Blockchain Technology launched after the financial crisis of 2007-08, broke into public consciousness in 2012-13 with its iconic application – Bitcoin, a cryptocurrency whose jaw-dropping rise both puzzled and intrigued the general population. Ardent support led to its fierce but volatile rise. Since its inception, this esoteric cryptocurrency continues to reshape the global financial markets. Blockchain, the less-understood albeit foundational technology powering Bitcoin, is the real technological game changer, an innovation in some ways as radical as the Internet itself. It provides an opportunity to reshape the Digital economy, empower consumers and secure the digital world. This paper addresses the importance of Blockchain technology and its application in the Energy industry – especially how ISOs can use Blockchain technology to solve some of the ISO challenges and opportunities.
Blockchain technology is more than just ‘Bitcoin’. While Bitcoin is an ‘application’ that is ‘visible’ to end consumers, the underlying and ‘invisible’ technology that drives this application is called Blockchain that is also known by another name – Distributed Ledger Technology or DLT. Simply put, it is the next generation of distributed computing technology that can serve as a new computing platform to implement ‘distributed’ solutions. Distributed computing technologies have been around since the eighties and have been well known to IT practitioners in the field. A few major distributed computing technologies more widely known with their acronyms in the IT field are: OSF DCE, CORBA, J2EE, .NET and SOA. In fact, a majority of computing application and clouds in existence today are based upon at least one of the distributed computing platforms identified above. This paper identifies use cases that do not require or depend on any crypto currency such as Bitcoin or Ethereum. This paper addresses non-crypto use cases that are more germane to the ISOs business models to provide wholesale market functions and grid reliability.
So why is Blockchain so different? Because, Blockchain offers the next generation of ‘built-in’ distributed computing features such as consensus, immutability, provenance/tracking, cryptography, smart contracts etc. that are well suited for today’s not just distributed systems but decentralized digital systems as well. Blockchain takes it one more step further by injecting the capability to design democratized systems. The distributed, decentralization and democratization attributes of the Blockchain architecture are coincidentally very well aligned with the transformation of the energy industry. Although public blockchains may be too slow for real-time transactions, private or consortium blockchains are apt for next generation of solutions for the energy industry.