The energy sector, like many other technology based industries, is transforming rapidly. The traditional power generation, transmission and distribution architecture is morphing from a one-way power system to a decentralized infrastructure with multidirectional energy flows. Simultaneously, faster, cheaper, and smaller smart sensors and other IoT devices generate valuable data that can be harvested and analyzed to provide ever-increasing insight into the state and use of grid-connected devices. Finally, regulatory effects such as market deregulation, carbon intensity reduction quotas, and renewable energy credit exchanges are accelerating the transformation. Technical and market gaps that need to be addressed include stress on the grid from intermittent generation supply and demand mismatch, limited incentives to install distributed load balancing sources, and how best to pay for upgrades to the grid to accommodate increasing renewable distributed energy resources. Distributed ledger or blockchain technologies are maturing and becoming a viable technology to enable peer-to-peer (P2P) applications across many industries, including the energy industry. Key attributes of distributed ledgers are their transparency, immutability, and security, while decentralized distributed ledgers enable novel trading mechanisms between individual energy users and producers. Strategic Analysis Inc. and team members SAP and Pantheon propose to develop a MultiChain-based energy market that bridges the prosumer and the grid system operator to enable grid-mediated P2P energy trading. The system will incentivize deployment of controllable storage to flatten the load curve and mitigate problems created by intermittent distributed resources. MultiChain is a private, permissioned, lightweight, open-source, blockchain implementation that solves many of the challenges to scalability present in open permission-less blockchain implementations used in some high profile, small-scale demonstration projects. A decentralized P2P transactive energy market enabled by blockchain technologies as proposed here is a compelling approach to meet the needs of an evolving energy market. Our approach addresses several challenges that arise from disrupting the US energy markets, particularly as they relate to the need for increased installed storage capacity to match the growth in installed intermittent energy resources. Moreover, this approach addresses the need to pay for physical grid management and modernization by working closely with system operators while building a market-based approach that allows micro-tailored production and consumption that we expect will reduce net electrical costs. This will lead to reduced CO2 and regulated emission, and increased fuel independence in the US. Furthermore, we have built in flexibility and openness to encourage outside innovation which we expect will accelerate US leadership in next-generation grid-connected devices.
