Blockchain software company ConsenSys has announced the introduction of a new electricity distribution layer called GridX. Built on the Ethereum network, the system allows for registered users to settle payments in real-time and to optimize their energy usage. This significantly reduces administrative costs incurred due to electricity loss. According to Alex Miller, a ConsenSys team member:
“We believe distributed solar generation will soon be the most cost effective means of electrical generation in many locations around the world. The main reason for this expectation is that non-trivial amounts of energy are lost during long distance transmission.”
According to ConsenSys, approximately 38 percent of electricity costs are attributed to losses experienced during transmission of power. As a result, renewable energy sources such as wind and solar power are taking a significant role in the new energy race, as they are fast becoming more resourceful means to generate electricity.
“Moving power from your roof to your refrigerator is significantly more efficient than pulling it in from the power plant 150 miles away. So while there is a significant up-front capital investment to implement PVs, they pay for themselves over time.”
Nevertheless, while renewable energy sources are efficient, they still have problems of their own. Solar energy panels are strongly affected by cloud cover, which could cause energy production to vary, leading to stress on the system. Conversely, too much solar can be counterproductive to the overall grid by causing overvoltage. When this point is reached, market participants must tap into the market and use the energy, and therefore incur unwanted fees. In addition, the sun isn’t around 24 hours seven days a week. As per Miller:
“When the sun sets and the solar production wanes, carbon-based power plants need to ramp up by ~50% and they are expected to do so quickly, as end users have grown accustomed to limitless energy on demand. This is expensive and difficult; it results in a massive waste of energy.”
Wind power also suffers from its own flaws and weaknesses. Winds don’t blow all the time. Furthermore, on days with peak energy demands, such as a hot day, winds tend to be lighter than average. As a consequence, other generators have to make up for the loss on the grid.
Another possible solution to energy conservation is the use of batteries. However, batteries are currently a counterproductive investment for energy market customers as they only provide nominal returns on investment. Energy market players are aware of this, and that’s partially the reason why they have introduced beneficial accounting solutions such as “smart meters” and “Time-Of-Use (TOU) pricing”- a variable pricing structure that charges energy based on the time of day and season. Currently, energy providers, such as Southern California Edison, have automatically switched commercial and industrial customers to a TOU pricing plan. Residential customers are offered the service as an option.
ConsenSys is adding another solution to this issue through its new innovation, GridX.
GridX seeks to add another layer to the existing grid that will redefine energy markets and provide an efficient energy distribution for existing grid infrastructures. According to Miller, GridX could potentially offer “a more efficient accounting system” for energy providers by automating decisions based on user preferences.
GridX uses ERC20-compliant Unit of Electricity (UE) tokens that function as tradable energy credits. These credits will be available for users to trade over exchanges based on supply and demand principles. At a recent Rice University discussion, Miller described the hacker-resistant system in detail:
“The only actors on the network who can affect the money supply are registered smart batteries. And the way that they do that is that they call the smart contract every 15 to 60 minutes, and they report their charge.”
These “smart batteries” present a solid solution to energy conservation woes by offering an automated way for customers to capitalize on energy markets by buying and selling energy when it’s most advantageous to them. According to Miller, GridX will offer a better customer experience for energy providers.
“If the grid has too much energy, you would expect prices to be low. Batteries would naturally charge up on the cheap energy and wait until prices rose to sell it,” said Miller in his Medium post.
Miller went on to say at Rice University:
“If the charge is greater than the balance, the money supply expands and the smart contracts issue new UE. If the charge is less than the balance, similarly, the smart contract revokes UEs from that battery and it shrinks the money supply.”
ConsenSys tells ETHNews that GridX will also operate without the use of smart batteries. The company plans to cover the concept in greater depth in future Medium articles, which are slated to be released within the next few weeks.
Nevertheless, a number of Proofs-of-Concept have surfaced over the past year that utilize blockchain technology for grid-based energy transmission. Moving forward, this may well be the future of the energy sector, as it offers a more resourceful, cost-efficient, and environmentally friendly option for energy providers and their customer base.
Dan is a US Army veteran and Los Angeles-based writer passionate about science and technology, current events, human rights, economic impacts, and strategic calculus. Dan is a full time staff writer for ETHNews and holds value in Ether.