The Energy Blockchain in 20 Minutes

[Music] my name is greg mcdonald and this is brendan Playford hi guys and we're here to tell you about the the energy blockchain give you an overview of that so today we just would love to take the opportunity to talk to you about a couple different things first of all we kind of want to frame the situation of the state of energy markets today and to find the opportunity for a new energy paradigm and and point out how current public blockchain infrastructure is generally incompatible with with the energy infrastructure today and how we're building a new infrastructure that will enable that transition and then give an example of an application that will run there so energy infrastructure today was largely designed a long time ago and a lot of regulation that applies to it today which disciples the innovation was put in place about a hundred years ago and has been lobbied for to keep in place since then so there's massive inefficiencies in the entire ecosystem and infrastructure and the control and distribution of energy today is actually quite antiquated and so there's a lot of regulation that's preventing us from from implementing a new system so it's super important that we work with the current incumbents to integrate this system and aware of how your energy what process energy goes through to get to your home right now do you even know whether you're a deregulated space or a regulated space there are certain states in America hands up really if anyone fully understands the process through which their energy goes to get to them so one go over here not many people here so the the infrastructure we have right now is pretty antic yeah pretty antiquated and it's set up for a sort of centralized highly capitalized market system whereby you generally have monolithic generators on a network the transmit power directly to a consumer in Europe that's changed a little bit with deregulation as in the u.s. markets where you've got California New England Texas deregulated which gives the opportunity for more competent a little bit more exposure for other players to come into the market and offer unique products and really you know there's there's there's limited opportunities for new players to come in there's limited opportunity for new technologies to be embraced for example novel gasification we obviously have a big rush for solar and wind right now which is being very very well financed but also a lot of light small-scale projects yeah basically energy units that are generated and intended to be used by a consumer only 10 of those actually get to the end point and when you do something like a data center for instance it's closer to 1% so this is actually ridiculously low and most of that happens because of inefficient power generation so if we can localize the power generation and provide an infrastructure that enables that and enables the value to be transferred in that new ecosystem then we can really increase the yeah and I'm just gonna add science that really quickly as well the International Energy Association by 2050 is planning on getting 57% of all renewables to kind of give global supply of energy so 57 percent of the total energy produced will have to come from in ervil's now an interesting point to note about that is when you look at renewables technology a lot of it is decentralized distributed power small-scale stuff which doesn't really have any links to a network right now so if I've got solar panels on my house yes that's great I might have a grid tie I might benefit from a feed-in tariff but there's a whole host of other tokenize sort of derivatives you can take from that model which can unlock a huge amount of economic abundance from already distributed systems in order to coalesce all of these things together we can do that really well on blockchain so I'm gonna leave Garrett to talk a bit more and then I'll come back to those points what we need to do is create every single device that's able to consumer produce energy is connected as a node and that node is an agent that's aware of all the other nodes in its locality and can react dynamically according to the current market conditions how much energy is being sold for weather what time of day it is whether there's an abundance of solar power that needs to be consumed to not flood the market or flood the power lines and there's actually quite a difference between interacting and physical infrastructure like this and something like finance where here if you mess up some numbers then you can actually cause fires and deaths it's not just a simple rewrite so it's it's actually very very critical that the infrastructure is completely secure and as well which is when you're looking at how these bits of hardware infrastructure get financed so obviously in the interest of the actual utility operator so the actual generator on the network to finance that and create a sustainable way of getting return for investors on those big capital projects again going back to the fact that renewables are generally distributed systems in order to bring about an unlock value and create more incentive for people to either crowdsource or pull together of resources or small groups of community investors into I don't know like a biogas or a wind project in Africa giving a platform where people can come together to actually finance that giving these distributed systems where at the moment you can take a renewable energy credit for example for a small solar installation on your house and participate in the rock or the rec market which for small independent people with solar panels on their house is not something can do you generally go through an agent you generally bundle these wrecks or rocks up into one package and send them out to auction so we're looking at creating like a frictionless way of moving value around this system and that's moving value not just of energy it's also ways in which smaller producers and smaller participants in the network can benefit from getting value from what they already have and I think that's like that unlocking of value is really powerful here with what we're looking at it's gonna get people a much more frictionless experience and able to do more with what they've got absolutely so here's a little demo that one of our partner companies made a good singularity that just shows a simulation of a local energy grid where all where each section of the network is today I mcli react to the others and it just shows an example of pricing and if you turn off the powerplant how the house is in that Network react so you can see that when the power plant is turned off that the houses will dynamically adjust their consumption and production loads and and basically just react to that so that way in the event of an actual outage in a real power plant the houses will be able to still consume power locally and produce it and interact with each other and this is gonna be a huge resiliency improvement for energy grids all over the world once this is implemented so of course the infrastructure today doesn't work very well for that so we're building a new one and it's called the energy web blockchain and we have our test net live right now and that sets page is live and we just open sourced it on the 1st of this month and it's everything's accessible there we can do 2500 transactions a second right now because it's proof of authority the authorities are energy companies that we currently trust to keep the lights on so we figure that it's reasonable to trust them also to validate blocks correctly and right now it's open network and it will always be an open network that anybody can use freely and run applications and transact value any aetherium smart contract of course is completely compatible and can run on the energy of foundation blockchain and interchange communication is something that we're very much prioritizing and we want to have that coming really soon so for instance projects like polka-dot will be very high on our list to implements that way we can interact with the etherion public blockchain as well i think i just want to reflect on a way that i'm involved in this mix where the project that we're working on right now is called the aurora network and what it is it's an open-source hardware project where through these mechanisms we're building we can actually deploy hardware that's innovative and otherwise wouldn't find funding so i've got a really good example biomass gasification particularly small scale biomass gasification classically is pretty much unheard of unless you're on a commercial scale and when you look at the way in which going back one more one more yeah - this - this whole household model here when you're looking at for example soul there's a supply demand curve of which you've got say this massive abundance of solar energy during the day currently not sufficiently deployed storage batteries to take that power offline and our usage is generally out of whack with that like we're all at work during the day the majority of the actual power consumption isn't until the morning or the evening you get this dull period and we're all used to getting cheap electricity in some regions through the night you get the economy saving between like 1 a.m. 7:00 in the morning that's because big power stations have to keep running they don't just shut down because shutting down costs a ton of money so by implementing this system whereby you can take energy as and when it's needed from core parts and understand what equipment you can bring online and when so for example in the time of high demand you have a bit of equipment that would otherwise cost more to run or more to cut like produce a unit of energy that may come on in these times of high demand and you may have a variable pricing model for that so that energy can be used and acquired and sort of leveled across the network but you're effectively smooth and this is like a smart grid effect so all of these companies are kind of moving towards this more smart grid and again this vision of a more distributed power network this beautifully supports that when you're actually looking at tokenizing for example the energy on the network you need a high transaction throughput to do that the rate and volume of which you're planning on scaling to to make this be a very impactful global sort of infrastructure that allows this transfer of value and flow of markets globally so you can take abundance in one area and maybe deploy that in an area where there may not be the infrastructure or the actual drive to develop in an african community for example so California is a great example California there is an abundance of wall nutshells that are supplied by walnut manufacturing companies so where do they go right now those walnut shells are dumped or burned there is no value being created by that by-product so take those walnuts shells put them through something like a gasifier on site have a grid tie tie that back to the network and actually use that energy in a way where you can either sell that directly to a consumer using your tokenized and link that with more of the smart meters were seeing like there are these inductive smart meters where you clamp them onto your incoming feed of your house and it will do a Fourier transform on your frequencies of your energy and it will tell you after about a month of learning your fridges using 60% of the power your toaster is using 0.

1% whatever that mix looks like and if you analyze that data you can actually start incentivizing good actors in the system so I can make an assessment of what the usage in this house should be if an actor is overusing that they pay a fee if an actor is under using and coming below a threshold they get paid that back so you're not just the incentivizing smarter energy distribution you're incentivizing good behavior your assent advising better practice on the network whereby the participants contribute overall to a lower demand and that's done in like a fluid and organic way because everything is so static right now for instance in California sometimes their events where in the middle of the day on a hot summer day there's a bunch of abundance of solar power that the market just doesn't need the rest of the resources are not flexible so they're not able to ramp down production fast enough to actually utilize the solar energy so the utility companies sometimes ask the solar producers to turn off their panels so that way the abundance of of electrons don't flood the network and so this is obviously a huge waste and not effective utilization of our solar industry so yeah basically enabling the all the resources on the network to be a lot more flexible will enable a much higher utilization of all the electricity we're generating from renewables especially especially the ones that vary yeah and I think this vision as well for the more IOT connected sort of states so where you have these feedback mechanisms into a smart grid where it understands exactly what to switch on and off when it's really kind of that utopian vision of a really efficient marketplace where you're again going back to allowing a nice flow of value so when you unlock value in systems that isn't currently used you know our vision is to then use some of that elsewhere in the world to make an actual impact so take that station that's really abundant and producing revenue and using a portion of that to develop other you know other infrastructure elsewhere invest that in more kind of skunkworks new development open-source hardware which does exist out there that currently isn't getting the attention because it's hard to monetize hard to justify costs and encumbers just would like to continue in the current paradigm yeah exactly and so the ecosystem within energy applications that are seeking to use blockchain infrastructure and some magnitude is expanding super rapidly this is a smattering of of companies that are that are trying to accomplish this some of them we have agreements with already and we're working actively lyft we've spoken with all of them all of them have shown interest in using they do have blockchain for the purposes simply because you can have a lot more transaction throughput and so on so and some of them have gone to the point of purchasing tokens in the energy web blockchain which are used as gas similar to ethan ether and aetherium so yeah i just wanted to say thank you very much it's a huge honor to be here thanks for thanks for having us and yeah we do have a couple more minutes left so if there any questions we're happy to take those thanks guys thanks [Applause] did anyone have any questions if you don't that's fine if you do it's under there yeah right so in your presentation there is a slide where you mentioned that energy demand fluctuates throughout the day and that doesn't coincide with energy that's produced through means like solar my question is what role do technologies like in house batteries think tesla powerwall have in addressing that specific problem yeah absolutely so basically the idea is with the tesla powerwall is if you and if you have an infrastructure that supports the leasing of batteries on a short timescale like for instance over the course of a day then if there's abundance of solar on one home for instance if we just go back to the simulation there's abundance of power on on this home because they have a lot of solar panels and only two batteries and this one doesn't have that but maybe he has more storage capacity then basically you can lease out the battery and use that solar power throughout the day to power everything during the night when it's not there so that way you're shaving the peak a lot so batteries like that play a tremendous role and actually utilizing the solar power more effectively even though you have a obvious decrease in efficiency when you store electrons in a battery you lose some but the gains over just use lighting and utilizing the normal grid is tremendous yeah and I think something I'll add to that as well is not just to be too narrow in solar is to also look at a lot of the other technologies that are out there so in the UK there is a system called the Triad Network and what the Triad network does it is a bunch of distributed diesel gensets very very big substantial ones tied to the grid in strategic locations around the UK between the hours of 6 & 7 p.m. they will switch on they switch on they provide a very expensive kind of surcharged power which balances this load so I think it's about thinking about how you can also bring on more novel technologies like you can use recycled cooking oil that's been reprocessed in a diesel genset as a biomass fuel in a strategic location the infrastructure that costs a little bit more but if you are able to switch it on at the right time of demand and only use it when demand is high then that can help balance that though so it's a combination of storing and finding dynamic load in the network that can instinctively switch on based on the load balancing that's kind of in the smart grid to bring that power on when it's needed so you've got this nice blend of battery which is going to take some time to kind of get affected on the network and novel technologies there to boost it but focusing on renewables for that yeah there was a really interesting talk yesterday that treated this as an optimization problem I guess I'm curious what the change in efficiency is between the optimized version and the normal market if you know sorry in terms of like yeah thanks yes if you could repeat yourself I didn't quite hear the between the witches market and there was a speaker from Berkeley the other day yeah who essentially had everyone sort of bid and schedule stuff and I guess it sounds like it's sort of a real-time auction so I think what you're asking are you asking between the future vision for a network like this and what we have currently is it just an optimization exercise where values coming from efficiency savings because we have a little bit more fluidity in the network is that worst thing anyone else Hey yeah well thank you for the talk I had a quick question about distribution because you talked about production and also storing at the local nodes sure but isn't there an issue of a distribution still being somewhat centralized and also in waterfall pattern which would prevent peer-to-peer send and/or sell energy to my neighbor kind of thing because there's no connection there yeah right now the distribution grid is definitely centralized and the idea is to work with them and bring more and more distribution grid owners on to this network and then eventually we will to decentralize the ownership of that of course that's what we all want we want a completely decentralized system but enabling the current incumbents in the market to start acting with these technologies and profiting more from these is the first step to getting them on board to a really truly decentralized system so then yeah you're completely right that it is still centralized in that there's generally one monopoly in the state like most of California or a state like Colorado where one company often owns the entire distribution grid so yeah we hope that will change over time yeah there are physical limitation by the fact that you can't actually even send energy from your home so because there's no so it depends I think we're saying is so there's we've got deregulated markets and regulated markets which will allow generators access on or off the network and that is split in two you've obviously got the generator you've got the transmitter which is your D&O or your local operation which is your powerlines you then got the utility on the end which you'll retail side of it now what you're saying is that bit in the middle which is generally controlled in non deregulated markets in regulated markets the likes of Colorado that is something that if you want to supply it directly then user you can't if you want to supply it direct to the energy provider and they will pay you a pretty poor rate for that energy then you can also do that and it's then bundled up in their package what I think this is going to do it's going to increase competition in markets where there is already deregulation like Europe like the UK like these particular states in California and what it needs to be it needs to be a community effort to influence and lobby as well through relationships like energy whoever doing like bringing together a consortium to all view this through the lens of this is the future these companies all want smart grids they're struggling to understand how to do that and if you can place their weaknesses with giving them sort of power in areas where they currently don't have it where they have these deficiencies where they need to top it up it's all about working together and understanding where to start and like them where to influence to move forward but I think there will be more power at least from this in the hands of the operators that are building infrastructure like independently than what they're currently is I just had a quick question about the proof of authority chain sure how are like users expected to pay gas costs why would they get ether to pay for the gas costs right now users in the test network gets handed out for free of course in the phone network we're still figuring out the governance principles and stuff we're not launching the main Network the Genesis flock will be in the beginning of 2019 we're still in an exploratory phase figuring out exactly the best mechanisms for that but right now the idea is you you purchase it like you'd purchase either okay thanks okay got you great all right well thanks everybody thanks guys [Applause] [Music]