How Blockchain And Batteries Flipped A Power-Line Developer To Microgrids
By Jeff McMahon, Forbes
Ed Krapels is a curious sort of electrical-transmission developer who thinks we don't need to develop more transmission.
"We need less transmission in the future, but we need better-located and better-sited transmission,” the founder and CEO of Boston-based Anbaric Development Partners told me last week.
Krapels came to that conclusion as he watched diverse technological developments converge, including the falling price of batteries, the rise of wind and solar power across the grid, and the advent of blockchain, the encrypted virtual ledger system behind Bitcoin and other cryptocurrencies.
Together these developments compel the electrical system toward microgrids, Krapels said in an interview and appearance last week at the University of Chicago, and away from big transmission projects.
"Microgrid is kind of a hot new word. We’re going to marry it up with another hot new word: blockchain. And so what we’re now seeing is I think really a revolutionary change in the organization of consumers," he said.
Microgrids allow energy producers and consumers—and the "prosumers" who do both—to set up discrete electrical systems that can function independently of the larger grid. Blockchain allows them to engage in real-time automated exchanges with each other, buying and selling power throughout the day and night as supply and demand fluctuates.
By using blockchain, sellers get paid immediately, without a utility serving as intermediary, without the delays and restrictions incurred now by prosumers who sell power back to the grid.
"The same technology that allows Bitcoin to do what it does, which is to amass an enormous number of participants outside of the banking system, is beginning to be applied in the electric system," Krapels said. "So there are now small-scale blockchain energy systems, that once those become more widely used I think really represent a different form of organization for electric power than we’ve ever seen before."
This form of organization is happening now, as the MIT Technology Review reported late last year. LO3 Energy operates a neighborhood microgrid in Brooklyn, for example, that promotes renewable energy and uses a blockchain ledger. The non-profit Energy Web Foundationis working on an open-source technology infrastructure for blockchain energy transactions worldwide.
To survive without depending on a centralized power plant, microgrids need batteries. And the price of energy storage continues to drop.
"What storage can do, deployed in large scale, is it can store the energy for the times when the wind doesn’t blow and the sun doesn’t shine. It takes a lot of storage to really be able to play that role, but the cost of storage has come down so much that we see that as really the next big disruptive technology," Krapels said.
Batteries will hold the inventory of electrons that will move where they're needed through an automated system of micro-transactions.
"They would be a buyer and a seller of electricity all day long," Krapels said of prosumers in this model. "So imagine they have an electric vehicle and they have a water heater and they have a heating system and they have a big battery, a Tesla battery on their basement wall, that all will be regulated by some app that they have, and the ones who are interested enough can do micro-transactions. I don’t need my car for the next three hours, I’ll sell the power from the car into the system. Right now you can’t do that, but very soon that’s going to become ubiquitous, and it really will change the efficiency with which people use electricity."
My full interview with Ed Krapels will be broadcast soon on Off the Charts, the podcast I host for the Energy Policy Institute at the University of Chicago. The company he founded, Anbaric, has installed two transmission lines between New Jersey and New York and is developing transmission for windmills offshore of Massachusetts. Krapels sees increasing need for offshore transmission, attaching coastal states to wind resources 60 or 70 miles away. But he sees dimmer prospects for large interstate transmission projects.
Interstate transmission is hobbled by the regulatory process, Krapels said, and Jon Wellinghoff, former chairman of the Federal Energy Regulatory Commission, agreed:
“The siting authority and permitting authority for transmission lines in this country is with the states. And the states oftentimes even delegate that down to the county level, in some instances," Wellinghoff said, appearing with Krapels on a Feb. 21 panel event hosted by EPIC.
“It is a much, much more onerous process... because they have to go through each state and each state agency, and there’s not necessarily any coordination, plus not only that you have to deal with all the federal agencies that may be involved.”
Wellinghoff was the longest serving chair of FERC, holding the position from 2009-2013.
“All these things combining together are creating this tension that Ed’s talking about," he said. "Do we build this very big, expensive very long-term infrastructure that can deliver to us very cheap energy sources for a long period of time, or are we going to ultimately be in a situation where some of that will become stranded because of these other technologies at a distributed level that are becoming less expensive and becoming more available to people?"
To Krapels, the answer seems obvious:
"Because I was so concerned about the difficulty of building transmission my company also develops microgrids," he said. "Micro-transactions will be taking place in most places, and as the years go by I think this will become an enormously important part of how we transact energy with each other. The more of that that happens, I think the less new transmission we need."