint, string); 31. function newDeal(address source, uint sourcePrice, string supplier, string dso, uint ds

oPrice, uint chargeStation, uint startValueStation, uint chargeAmount) public payable; 32. function finishDeal(uint dealId, uint endValueStation) public; 33. }

CODESNIPPET5:ABSTRACTCENTRALCONTRACTSMARTCHARGE

Thedemointerfaceasshowninfigure31allowsuserstosimulatereallifesituations.Energysourcesaresupplyingenergytothegridandthisisconsumedbythechargingstations.Carscanbedriventothechargingstationsandassoonthecararrivestheapppopupswhichisshowninfigure32.Whenasourceisselecteddealsaremadebetweenthesourceandchargestation.Whenclickingonanenergysourceitssupplywilldropdownsoitisonlygeneratingenoughenergyfor2chargingstations.Thissimulatesareal-lifesituationandprovesourreal-timeguaranteeoforiginstatement.Whenthesourcedoesnothaveenoughenergyforallhisdealsfor5minuteslong,onedealisfinished.InthecaseofSmartCharge,thechargingstationwilllookforasimilarkindofenergysource(forinstancesolarenergyclosetothechargingstation).

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FIGURE30:UMLSEQUENCEDIAGRAMSMARTCHARGE

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FIGURE31:INTERFACESMARTCHARGEDEMO

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FIGURE32:APPINTERFACESMARTCHARGEDEMO

7.2.3 ADVANTAGESOFBLOCKCHAIN

Blockchainaddsanautomatedreal-timepaymentinfrastructurebetweenallinvolvedpartieswhensharingaconnectionwithmultipleenergysuppliers.SincesettlementhastobedoneeveryPTUoreveneachminute,ablockchainreducesthetransactioncostsofthesesettlements.Italsocreatesatransparentplatformforallpartiessotheycanvalidatethepaymentsarecorrect.Ontopofthis,inthisusecaseareal-timeguaranteeoforiginisgiven.Inthecurrentsystemguaranteeoforiginisbasedonyearlyaggregatedsupplysoeventhoughyoubuycertificatesasguaranteeoforigin,youarealwaysusingenergywhenthesourceisnotsupplyinganyenergy.Thesecertificatesarealsomaintainedbyathirdpartyandenergysuppliersbuyingthesecertificateshavetocrossoutallenergythemselveswhichtheyhavesoldasgreenenergy.Blockchainaddsatransparentdecentralsystemaccessibleforanyone.

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7.2.4 VALIDATION

Thevalidationofthisconceptwasdoneinmultipleways.Themostimportantexpertfeedbackwasreceivedfromtwoenergymarketprofessionalsandtwoblockchainspecialists.Furthermore,theconceptanddemowasexplainedinawhitepaperandtogetherwithavideoitwasthesubmissionforaninternationalblockchainhackathon.Itbecametherunner-upintheenergy&environmentcategoryandinternationally,multiplepartieswereinterestedandstillareinterestedtoimplementit.ThelastfeedbackwasreceivedfromablockchaineventatgridoperatorAllianderwheremultipleelectricvehicledrivers,blockchainspecialistsandenergyspecialistswerepresent.

Forthearchitecture,thefollowingwasthemostimportantreceivedfeedback:

- Sincetheconceptexistsofamachinetomachineeconomywithalotofdatatransactionsbeingmade,apossibleimplementationfortheEthereumblockchainaswellastheIOTAtanglewasmade.Inthecurrentstateofbothtechnologies,IOTAwouldaddvaluewithtransactionswithoutfeeandtransactionswithoutvalue.However,IOTAisnotsupportingsmartcontractsyet.Asolutionarchitecturewithoutsmartcontractswasalmostpossible,howeveraguaranteethatanenergysourcewouldnotsellmoreenergythanithasavailablecouldnotbegiveneasilywithoutsmartcontracts.AlsootherconceptsbecamemorecomplexwithoutsmartcontractssoanimplementationwasmadeontheEthereumblockchain.Thisresultedinmultiplefeedbackaboutthehightransactioncostsandscalabilityissues.Fornowtheseareunacceptable,butaccordingtoEthereum’sroadmapthesewillbesolvedinthenearfuture.

- Thereasontouseblockchaininthisconceptwasdiscussedinmultiplesessions.However,insuchasituationwithalotofpartiesinvolved,whereguaranteeshavetobegivenforreal-timeGoOandwherevalueisexchanged,blockchainisapromisingtechnology.Especiallysinceitwasproventhatinothersolutionsnotusingblockchain,athirdpartywasrequiredsuchasintheEnexiscasewhereElaadtookthethird-partyrole.Privacyandreliabilitywasdiscussedduringsomefeedbacksessionsandaconsortiumblockchaininthesecaseswillprobablybemostuseful.

- Inthecurrentscenariovaluetransfersaremadeinthebeginningandtheend.ThemostpopularblockchainorDAGsolutionsalsoprovidepaymentchannels(forexampleEthereumwilloffertheraidennetworkinthefutureandIOTAprovidesflashchannels)todoinstant(micro)payments.Thishappensoff-chaininasecureenvironmentandrequiresonlytwotransactionsontheblockchain.ThisallowstopayperkWhreceivedbythecar.ElaadwillbuildaproofofconceptforIOTAflashchannelsinthebeginningof2018andsuchaconceptcouldalsobeusedinthiscase.

- Inthecurrentarchitecture,agridoperatorcandetermineaflexiblepricedependingonnetworkcongestion.However,atmediumandlowvoltagegridsmostDSO’sdonothavemodernautomatedmeasuringtechnologiespresent.Soitisnotmeasuredreal-timeandonlyphysicallyavailableattransformerstations.DSO’sareimplementingreal-time,fromdistanceavailablegridcongestionmeasurementtechnologiesatthemoment.Inthefuturetheywanttousethistopreventnetworkcongestionreal-timeandso,thesesystemscanalsobeusedinthearchitectureofSmartCharge.

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- Flexiblecharging(notusingthefullchargingspeed)isaconceptthatiswidelydiscussed.ItoffersgreatpotentialforDSO’sandTSO’stobalancethegridandavoidgridcongestion.Withoutevenbeingknowntothecustomer,itwasdiscussedthatthisisalreadyhappeningwhentherearepeaksinthelocalgrid.Thereforeatransparentoptionisrequiredwherecustomersareawareofthepossibleandcurrentchargingspeed.

Theconceptwasalsovalidatedandreceivedthefollowingmostimportantfeedback:

- Theprocessforthecustomerbecomesmoreextensive.Atthemomentacustomeronlyhastoofferhiscardtothechargingstationandthecarwillstartcharging.WithSmartCharge,onehastouseanapp,scanthecode,selectthedrivingdistanceandenergysource.Forcustomersnotinterestedinenergythismightbeabarrier.Thereforethefollowingupgradeinuserexperiencemightbedesirable.TheNFCchipinamobilehponecanbeusedtolettheappknownwhichchargingstationthecarisusingandacustomercanonlyatfirstusageselecthispreferredcategoryofenergysource.Inthisway,acustomeronlyhastotouchthechargingstationwithhisphoneafterfirstusage.Inthefutureitcouldalsobepossibletoconnectthecarandapp,soalldatacanbetransmittedoverthecabletransmittingtheenergytothecarandnouserinteractionisrequiredatall.

- Whenusingflexiblecharging,aparkingspotmightberequiredforalongertimethennecessary.Atthemoment,onecangetafineforkeepingaparkingspotoccupiedwhichhasachargingstationwhenthecarisfullycharged.Whencarsarechargedslowlyorwithinterruptions,theykeepparkingspotsoccupiedforlongertimes.Whenchargingstationsarelimitedinacertainarea,asolutionshouldbecreatedforthisproblem.

- Notallenergysourcesandchargingstationsareequippedwithasmartmeter.Inordertoretrievereal-timedataoneshouldbeequippedwithasmartmeter.IfexistingchargingstationswoulduseaSmartChargeconceptthisimpliesextrafinancialcosts.

Ingeneraltheconceptandtechnicalsolutionwasretrievedverypositivebyallparties.Italsoperfectlyfitswithinthecurrentstepsmadeinthemarkets,forinstancetheEuropeantenderfor4.500chargingconnectionswheresmartchargingisrequiredandausershouldbeabletoselecthisenergysource(Energeia,2017).

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8 PROSPECT

Blockchainseemsatechnologythatsuitstheenergytransition.Asoutlinedintheprevioussections,ablockchainimplementationhassomebarrierswithinthecurrentregulatoryframeworkandwiththecurrentstate-of-the-artoftheblockchaintechnology.Thissectiongivesanswertothesubquestion:


8.1 BLOCKCHAINTECHNOLOGY

Althoughdevelopingquickly,theblockchaintechnologyisstilltooimmaturetobeappliedatlargescale.However,thebasicswillremainthesamesoalotofcompaniesarespendingalotofresourcestoresearchthepossibilitiesforblockchain.Itisexpectedthatinoneortwoyearsthecurrentlymostimportantproblemsareresolved.Mainissuesinblockchainarescalability,transactionfees,securityanditshighusageofelectricity.Scalabilityissuesaretwofold,itinvolvestheamountoftransactionspersecondpossibleandthesizeoftheblockchainandsotherequiredharddiskspacetohaveablockchainnode.Scalabilityforthefirsttypeismainlysolvedbycreatingsidechainsandthesizecanbesolvedbyshardingorsnapshots.Transactionfeesdependhighlyonthetypeofblockchainused,butarealsoreducedbysidechainsorforinstanceIOTA.

Highusageofelectricityismainlyaprobleminproofofworkconsensusblockchainswhichhaveproventheirsecuritythelastnineyears.Newconsensusalgorithmsshouldsolvethisissuebuttheirsafetystillhastobeproven.Forinstance,Ethereum’sreleaseCaspermid2018willbeahybridPoW/PoSblockchain,whichisatthemomentalreadyavailableonthetestnetworkfortestingpurposes.Casperisalsousingahybridchain/BFT-styleconsensus,whicharebothexplainedinsection2.1.4.2.Acombinationofthealgorithmsshouldbeabletocreateanetworkwhichisresistanttodoublespendingattacks(Buterin&Griffith,2017).Regardingreducingthechainsize,theshardingmethodstillisonlyresearchedtheoreticallyanddoesnothavea(test)implementationyet.Anothersecurityissuearethepublicreadablesmartcontractswhichcancontainerrors.Sinceablockchainisimmutableanyonecanuseacodingerrortotransfervaluetotheirownaccount.Thisisoneofthenegativeimplicationsofblockchainsimmutability.

Anotherimportanttechnologyarising,sometimescalledthesuccessoroftheblockchaintechnology,aredistributedledgerswithaDAGstructure.ImportantcharacteristicsofDAGsaretheeliminationoftheextremeenergyusage,transactionfeesandifallowedbythenetwork,theabilitytodotransactionswithoutvalue.Thiscouldallowforonesystembeingabletodo(feeless)dataaswellasvaluetransactions.OnlysomePoWhastobeconductedwhenoneexecutesatransaction.

Foreachoftheninedifferentappliancesofblockchainintheenergytransition,researchcouldbedoneintothemostsuitableblockchain.Sincesolutionsarecreatedwithintheenergytransition,anblockchainimplementationusingasignificantamountofenergyisdiscouraged.Thismeanscurrentlyusinga(delegated)PoSalgorithmorDAGarethemostsuitabletypeofblockchains.Otherrequirementscanforinstancebethenecessityforsmartcontractsand/ortheneedforfeelesstransactions,probablydependingifdataonlytransactionsarerequiredandonthetransactionvolume.

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8.2 REGULATORYFRAMEWORKS

Asaconsequenceofthedisruptivedecentralizedblockchaintechnology,governments,supervisorybodies,andauthoritiesforconsumers&marketslosecontrol.Dailybillionsofcryptocurrenciesaretransferredoverblockchainwithoutpayingtaxesandknowingthesenderandreceiver.Consumersownlargeamountsofcryptocurrencieswithoutpayingwealthtaxanddisruptivebusinessconceptsarecreatedoutsideregulatoryframeworks.Thismakesauthoritieslosingcontrolandinsomecases,theytrytoslowdownthegrowthofblockchainsbyblockingcryptocurrencies(forexampleinEcuador(Panampost,2014))

WithintheenergysectorintheNetherlands,theelectricityact(1998)determinespartiesandresponsibilitiesfordistributingandsupplingenergy.EventhoughthisactisregularlyupdatedandtheDutchgovernmentrecentlyhasobligatedcompaniestoseparatethedistributionandsupplyofelectricityinseparatedcompaniestoencouragemarketforces,itisalsolimitingdevelopments.PermissionfromTenneTtobecomeaBRPisaverycomplexandtobecomeanenergysupplier,onehastogothroughanextensiveprocessattheACM(AuthorityforConsumers&MarketsintheNetherlands)andhasveryexplicitobligationstotheconsumer.Forinstance,oneshouldsettleacustomerbytheP4datafromasmartmeter,shouldsendinvoices,shouldannouncetheirenergypricestotheACMandthenameoftheregisteredenergysuppliershouldbenamedonthebill.Also,togetaccesstoelectricitymarketsthereisacomplexprocesssothisislimitedtoafewparties.

Allthesefactorscan,andwillreducethepotentialforopportunitiesintheenergysector,especiallyfortheblockchainconceptsinthisthesis.Therefore,authoritiesshouldresearchtheopportunitiestoloosenregulationstoacceleratetheenergytransition.AsPwC(2016)alsopredicts,theenergysectorcouldmovetoadecentralizedsystemwithoutallrequiredparties.

Animplementableroadmapcouldberesearchedwhereeachstepleadstoamoredecentralizedenergygrid.Inanultimatescenario,localneighborhoodsareself-sufficientandnotop-downcontrolisrequiredfromTSO’sandBRP’s.Thismeansonedoesn’thavetopredictandcreateE-programsandonlyreal-timeenergymarketsarerequired(noENDEXandAPX).Tocreatesuchagridinawealthycountrywiththeluxuryofhavingenergywhenrequiredforanaffordablepricewillbeachallenge.Aroadmapcouldcreatestepstoachievesuchasystemwhichshouldbesupportedbythegovernment.Inthisway,alsointhefirststepstheenergybecomesaffordable.

8.3 EXE&BLOCKCHAINCONCEPTS

Fortheblockchainconceptsasgiveninchapter7therearesomepracticalissuesopenforresearch:

- Privacymightbeanissuewhenmetervaluesarepublishedintotheblockchainand/orwhenvalueistransferredfromandtoaccounts.Itmightbeunknowntothepublicwhichwalletbelongstowhichperson,houseorbuildingbutitcouldsomehowbetraceableorthedecentralizedledgercouldbehacked.SolutionscanbefoundinblockchainprotocolslikeMoneroorzeroknowledge-proofprotocolslikezk-SNARKsorZKRP’s(Koens,Ramaekers,&vanWijk,2017)fortheEthereumblockchain.Whentransferringdatalikemetervaluesovertheblockchain,oneshouldprobablyrequireaquantumproofalgorithmsothedatadoesnot

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becomereadablewithindecades.

- Downtimeofthesmartmeterorthedongleconnectedtoasmartmeterisdangerousinsettingswherereal-timedataisusedinthegrid(vanWylick&First+Consulting,2016).Accordingtothisreport,P4dataofsmartmetersarenotthatreliable.ItisunknownhowreliabletheP1portis,howeverdowntimeshouldalwaysbetakenintoaccount.Forsettlementonecouldinterpolateoncethedevicegetsbackonlineandforlongerperiodstheusercouldgetafinancialsanction.

- Interconnectivitybetweenotherblockchainscouldbeveryimportantinforinstancetheidentityquestion.Alotofbanksorregulatoryframeworksfocusondigitalidentityintheblockchain(IBM,2017).Revealingattributescouldidentifytheuserandforinstancehiscreditworthinesstootherpartiesintheblockchain.

- Similarprotocolsandblockchainsolutionscanbeappliedinthegasoroilsector.Especiallygasisofinterestsincethisismostofthetimedeliveredtocustomersbythesamepartyaselectricity(althoughnotrequired).ForaconceptlikeBlockEnergyitmightbevaluabletoalsoprovidegas.However,supplyofgasismorecentralizedandthereforesuitstheblockchain’speertopeerconceptless.Anotherapplianceofblockchainwithintheenergysectoristosettledistrictheatingontheblockchainwhenmultiplesuppliersandconsumersarepresent.AprototypeforthistypeiscurrentlybeingcreatedbyEnecoandCGIintheNetherlands.

- ThefinancialadvantageofusingblockchainwasquestionedintheBlockEnergyconcept.Itwouldbeofinteresttomakeanextensivecalculationofanenergysupplierusingblockchaintodrawconclusionsonthefinancialadvantagesforthecustomer.TherearestillsignificantoverheadcostsinvolvedfortheC-ARregister,dongles,fiatcurrencybankaccountsandmarketingandcustomersupportcost.Alsoincomplyingtotheregulatoryframeworkcostsareinvolved.

ItishighlyrecommendedforEXEtogetinvolvedinblockchaininitiativessincetheycanpositionthoseperfectlywithintheenergymarketswiththeirEntrnceproduct.ThiscouldbeachievedbycooperatingwithlargecompanieslikeShellandBPwhodoresearchonthistopicaswellassmallermunicipalityinitiativescreatinglocalmarkets.HavingaresponsibleR&Dpersonwithextensiveblockchainknowledgecouldbehighlybeneficial.

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9 CONCLUSION

Thissectiondrawsaconclusionfromthewholeresearch.Inthefirstsectionthiswillbedonebyansweringtheresearchquestionsinashortsummaryandintheconsecutivesectionahigherlevelconclusionswillbedrawnfromthecurrentlandscape.Themostimportantlessonslearnedwillbeoutlinedtogetherwithafuturevisioninthelandscapeofenergytransitionandblockchain.Insection9.3shortcomingsintheresearchareexplainedandinsection9.4thelimitationsofthisresearch.

9.1 ANSWERSTORESEARCHQUESTIONS

Inthissectionallsubquestionswillbeansweredfirstandintheendananswertothemainresearchquestionisgiven.

Subquestions:

1. Whatarethecharacteristicsoftheblockchaintechnology?

Thisquestionhasbeenansweredbyperformingaliteratureresearchonthemostimportantaspectsinchapter2.Ablockchain’sdistributedledgerstorestransactionsinblockswhicharechainedtoeachotherbysavingahashofthepreviousblock.Inthiswaytransactionsbecomesimmutableandaretransparent.TheblockchaintechnologysolvestheByzantineGenerals’Problemandthedoublespendingproblemwhichoftenexistinonlinecurrencies.Importantdesigndecisionsincreatingablockchainarewhichconsensusalgorithmisused(forinstanceproofofworkorproofofconcept),creatingapublic,consortiumorprivatechainanddecideifminersofnewblocksshouldberewardedandso,ifnewcoinsaregeneratedovertime.Blockchainsareappliedinhundredsofdifferentcryptocurrenciesnowadaysandthehighestpotentialliesinthefinancial,insurance,publicandenergysectorforfirstbusinessadoption.Someblockchainsalsofeaturesmartcontractswhichisasetofcodewhichrunsontheblockchainandmakesitpossibletosetcertainconditionsbeforetransferringvalue.CompanieslikeMicrosoftandIBMareofferingBlockchainasaService(BaaS)whichmakesitpossibletocreateyourownblockchainquickly.However,limitationsexistinsafetyandenablingthefullpotentialofblockchainwhenrunningyourownorconsortiumblockchain,sinceatraditionaldatabasewithanAPImightbemoreefficient.Ingeneral,onlyincaseswheretrustisanissueand/orarobustnessisrequired,blockchainaddsadvantage.Privateorconsortiumblockchainscanstillbeusefulfordevelopmentandtestingandtouseitinaproductionenvironmentaslongaspublicblockchainstillfacechallenges.Themainchallengesnowadaysarescalability(processingahighvolumeoftransactionsandchainsize),transactionfees,security,invulnerabilitiesinsmartcontractsanditsenergyusage.

2. Whatisthecurrentarchitectureoftheelectricitymarketandhowarereliableelectricityconnectionsprovidedbyallparties?

Thissubquestionisansweredinchapter3bydoingaliteratureresearchandstudymultiplereportsofconsultancycompanies.ThecomplexenergymarketissetbytheElectricityact(1998)intheNetherlandsandwasintroducedtocreateafair,liberalizedandstableelectricitygridby

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decouplingutilitiesandsupply.Tokeepthegridinbalance(meetdemandandsupply),alotofresponsibilitiesarerequiredfromeachparty.ThegridexistsofthehighvoltagegridprovidedbyTenneTandthelowerandmediumvoltagegridsprovidedbymultipleDSO’s.Tostaybalanced,eachconnectionishavingabalanceresponsiblepartywhichcreateselectricity-programsonedayaheadandsendsthemtoTenneT.TenneTaggregatestheseandusesregulatingandreservecapacityduringthedaytokeepthegridinbalanceandemergencypowerinextremecases.LargecustomerscanbedirectlyconnectedtoaBRPwhilesmallcustomersareconnectedtoanenergysupplierwhichtakestheroleofBRP,oriscooperatingwithone.Theelectricitymarketisusedtotradeenergyforaspecificday,whichwillbegivenas‘D’.TradingfordayDcanstartfrom4yearsbeforeattheENDEXfuturemarketwhichprovideslongtermcontracts.TheAPXistheday-aheadmarketandOTCdealscanbemadeeventhedayafterD.E-programsaresubmittedbytheBRPsD-1at14:00andcontainsthesupplyanddemandperPTUfortheportfolio.Intradaymarketsmakeitpossibletolowerdifferencebetweenthee-programandactuals.Allocationandreconciliationprocessestakecareofthesettlementforanyimbalancesinthee-programandactualsandinvoicesaresentfromTenneTtotheDSO’s.Thesecomplexprocessesformanobstacleintheenergytransitionduetotheunpredictablesupplyfromrenewableenergysources.3. Whatarethechallengesoftoday’senergytransition?

Worldwidealotofprogramsfocusonphasingouttheusageoffossilfuelsandincreasetheshareofrenewableenergy.Forinstance,theParisagreementsignedby195partieswillcommitthemtomitigateglobalwarmingandreporttheircontribution.TheEuropeanUnionhasthegoaltocreatea20%renewableenergymarketshareby2020and27%in2030.However,renewableenergygivesalmostnoflexibilityinproductionandisveryunpredictableandunstablesoitcreatesalotofchallenges.Also,thedemandforenergyiscreatingmorepeakssincegasisphasedoutintheheatingofhousesandso,housesareheatedbyheatpumpsusingelectricity.Thehighlyexpectedincreaseofelectricvehiclesalsocreateshigherpeaks,botharehighlyusedatcertainmomentscreatingpeaks.Solutionsareforinstance,butnotlimitedto,theuseofhighvoltagebatteries,demandresponsesystemsandcreatinglocalself-sufficientcommunities.Thus,electricvehiclesalsoprovideopportunitiessincemostofthetimestheyprovideflexibilityindemandandcanalsosupplythegridwithenergy.Theenergytransitionismainlyledbottom-upwithconsumersandinitiativesbecomingmoreenergyaware.Theprosumerisinvestingtogetherwithinitiativesfocusingonmunicipalitylevel.Inresearch,oneoftenreferstothisphenomenonasgrassroots,community-ledsolutionsforsustainability.Themainchallengesarecreatinga100%sustainableenergygridwhichisstillreliableandaffordable.


Thisexplorativeresearchquestionofexistinginitiativeshasbeenansweredinchapter5.Byfar,mostinitiativesareenablingpeertopeerenergytradingontheblockchain.Thedecentralizedsupplyintheenergytransitionsuitstheblockchainsinceitallowspeertopeertransactions.Someofthepeerenergytradinginitiativesalsofocusonthelocalaspectbycreatingsmallermarketsatmunicipalitylevel,soonecanonlytradeenergywithgeographicallyclosecustomersandsodemandandsupplyisbalancedatalocallevel.Othertypesarerewardingcryptocurrenciesforrenewableenergy,usecryptocurrencyaspaymentmethodforsharingyourenergyconnectionandtobalancethegrid.Insection5.4moreopportunitiesforblockchainintheenergysectorareoutlinedwhichwerenotfoundincurrentinitiatives.Thesewerederivedfromexistingproblems

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orlimitationswithintheenergymarketsandgridrecalledbyenergymarketprofessionals.Theseopportunitiesareusingtheblockchainfordemandresponsecommunication,real-timeguaranteeoforigin,sharingmeterdataandtocreateasystemwheremultipleenergysupplierscanbeusedatonegridconnection,forinstanceatEVchargingstations.


TheEXEproductportfolioexistsofthreesoftwareproductscalledEnwire,R.E.X.andEntrnce.EnwireisaB2B2Cproductandisawhitelabelmarketplaceforlocalgreenenergy.ConsumerscanchoosetheirownlocalproducerasenergysourceandEnwireisonlyinvolvedinbringingtheconsumerandproducertogether.R.E.X.focusesonlargeconsumersandproducersandletthemprofitfromchangingenergypricesbycreatingademandresponsesystem.Devicesflexibleintheirsupplyanddemandrespondontheenergyprice.EntrncemakesitpossibletocreatedirecttransactionsfromEANtoEANorletanEANbuyorselltheirdemandorsupplydirectlyattheenergymarket.IttakestheroleofBRPandso,submitse-programstoTenneTandEntrncesettleswiththeircustomersforanyimbalance.ThepotentialforblockchainfortheEXEproductportfolioisgivenintable8andthehighestpotentialisforEntrncethepeertopeerenergytrading(withorwithoutlocalmarkets)andfacilitatingmultipleenergysuppliersatoneconnection.Mostpeertopeerenergytradingsolutionsdonottakeintoaccountallrequiredpartiesbytheregulatoryframeworkandso,theygivetheresponsibilityforkeepingthegridinbalancetootherparties.Entrncecouldbeanenablerofsuchinitiativesinthecurrentmarket.Blockchainaddsvaluebycheap,transparentandhighfrequentsettlementthroughadecentralizedplatform,sonothirdpartyisrequired.


TwoconceptsforblockchainpropositionsthatcouldbesupportedbytheEntrnceproducthavebeenoutlinedinchapter7.PeertopeerenergytradingcanhappenwhenEntrncewouldtaketheBRProleandsosubmitthee-programsfortheportfoliooftheuserstoTenneT.Thesee-programsarebasedonpredictionsforthenextdaywherethepredictionexistsofsupplyanddemand.Aknowyourcustomer(KYC)perspectiveisthereforeimportant.Sincethoseinitiativeshaveaccesstoreal-timemeterdataandusethisintheblockchain,theinformationshouldberetrievableforpartiesoutsidetheblockchaintomakethemostprecisepredictions.Pricingofenergyandtheuseoftokensareimportantandhighlydifferbetweeninitiatives.Theenergytransitionmakestimingmoreimportantandsothisinfluencesenergypricesthroughouttheday.AdynamicpriceshouldthereforebepaidforeachkWh.Thehigh-levelarchitectureisshowninfigure28.Forsupportingmultipleenergysuppliersatoneconnectionblockchainaddsvaluewithatransparent,short-termsettlementprocesswherevaluecandirectlybedistributedacrossallinvolvedparties.TheproblemwithsuchconnectionsisthatonehastotaketheBRProle,whichEntrncecanperfectlydo.Aconceptforsuchasolutionisgiveninsectioninsection7.2.ThearchitectureforintegratingthissystemwithEntrnceissimilartothepeertopeerenergytradingarchitecture.


Asoutlinedinchapter8,theenergytransitionisalreadycomplicated.Theimmenseandexpensiveinfrastructureisfocusedoncentralandadjustablesupplyandsoaretheinvolvedparties,whiletheenergytransitionstimulatesgrowthofdecentralizedandunmanageablesupply.The

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regulatoryframeworkisdelayingtheenergytransitionandsodolargeestablishedcompanies.Especiallynowtechnologyisevolvingandthedecentralizedblockchainseemstofitthedecentralizationintheenergytransitionenablingpeertopeertransactions,regulationsshouldbeloosedandinsteadofincreasingenergytaxeveryyearforeveryonetoenabletheenergytransitiontop-down,letdisruptivestartupsledtheenergytransition.Afuturevisiononthisisgiveninsection9.2.Itshouldbestatedthattheblockchaintechnologyisnotreadytoenforceatransitiononlargescaleasoutlinedinsection8.1,butmightbeabletodosoinafewyearswhentechnologyismatured.

Howcantheblockchaintechnologysupportandacceleratetoday’senergytransition?

Importanttopicsandchallengesintheenergytransitionarecreatingasustainablereliableenergygridwhereenergyisaffordable.Sustainablyenergyismostofthetimecreatedthroughsolarpanelsandwindturbines.Challengesarethedecentralizationandthereforeshiftedloadonthegrid.Theincreasedloadanduncontrollablesourcesleadtotheincreasedimportanceoflocalenergy,flexibleenergypricinganddemandresponsesystems.Blockchaincouldaddvalueintheenergysectorasdescribedinchapter5:energytrading,localmarkets,rewardingcryptocurrency,payorreceivewithcryptocurrency,gridbalancing,demandresponsecommunication,real-timeGoO,sharingmeterdataandcreatingmultiplesuppliersatonegridconnection.MostsuitablefortheEXEproductportfoliowouldbetosupportthefirstorthelatterwiththeirEntrnceproduct,acknowledgingthecurrentbarriersforpartiesoperatingintheenergymarketsandEXE’sstrategy.TheamountofpeertopeerenergytradinginitiativesusingblockchainisincreasingsoanewmarketforEXEisopeningup.

9.2 LESSONSLEARNED

Theblockchaintechnologyisstillquicklyevolvingandnotmuchscientificresearchhasbeendoneontheapplianceofblockchaininvariousfields.Researchpaperaremostofthetimelimitedtoblockchainastechnologyorastechnologyforpayments.AfewpapersdescribethepossibilitiesforblockchaininmicrogridsandbothPwC(2016)andDENA(2016)takeaveryhigh-levelapproachontheapplianceofblockchainwithintheenergysector.Bothdonotgoin-depthabouthowitcanapplied,donotstudythecurrentstate-of-the-artanddonotoutlinethelimitationswithintheregulatoryframeworks.Goingmorein-depthontheenergytrading,literatureislimitedtotheNRGcoinpapersfromtheVrijeUniversiteitBrussel.However,thesepapersareonlytheoreticalanddonottakeanyperspectiveonthecurrentenergygrid.

Thisthesisisthefirstscientificresearchtakingaperspectiveofawiderangeofdifferentblockchainapplianceswithintheenergysectorandtakingtheexistingcurrentregulatoryframeworksandenergymarketsintoaccount.Itaddsknowledgetoresearchbydescribingninedifferenttypesofappliancesofblockchaininchapter5tosupportandacceleratetheenergytransition.Limitationsincreatingafullydecentralized,self-managinggridareoutlinedandinthenextsectionrecommendationstosupportblockchaininitiativesandtheenergytransitioningeneralaregiven.

Atmorein-depthlevel,twodesignsarecreatedforaspecificblockchainimplementation.Theirconceptsareplacedwithinregulationsandsotakingallrequiredprocessesintoaccount.Forenergytrading,theexistingstate-of-the-artinitiativeshaveledtoageneralizedenergytradingconceptonthe

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blockchain.ThearchitectureiscreatedwithintheEntrncesoftwareproductthatfacilitatestheBRProle.Themultiplesuppliersatonegridconnectionconceptshowstheflexibilityofablockchainbasedplatformandhowitcanfacilitatereal-timeguaranteeoforiginbymakingdealsbetweensupplieranddemand.Bothconceptsincludeademoandimplementedsmartcontractsoftheinterfacecontractsshowninthisthesis.Section9.4outlinesnextstepsforscientificresearch.

9.3 RECOMMENDATIONS

Theenergytransitionisatopicdiscussedoneveryscale,fromneighborhoodtotheworldwideParisagreement.Billionsofdollarsarespenttoacceleratethetransitionfromatop-downperspective.Thepriceacustomerpaysforhisorherenergyismerelyathirdofthedirectcostfortheenergy,theotherpartarefeesandtax.Grassroots,intheNetherlandsmainly‘energiecoöperaties’,tendtotakeinitiativeasgroupsofcitizens,andstartups,arecreatingnewideastoacceleratetheenergytransition.However,theyfacehugebarrierstoentertheenergymarkets.Becomingalegalenergysupplierisanextensive,complicatedandexpensiveprogressandsufficientERPsoftwarerequiresahugeinvestment.Asenergysupplier,youshouldalsotaketheBRProleoryoucanoutsourcethisresponsibility.Thiscreatesanenvironmentwheretheycooperateandsigncontractswithlargeenergysuppliers.

Thecurrenttop-downapproachisnotsolvingtherealproblems.Timeisadimensionnottakenintoaccountinmostprojectswhileitisextremelyimportantintheenergytransition.Prosumersaremainlygeneratingenergywiththeirsolarpanelswhentheyarenotathomeatallandsotheirsurplusisfedbacktothegridandoftenusedagainatpeakmoments.Peakmomentsforcegridoperatorstoupgradethegridwhichisveryexpensiveanddepreciationofthegridhappensupto20yearsearlierthanexpectedduetoextremepeakloads.Prosumerscannowusethe‘salderingsregeling’whichaggregatessupplyanddemandoveroneyearandsoisnottakingtimeintoaccountatall.Also,smartmetersintheNetherlandsarebehindontechnologyandnotevenimplementednationally.Thegoalistoimplementsmartmetersateachconnectionby2020,buttheyarenotthatsmart.Nodirectreal-timeaccesscanbegiventometervaluesbythecustomer.WhereasinothercountriessmartmetersarereallysmartandWi-Fienabled,givingreal-timeaccesstometerdataandsoforinstancecreatepossibilitiesforpeertopeerenergytrading,real-timeguaranteeoforiginor(verificationof)demandresponse,thegridintheNetherlandsisnotreadyforthis.

Asoutlinedinthisthesis,theblockchaintechnologyhasahighpotentialtosupporttheenergytransition.Thisisnotachievableoutofasuddenbutcouldbeachievedstepbystep.Iftheblockchaintechnologyisnotthemostoptimaltechnologyinaspecificcase,anothertechnologyshouldbeused.However,thisthesissuggeststheworldtotakethefollowingstepstoacceleratetheenergytransition:

- Enhancesmartmeterssothirdpartieshavereal-timeaccesstometervaluesinordertoletpeopledirectlytradeenergywitheachotherandtogivethemreal-timeinsightsintheirenergyusage.Iffinanciallybeneficial,enrichthecurrentsmartmeterswithadongle.PrivacyissuesarepresentinsuchintegrationsbutarealsosolvedinthecurrentP4ports.ItwouldbeextremelybeneficialtoofferP1asaservice.Currentlyonecanbecomeanindependentservicesprovider(ODA)atEDSNwhichgivesaccesstoP4portsforcustomersthatsignedacontract.However,thesepartiesarecertifiedandcontrolledregularly.Inafuturesystem,itwouldbebeneficialtogivethecustomerreal-timeinsightinwhocanreadtheirmetervaluesandletthemhandletheaccess.Thisenablespeertopeerenergytrading,rewardingpeoplefor,forexamplehelpingwithgridbalancingorreducingpeaksandreal-timeGoO.

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- Loosentheregulationsthatapplyforenergysuppliers.Theprocesstobecomeoneis

extremelyextensiveandnotaccessibleforsmallerparties.Also,unnecessarytaskslikesettleontheP4portvalueinsteadofP1,havingthirdpartybankaccountsandprovidinginvoicestothecustomersmakeintegrationofforinstancetheblockchaintechnologymoreextensive.ERPsystemsarealmostalwayscreatinglosswhenhavingbelow5.000customerssincepricesstartfromaround50.000euro.Blockchainmightbeabletoimplementautomatedlow-costsystemsforenergiecoöperatieshavingonly100or1.000customers.

- Allowformorebottom-upexperimentslikethepostcoderoostocreatemorefinancialbenefitforrenewableenergyinitiatives.AsalsosaidbyStedin,theonlywaytoletinitiativeslikethembecomeattractiveistocreateafinancialadvantage.WiththepostcoderoosonehastoinvestinrenewableenergysupplytogetataxreductionontheirkWhinthefuture.Thissystemisnottakingtimeintoaccountandonehastoinvestupfront.Takingtimeintoaccountwouldbemostrealisticandinvestmentofrenewableenergyparksorroofscanhappeninotherways.Thereforeitissuggestedonecanuseenergyfromapostalcodeinthepostcoderooswiththesameenergytaxreductionasthepostcoderoos,onlyifthereisareal-timeguaranteeoforigin.Governmentsshouldbeopenforsimilarregulationswhensetupbyenergiecoöperaties.

- RespondtotheextremepredictedgrowthofEVandimplementgridcontrolsystemsatchargestations.ThedisadvantageofEVisthehugepeakloadatoftenpredictablemomentsbuttheadvantagesarethattheyareoftenflexibleinchargingmomentandspeedandtheirbatterycanhelpingridcongestionmanagementandgridbalancing.

- Implementopendemandresponsesystemsatlocalscalewhicharealsoavailableatnationalscale.Atsmallerscaletheycanbeusedforgridcongestionmanagementwhileatnationalscaleitcouldhelpwithbalancingthegrid.Anyoneshouldbeabletoconnecttothesystemanditshouldbeintegratedinhardware.ForinstanceEVchargingstationsandheatpumpsinbuildingsandhouses(especiallyhouseswithoutgasand/ornul-op-de-meterhouses).ThiscouldforinstancebeachievedwithIOTAusingtheTanglewhichisfocusedonM2Minteraction.Peoplecouldberewardedwhenenablingthedemandresponsesystemintheirhardware.

- Donotlimitpartiestocertainrolestheyareallowedtotake.Forexample,atthemomentitislegallydefinedthatanetworkoperatorisnotallowedtobuyorsellenergy.Lawsuitsaretakingplaceagainstthemsinceotherpartiessuspectthemfromhandlingoutsidetheirlegaldomain.Thisseparationbetweentransferringandsupplyingenergyhasbeenmadetoenablemarketforcesandgivecustomerscheapenergy.However,twothirdoftheenergypriceismadeupoftaxsothereisalmostnodifferenceinenergypriceanymore.Furthermore,theseparationhasbeenmadeandnetworkoperatorsareservingeveryenergysupplierontheirnetwork.Makingalsotheirowndealsonthenetworkisnotdirectlydisablingthemarketforces.

Sincethesalderingsregelingdoesnottaketimeintoaccountandcurrentlythereisnoapplicationtotradeenergybetweenprosumersandconsumers,thelargestpotentialtodevelopablockchainapplicationisinpeertopeerenergytrading.ThisalsofitstheEXEproductportfoliosinceEntrncecangivecurrentinitiativesonthistopicaplacewithincurrentmarketsbyofferingtheBRProle.Blockchaintechnologystillhastoevolvetoamaturelevelwithsmallertransactionfeesandlessenergyconsumingconsensusprotocols.AssoonaspublicgridinitiativesariseintheNetherlands,EXEshouldassoonaspossiblecooperatewiththeseinitiativesbeforetheytaketheBRProlethemselves.The

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likelihoodforaninitiativetobuildatechnicalimplementationtofulfiltheBRProlethemselvesislowduetohightechnicalrequirementsandextensiveprocedures.

Whenenergyistradedontheblockchainthiscouldbeextendedtowardsmoredecentralizationofthegrid,forinstancebyusingopendemandresponsemechanismsandcreatinglocalmarkets.Intheforeseeablefuture,itmightevenbepossibletoeliminatetheBRProlesandso,toeliminatetherequirementtopredictusageandbuyenergyupfront.Aself-managinggridisachievablewheneveryoneacknowledgestheresponsibilitiesandcharacteristicsofrenewableenergy.IntheNetherlandswehavesuchextensivesystemsthatitmightbeusefultolookfirstatmicrogrids,especiallyinthirdworldcountries.Developingcountriesaredoingprojectsconnectingthedifferentmicrogridsandareusingtheblockchaintechnologyinordertoprovideeveryonewithenergy.

9.4 DISCUSSION&LIMITATIONS

Sincetheblockchaintechnologyonlyexistssince2009itisstillimmature.In2016and2017itspopularityhashighlyincreasedwithnewfeaturesbeingenrolled.However,stillalotofproblemsarepresenttouseitineverydaylife.Therefore,thisresearchdidnotfocusonwhichblockchaintechnologyimplementationisthebesttousefordifferentcases.Itislikelycertainblockchainswillevolveandenrollnewfeaturesandnewblockchainswillarise.Indifferenttypeofapplicationsadifferentblockchaincouldbeuseddependingonifsmartcontractarerequired,transactionspeed,ifzerovaluetransactionsshouldbepossible(fortransmittingdata),ifowntokensareneeded,etcetera.

Theblockchaintechnologyhasalsoquicklyevolvedduringthisresearch,carriedoutfromJunetillDecember2017.Forinstance,theEthereumblockchainwasupdatedwithanewconsensusprotocolandINGannouncedaZero-KnowledgeRangeProofsolutionimprovingtheconfidentialityinpublicledgers.RelevantinnovationsfortheblockchaintechnologyimplementedbeforeNovember2017havebeenprocessedinthismasterthesis.

Especiallylargeestablishedcompaniesdidnotalwayswanttoprovideallorevenanyinformation.Mostofthemdidnotwanttoprovideprojectspecificinformation.NewstartupsandinitiativesontheotherhandprovidedalotofinformationandwhitepapersareprovidedwithalmosteveryICOprovidingalotofinformation.Technicalinformationlikesmartcontractswasneveravailable.

Ifonewouldsetupanenergygridnow,thiswouldbedoneinatotaldifferentway.TherearesomuchnewconceptspossiblewithITbuttherealworldseemsbehind.Regulatoryframeworksandestablishedcompaniesseemtoslowdowntheenergytransition.Assoonasapartyisnotbenefitingfromatechnologydirectlytheyarenotimplementingit.Forinstance,thisseemsthecasewithsmartmetersbeingbehindonthetechnologysincegridoperatorsdonotbenefitfromenablingthemwithreal-timedata.Thisisadifficultcaseinamarketwithsomanypartiesandroles.

Themostinterestingstepsforfurtherresearchwouldbetoresearchthetechnicalrequirementsandfinancialfeasibilityofreal-timeenergytradingontheblockchainwithlocalmarketsatmunicipalitylevelbeingnearlyself-sufficient.Thecurrentsalderingsregeling,togetherwiththegridbeingoverloadedandsothegridbeingquicklydepreciated,makesenergymoreandmoreexpensive.Withreal-timeenergysettlementandlocalmarkets,nosalderingsregelingisrequiredandgridcongestionreduced.Inordertonotexceednationwideenergyprices,somereductionmightberequiredintheenergytaxintheshort-termaslongasthesalderingsregelsregelingexists.

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Privacyissuesarenotincludedinthisresearch.Althoughitiswellknownthesewillarisewhenforinstancemeterdataissharedreal-time,thiswasoutofscope.Probablyconsortiumblockchainsorquantumproofalgorithmscanprovideasolutionforthisissue.

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