Blockchain Applications Can Help Grid Balancing and Management

Since Guidehouse Insights began tracking energy blockchain projects in 2012, transactive energy projects (projects that use blockchain as the foundation for an open energy trading marketplace) have remained the most popular use case within the energy blockchain space. Although transactive energy projects are likely to continue as the most popular energy-related application of blockchain technology, other use cases have potential to grow as the market matures and resistance eases among market incumbents. In recent years, a few projects from leading blockchain vendors have used blockchain for grid balancing and management, indicating a growing market for blockchain-based grid balancing solutions.

Grid balancing and management projects employ blockchain solutions to streamline supply and demand management for utilities. As blockchain applications become more widely accepted, they are expected to become the foundation for automated management of power grids. Over the long term, the cost of human involvement in the computational processes of power trading is too high compared with an automated system operated by smart contracts. Blockchain-based management of power grids has the potential to achieve results more quickly, securely, and at a lower cost.

Pilot Projects Show Interest from Vendors

Two recently completed pilot projects from Electron demonstrate the capability of blockchain as a solution for grid balancing and management. Project Groupe-Bilan Flex in Switzerland and Project TraDER in Scotland both aimed to establish a trading mechanism for an internal flexibility market.

Elsewhere, Austrian Power Grid became the fifth member of the blockchain energy balancing platform Equigy (joining Swissgrid, TenneT Germany, TenneT the Netherlands, and Terna). These grid balancing projects from Electron and Equigy may be a sign of more projects to come for blockchain-based grid balancing platforms.

A Growing Market for Blockchain-Based Grid Balancing

As more renewables add to the grid, they bring added challenges of power flow variability and intermittency. These challenges require new solutions to manage an increasingly variable grid. Blockchain vendors should be ready to meet the flexibility and balancing needs of renewables and distributed energy resources as they arise. In regions with significant wind and solar generation, blockchain-based grid management platforms can help alleviate issues of variability and intermittency by connecting renewable generators to local energy assets able to absorb excess power. A blockchain-based platform can be particularly adept at serving this new grid by using smart contracts to automatically resolve energy transactions.

As more renewable generation and distributed energy resources come on the grid, the market for blockchain-based grid balancing platforms is expected to grow. For a more in-depth look at blockchain-based grid balancing and management solutions see Guidehouse Insights’ Analyst Insight: Blockchain Solutions for Grid Balancing and Management and Energy Blockchain Vendor and Deployment Tracker 3Q21.