The energy industry is undergoing a profound transformation, of which distributed generation and e-mobility are two important factors. In this context, Blockchain presents itself as a technology capable of enabling new business models that promote the efficient use of distributed energy to meet the energy demand of electric vehicles.
Electric mobility and challenges for the energy sector
The growing demand for electricity worldwide is expected to increase further in the coming years with the growth of electric mobility solutions. In 2018, the number of electric vehicles surpassed 5 million units and, according to the auto industry forecasts, their prices are expected to become equivalent to that of combustion vehicles by 2025, which may lead to electric vehicles accounting for 30% of the world’s fleet by 2030.
The recharge of an electric vehicle’s batteries can be done in public electric charging stations or even at home. Public electric charging stations typically use a fast recharge system with power over 40 KW, where the recharge operation takes around 20 to 30 minutes. Conventional recharging, which can be done in homes with minor adaptations to the electrical installation and using a lower wattage, can take 8 hours or more.
For the electric system, electric vehicles represent a new load, with a demand equivalent to an average load-consuming unit, such as a regular home (something close to 240 KWh). In addition to the electrical capacity required to meet this new demand, the specific characteristics of this load (such as its mobility aspect) pose additional challenges for the electrical system.
Therefore, the necessary adaptation of the electrical system and the creation of a public electric charging station infrastructure are essential elements for enabling large-scale electric mobility. Distributed energy generation can be an important part of this puzzle.
Distributed generation and electric mobility
Traditionally, electricity is generated centrally, by large plants located in regions far from the consumption centers. The electricity generated at these plants then needs be transmitted to the consumption sites, which is done by the transmission and distribution companies.
The distributed energy generation, which has become more common in recent years, is characterized by the use of small generators, usually using renewable energy sources such as solar and wind power, located near the places of consumption. In the case of solar panels, residential installations that serve a specific residence directly are not uncommon. In this context, utility customers who have local generation facilities are called prosumers, since they are both energy producers and consumers.
Distributed energy generation from renewable sources, such as wind and solar power, has been consolidating itself around the world as an alternative to meet society’s growing energy demand and to counter the advances of global warming.
By being close to the places of consumption, these Distributed Energy Resources (REDs) can be used to efficiently meet the demand of electric vehicles, reducing investments in power transmission systems, as well as the inevitable transmission losses that happen when energy is generated in a centralized manner.
As Blockchain technology promotes decentralized business models, its use may be suitable for recharging electric vehicles from distributed power resources.
Blockchain on electric vehicle recharge
Blockchain can be compared to a ledger where transactions are recorded. Data is stored in a decentralized way on the computers that are part of the system, so Blockchain is called Distributed Ledge Technology. Records from different transactions are stored in a chained manner so that new record information can only be validated if all records previous ones remain intact.
Thus, technology promotes decentralization, eliminating the need for a central authority, as both registration and validation of transactions are done by the computers (or nodes) that are part of the system. In addition, Blockchain is considered a transparent solution (as all network nodes can have access to stored information), highly secure (since stored data can hardly be changed), high reliability and availability (as the system continues operating normally even if one or a few network nodes fail to operate).
About this distributed and secure Blockchain infrastructure, smart contracts (smart–
contracts) enable transactions to be carried out automatically by the system. Smart contracts can be understood as portions of programs (computer codes) that are executed during the execution of a transaction. This mechanism can be used to ensure that contract terms and business rules (such as an asset price, available balance, etc.) are automatically verified by the system while executing a transaction, reducing costs and increasing the efficiency of these processes.
The best-known application of Blockchain technology is Bitcoin, a virtual currency that enables peer-to-peer (P2P) financial transactions, without the intermediation of financial institutions such as banks. The use of technology in the energy sector is also beginning to be explored, the most common case being the direct commercialization of energy between renewable energy producers and consumers.
Blockchain can also be used in the context of recharging electric vehicles, enabling energy transactions, as well as their payment, to be performed through this distributed platform. In particular, the technology enables the distributed, clean and renewable energy generated by prosumers to be used to recharge third-party electric vehicles.
Share & Charge is a pilot of an open electric vehicle charging platform, developed by German startup MotionWerk, which uses Blockchain technology. This platform allows private electroposts to be shared with other electric vehicle drivers. That is, it is a kind of marketplace, where electroposts owners can share their recharge points with third parties, also defining the conditions of use, such as availability times and the price of energy.
Drivers can use the Platform App to find an available electropost, perform the recharge operation and make the payment, which is made through the platform’s own virtual currency (created via the Blockchain). Thus, recharge and payment transactions are all performed through Blockchain, reducing the participation of energy utilities and banks in this process, and consequently reducing the costs of operations.
This sharing mechanism promotes private investment in recharging infrastructure as well as distributed power generation. Imagine that in the not too distant future, you may have a solar-paneled home for the generation of electricity consumed in the home and for recharging your electric vehicle. In addition to ensuring your own power autonomy, you could also sell the excess power generated to other electric vehicle drivers, providing a return on investment in generation and recharging infrastructure.
This example shows how Blockchain technology can be used in the context of recharging electric vehicles, in a solution that encourages private investment in recharging infrastructure and distributed power generation, two key elements for enabling large-scale electric mobility.
This is all done on a distributed platform that reduces the role of intermediary institutions (such as banks and, in this case, utilities), which can ultimately lead to a reduction in the price of energy. It is important to remember that regulation is a key element for enabling the use of technology in these new business models.
Problems and limitations
Blockchain is a recent technology that has caught the attention of many industries for its ability to enable new business models. However, the use of technology, especially in essential applications such as the energy sector, is still widely discussed.
One of the points often questioned is the scalability of Blockchain-based solutions, as consensus algorithms in distributed systems may require excess time, processing power and energy, which could make some use cases unfeasible. Solutions to this and other technical problems have been proposed by the community and their effectiveness will be proven as these solutions are validated by industry companies.
For the energy sector, which is traditionally a highly regulated segment, regulatory issues are also seen as essential for new business models to actually be put into production. However, as we have seen in other sectors of the economy, startups and companies in the industry are already proposing Blockchain-based solutions in scenarios not yet fully regulated. These proposals will be essential to validate the technology and generate the necessary regulatory requirements to be addressed by the competent bodies of each country.
In a recent article, Forbes pointed to the growing participation of large companies, creating solutions and consortia for specific sectors, including the electricity sector, which should bring the technology to maturity in the coming years.