Blockchain startup Electron wants to disrupt global energy infrastructure
Strategy Director Jon Ferris from Electron details how the startup applies blockchain technology to help guide the development of future infrastructure.
Interview from Blockchain Week London on 23 January 2018.
Read the transcript:
I'm Jon Ferris, strategy director at Electron, and we develop blockchain systems for the energy sector.
Do you have your own native currency?
Yes. The energy sector is facing a lot of transformation, whether it's decarbonisation, decentralisation, as generation moves towards the consumer and digitization. There's a growing need for coordination and collaboration among the various parties. We are looking to apply blockchain to the underlying problems of the data that needs to be shared amongst those parties in order to create a platform that will allow innovation over the next 10-20 years as the industry evolves.
Okay, and so what problems is it that you're solving that haven't yet been solved?
Well, we've got two main projects looking at two different problems. One is just the sharing of data. No one knows, no one has a complete end-to-end view of what's connected to the grid, which might sound absurd, but the way that the grid has been sectioned off into different parts, there's good visibility in one area of large-scale generation. Distribution companies are finding it more challenging to understand what's connected to their networks because 5-10 years ago it was dominated by fairly homogenous consumption, particularly at the residential level.
Now, there's more and more generation that's going in on the distribution networks behind the meter. There are assets behind the meter that are controllable and a lot of the data around these assets is being held in silos, is being duplicated in ways that you don't have visibility, and people who are trying to operate and balance the network, don't have visibility of the capabilities of the assets connected to the network.
So one project we're working on is a platform where the owners of that data can share it. They're incentivized in a way that doesn't happen today to make sure it's accurate, and they're incentivized to share and are rewarded for sharing that data.
The other platform that we're working on is flexibility trading. At the moment, the way the industry has developed, the wholesale market is traded out on the transmission network where generation used to dominate.
The forecasts are that over the next five years the majority of generation could be on the distribution network much closer to the consumer, and yet there's no platform, there's no market, that allows the consumers to actively engage with the wholesale markets and bring flexibility.
And that's needed because the increasing levels of renewable generation and the closure of the fossil fuel power stations that bring flexibility from the generation side are disappearing in order to decarbonize the network. Flexibility has to come from somewhere, and consumers can bring that flexibility if there is a pathway for them to do so.
So we're developing a flexibility trading platform with a consortium of some very large and very small energy players, which is one of the great attributes of a blockchain-based platform, that it's not dominated, it's not owned by one large central party, it's not dominated by the largest. It brings this ecosystem together. And that can enable the demand side and consumers to bring flexibility to help balance the networks and to help integrate increasing levels of renewable generation on the grid.
So you said that decentralization is a key part of why using blockchain systems is useful. Are there any other reasons why this is a better way to do it than what exists currently?
It's a method that mirrors what's happening at the underlying physical level. We are seeing the decentralisation of the physical worlds. So a decentralised digital layer matches that in a way that the decentralisation of the assets is very difficult to coordinate from a centrally controlled top-down approach, which has historically been the way the industry is run. So we definitely see an opportunity to mirror both the physical and the digital worlds to help balance the system at different levels.
So whether it's behind the meter at a local level and all of that requires coordination and collaboration, and it can't happen when you have a central incumbent counterparty that it is potentially going to hold back innovation. The industry is developing in ways that no one can foresee. In the last 5-10 years, it's changed beyond all recognition and that's going to continue. So we need an environment where innovation can take place, where innovators are free to experiment.
In traded markets, liquidity will go to the best products and whatever they are, and anyone who thinks they know what the industry is going to look like in five years time is probably going to see a few surprises.
And what stage you are at?
At the moment, we've developed proof-of-concept platforms. We're hosting a hackathon shortly where we've got great interest from across the industry whether its suppliers, generators, software developers, service providers, metering companies that are going to come and interact with our asset-registration platform.
We see that as being one of the first steps of engaging and educating the industry around what they can do with an open platform that isn't currently possible the way the industry is currently structured.
Because the open platform and open standards enables the data to be shared amongst parties. They can bring their data and can open it up to other parties and find ways to monetize that data in ways that wouldn't be possible if they held it in their own silos.
And obviously, the energy sector and ownership of data are both really hot topics at the moment. Are you seeing any resistance to what you're trying to do?
We see some questions. There's certainly a lot of concern about data privacy and how the data can be used, who can own that data, but again we see a blockchain-based platform as being one of the solutions, and in the long term, an asset register that works across different industries can change the way the industries are regulated from a vertical industry basis to the consumer owning their data, having control over their data, and perhaps a move towards a more horizontal form of regulation where the retail side is regulated across industries. The consumer data side is regulated, and it's a way to change the way we think about data for the consumer.