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Researchers in Ontario Push the Envelope: Can They Generate a Breakthrough?

Blockchain could offer a cheap and secure way for households to certify their electricity production and track transactions

Blockchain can do more than drive cryptocurrency transactions, according to Dr. Srinivasan Keshav, one of the top researchers at the Waterloo Institute for Sustainable Energy (WISE) – based at the University of Waterloo in Ontario, Canada. This computer science professor sees a new opportunity to enable small-scale energy producers to sell green electricity to the highest bidder.

Currently, a homeowner with a dozen photovoltaic panels on his or her roof has only one option for selling the electricity which is produced: to the local utility at a price established by government.

But, as Dr. Keshav points out, lots of companies are keen to prove their eco-credentials by buying renewable energy certificates (RECs) to offset the carbon-intensive electricity they use. Unfortunately, certifying RECs is cumbersome and expensive, putting it beyond the reach of smaller producers.

Blockchain could change that by offering a cheap and secure way for households and other small-scale producers to certify their electricity production and track transactions.

The problems are focused on one challenge: bottlenecks. Currently, blockchain can only support a few hundred transactions per second, because before a block of transactions is confirmed, several servers must agree on its contents. When those servers are scattered around the world, delays and communication failures can slow down that process.

Dr. Keshav and his WISE colleagues have created a solution which they call Canopus. By ensuring that the servers which verify a particular block are near one another, Canopus speeds up communication. The researchers are now creating a prototype Canopus-driven blockchain they anticipate could handle more than a million transactions per second.

If successful, this new system will open up markets to all green-energy producers, regardless of their size. Furthermore, it will make investing in smaller renewable energy systems a more attractive proposition.

According to Professor Jatin Nathwani, WISE’s Executive Director, we “will see a dramatic change of role of the customer in the emerging ‘smart’ or ‘intelligent’ power gird. As the customer moves from being a passive consumer to an active participant in the production and consumption of electricity services, the entire framework of financial settlements of electricity flows will require fundamental rethink”. As an active member of the Energy Transformation Network Ontario, Dr. Nathwani thinks that transactive energy and ‘peer-to-peer’ transactions have the potential to make a significant positive contribution to an evolving electricity market.

WISE has gone further than others in pursuing these innovations WISE established a cluster of research activities to advance the concepts of blockchain in the energy sector. As the role of distributed energy resources changes, we will see increased penetration of  solar on roofs, local wind generation capacity at the community level in remote and distant geographies, electric vehicles begin to assume the role of “quasi” power plants on wheels able to provide ancillary services to the grid with the emergence of  Vehicle-to-Grid (V2G) technologies, Batteries-as-a-Storage Service (BaaS) to homes and distribution grid simultaneously and buildings linked through intelligent sensors able to arbitrage energy services.

Professor Keshav and his WISE colleagues have developed a prototype blockchain solution called Canopus with capability of handling more than one million transactions per second in support of the Renewable Energy Certificates (REC) trading. The goal is to reduce the cost of certification, eliminate onerous auditing and avoid non-market price controls, so that even a small-scale green generator could de-risk investments. Today’s blockchains cannot support the addition of more than a few hundred certificates or trades (we can call them both “transactions”) per second. This is because blockchain servers require agreement on the contents of each block with endemic server and communication failures and the presence of malicious servers. This is known as the difficult “consensus problem.”

Currently, BitCoin, the best-known blockchain, supports only about 10 transactions per second. Meanwhile, HyperLedger (IBM’s competing solution) supports under 1,000 transactions per second. Dr. Keshav’s Canopus prototype takes a server’s location on the internet cloud into account, minimizing communication between geographically distant servers.

By keeping most communications local and fast, blockchain servers can process far more transaction records each second than a traditional consensus protocol that doesn’t take location into account. This improvement in scaling allows even mom-and-pop green generators to obtain certificates and participate in energy transactions. In long term, this work will encourage homeowners and small businesses to invest in renewable energy technologies to become green generators.

Blockchain applications have the potential to create substantial new value in the energy sector. The blockchain ledger is currently used to reduce transaction costs, pinpoint origins of energy, increase the efficiency of exchanges, and maintain more proficient records. This technology also gives consumers the opportunity of distinguishing where energy is coming from – whether it be renewables-based or traditional fossil fuel-based power generating plants.

In the past, electric grids used to measure electricity as net amounts and don’t allow consumers to pick and choose. Now, consumers are empowered to choose their preferred energy generation option and switch providers. The new and emerging technologies in play here can help to overcome a process which is currently full of both technical and financial constraints.

One key goal at work inside WISE is this: to enable to Ontario’s electricity consumers to become 100% green. If Canopus, and related blockchain technologies fulfill their primes, it may well help to accelerate the transition to greener and cleaner systems.

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