Blockchain for transaction and settlement for distributed energy resources

CK Umachi and Dick Kim, both of whom work for Pacific Gas Electric (PG&E), the California natural gas and electric company, spoke about the company’s work on blockchain at Blockchain Expo 2019 in Santa Clara, California.

Both work on a team called Grid Edge, where they focus on forward facing trends and technologies, including electrification, microgrids and blockchain. At the heart of their work is the changing grid.

Before working on it at PG&E, Umachi and Kim both had a personal interest in blockchain. Umachi started investing in cryptocurrency back in 2017, when the hype was at its peak. After the fact, he decided to start looking into what the heck crypto was anyway, and that led him down the “blockchain rabbit hole.”

Umachi did a lot of mining with a bunch of different cryptocurrencies. He says he keeps his house heated for a good portion of the year just through that, but that might just be a joke he tells.

CK Umachi discusses what PG&E is doing with blockchain at Blockchain Expo 2019.
CK Umachi discusses what PG&E is doing with blockchain at Blockchain Expo 2019. AUTHOR
Umachi and Kim took the audience through why PG&E is interested in blockchain at all, what they've done so far, and what’s on the horizon.

“I guess PG&E is probably not the first company that popped into your head when you're thinking about blockchain,” Umachi said.

The Grid Edge group thinks about how trends could potentially impact PG&E, and blockchain registered as something to be aware of. The team there has been thinking about it through two strategic lenses. On one hand, blockchain will enable value capture or creation for the traditional utility, and their job is to figure out how that might exactly work itself out. The other question is how and when should PG&E act on this.

“To start thinking about this, we really spent a lot of time just looking internally at what our processes are, reaching out to different internal stakeholders, and understanding where this could potentially have some benefit,” said Umachi.

What the Grid Edge team is really talking about is transactive energy and potential peer-to-peer energy strategies. The Grid Edge team also focuses on policy and regulation, too, since a lot of the policy and regulation has yet to be worked out for a nascent technology like blockchain.

“Understanding how we could start to use blockchain with the current state of the blockchain regulation,” he said. “And then also thinking through what would need to change with the regulations specific to the utility to even enable us to use blockchain to its maximum potential.”

Then there’s market research to be done; benchmarking, understanding what’s out there, and what people have done in this space. “There's been a lot of energy spent in the energy space with blockchain over the last couple of years,” says Umachi.

CK Umachi and Dick Kim, two 'blockheads', talk Blockchain at PG&E
CK Umachi and Dick Kim, two 'blockheads', talk Blockchain at PG&EAUTHOR
A lot of work as been done in Europe applying blockchain to the grid, but less so in the U.S. Umachi, Kim, and the rest of the Grid Edge team want to know what other utilities have done, what startups are up to, and what vendors they might work with.

“Technology scanning and assessment,” Umachi calls it. “Understanding that there are a ton of protocols, a ton of different platforms. Understanding what are these core blockchain protocols and platforms that we could be using—what are the differences, what are the nuances.”

And then the Grid Edge team has got to understand how tomorrow’s technology, like blockchain, will interface with PG&Es existing infrastructure. “We have a lot of legacy infrastructure,” said Umachi. “If we're talking about moving towards a blockchain-enabled future, you have to do a lot of deep thought about how you could make that transition happen.”

A lot of the team’s work comes down to understanding what blockchain technology is all about. “Specifically. with all the hype surrounding it, really understanding what it can and can't do,” Umachi said.

Once all that work is done—the learning, networking, and ruminating—well, then comes the real work. That’s the use cases, of course. “Figuring out how we can actually get our hands dirty with this,” said Umachi.

When it comes to getting hands dirty, PG&E leaves that to a group called internally ‘the blockheads.’ This informal group formed out of employees who showed some interest in blockchain tech. They hail from throughout the company. There’s Umachi, there’s Kim, and there’s also Tim, Liz, and the others.

This group examines what PG&E processes the blockchain could improve. They initially came up with 45 potential use cases for blockchain at PG&E. But, blockchain today probably couldn’t help with most of these in its current state. They whittled these down to a few use cases they could explore. Their focus was on how blockchain could help PG&E grow its business and how they could make it more efficient, as well as aligning with the company’s strategic imperatives.

They started testing blockchain to see how it could improve existing processes with the idea of innovating for a more sustainable future for California.

“That’s something that’s been on our radar for quite awhile,” said Umachi. There’s something called the low carbon fuel standards in California. That got them looking at carbon credits in the state.

PG&E's Blockchain architecture
PG&E's Blockchain architectureAUTHOR
They wanted to know if they could use blockchain as a tool for transaction and settlement for distributed energy resources; mostly for carbon credits at electric vehicle charging stations. And then, they’ve got to figure out a way to make all of this cost-effective, says Umachi. “Can blockchain provide a robust chain of custody tracking in line of sight traceability for utility assets to ensure that we are not losing them, that we can maximize the ability to find these when we need them, cut costs on having to reorder materials that we have access to?”

Kim admits that, for a lot of what PG&E is doing on the edge of the grid, blockchain is not required. Hence, the continued to research towards “understanding what are the value propositions of blockchain.”

Umachi and Kim touched on the auditability piece of blockchain. This might not help at PG&E per se, but it could help out the regulators. As the number of electric vehicles in the state starts to multiply, it's going to be difficult for the state to be able to manage and audit all the charge events across the state in order to know who is owed how many carbon credits.

“You can have that immutable record and find a way for them to kind of navigate that easily using a UI,” said Umachi. “That would be a way for them to audit and ensure that these transactions and these charge events are real.”

source: https://www.forbes.com/sites/justinoconnell/2019/12/15/what-the-blockheads-at-pacific-gas--electric-are-doing-with-blockchain/