CFC Report Tackles the Hype and Hope Surrounding Blockchain

In 2016, the first U.S. demonstration of energy blockchain took place on President Street in Brooklyn, New York, when five homeowners with solar panels sold some of their excess power to interested neighbors.

The event was managed by blockchain start-up company LO3 Energy, and the transactions handled automatically by computer using “smart contracts” software called Ethereum. The local distribution utility, Consolidated Edison, was not involved.

What Are the Implications for Electric Co-ops?

A new CFC publication, “Blockchain and Transactive Energy: How This Disruptive Technology May Affect Your Co-op” looks at the potential implications from blockchain, a software technology made famous by the cryptocurrency bitcoin. In theory, blockchain—by permitting direct and secure financial transactions between individuals—could allow anyone with access to the Internet to do business without the need to go through an established third-party intermediary, such as a bank or even the government.

As a result, some pundits see blockchain as the beginning of the end for traditional electric utilities—as more residential solar panels are installed, for example, electricity could be traded between households without a utility even knowing.

“Energy blockchain remains in its early stages, with only a few dozen modestly scaled pilots underway,” comments CFC CEO Sheldon C. Petersen. “Any discussion about blockchain’s potential for transforming our industry must acknowledge electricity still requires a physical infrastructure that needs to be managed and maintained. In the end, blockchain is just a ledger system tracking who sells and who buys something—it’s not a system that manages power flows.”

What’s the Future of Blockchain?

As of March 2018, the energy analysis firm GTM Research counted more than 120 new blockchain start-ups opening for business in the energy sector over the past year, attracting $324 million in investments and more than 40 deployed projects. 

“Like many technologies today, blockchain puts more power in the hands of consumers,” Petersen notes. “It could become a useful tool—alongside other technologies and components that make up the palette of transactive energy—for allowing solar, battery storage and other distributed energy resources to become more productive grid assets.”