Distributed Ledger Technology (DLT) is an asset database that is shared and stored across a decentralised network of different and independent users, respectively nodes. All active network nodes guarantee that changes in the database (e.g. digital records or transactions) follow defined rules via a consensus mechanism, which makes the DLT tamper-proof. There are different forms of DLT designs, such as Blockchain (Bitcoin, Ethereum, EOS, etc.) or Direct Acyclic Graphs (DAG) (IOTA, Hashgraphs, etc.).
A Blockchain is a list of records, i.e. linked blocks that are cryptographically secured. Participants in a Blockchain network have access to the records of every transaction, which are securely stored in the ledger in a permanent manner. This technology, for the first time, allows online transactions between individuals without the need of a trusted middleman / platform.
On top of the DLT / Blockchain, a smart contract concept has been developed. This brings automation capabilities to the Blockchain technology, based on the principle ‘If This Then That’ (IFTTT), and enables new applications such as automatic payment after charging an EV. The data, the smart contract, while deployed on the Blockchain, is immutable.
Technology Types
- A DLT-layer (built from scratch, copy of an existing framework, or a public platform (e.g. Ethereum, EOS)
- Application layer (in the form of smart contracts)
- A so-called “oracle” has to be used to trustworthily link the DLT to the real world (human oracle, SW oracle, HW oracle, consensus-based oracle)
Components & enablers
The Blockchain technology dimensions:
- DLT design (Blockchain, DAG)
- Protocol definitions (e.g. speed, block size, etc.)
- Consensus algorithm (PoW, PoS, DPoS, PBFT, …)
- Governance principles (on-chain vs. off-chain)
- Public vs. private (i.e. permissionless vs. permissioned)
- Anonymity built-in (or not)
- Others components (tokens…)
Advantages & field of application
A non-exhaustive list of TSO/electricity DLT use cases:
- Peer-to-peer flexibility trade for system purposes
- Peer-to-peer energy exchanges
- Peer-to-peer certificates trade (origin, CO2 emissions)
- Cybersecurity improvement in settlement (time-stamp)
- Certification of data (fingerprint of a dataset on the Blockchain).
DLT has the potential to:
- Facilitate efficient integration of smaller and decentralised production and flexibility units
- Lower entry barriers for participation to markets
- Improve transparency and trust among different players
Technology Readiness Level
No full-scale commercial projects in the electricity industry have been developed so far. Further improvements are required [ 4 ]. Limitations are e.g. low scalability and a lack of standardisation, but DLT is developing fast.
2020: TRL 7
2025: TRL 9
Research & Development
Research is required for mass adoption in the energy sector:
- Scalability problem (e.g. 2nd layer (off-chain) vs. 1st layer (on-chain) solution)
- Energy efficient, scalable, secure consensus mechanisms
- Confidentiality (for public Blockchain)
- Performance comparison: DLT v. other IT solutions
- Policy/regulation issues - technology/security standards
- Governance issues of Blockchain networks
- Potential security/safety risks
Best practice performance
Specific design requirements for good performance e.g.:
- Smart contract architecture: consider future needs (e.g. mother smart contract with immutable characteristics, linked to other smart contract which can be adapted)
- Limit the data to be put on-chain to those necessary: e.g. only a fingerprint of data (hash which is a crypted and unique representation of the da-ta).
Best Practice Application
Examples of running pilots:
- LO3 (formerly ‘Brooklyn microgrid’) (US): peer-to-peer trading platform for local green energy use [ 1 ]
- Power Ledger (AU): P-2-P clean energy trading [ 2 ]
- TenneT (NL / DE): Ancillary services from decentralised flexibility resources (home batteries, EVs) [ 3 ]
- PJM (US) & Acciona (ES) track origin of energy [ 5 ], [ 6 ]
- ‘Share&Charge’ (MotionWerk’s): P2P service for EV and charging point owners to rent their charging infrastructure to each other autonomously [ 7 ]
Best practice application
References
[ 1 ] https://lo3energy.com/
[ 2 ] https://www.powerledger.io/
[ 3 ] https://www.tennet.eu/our-key-tasks/innovations/blockchain-technology/
[ 4 ] https://www.nera.com/content/dam/nera/upload/PUB_Blockchains_and_Power_Markets_0219_A4.pdf
[ 6 ] https://www.acciona.com/news/acciona-extend-blockchain-traceability- renewable-generation-globally/