Energy Efficient Homes and Buildings

Energy Efficient Homes and Buildings

Introduction

EU households, heating and hot water alone account for 79% of total final energy use (192.5 Mtoe  Heating and cooling account for about 48% of the energy use in a typical U.S. home, In the East it is the cooling load that dominates the households energy utilization . 

Heating and cooling of buildings do not get the same attention as climate change, but these should be paid attention as, both are carried out in a very inefficient manner. Buildings are a long way away from efficient thermal insulation and are not leak proof. .Much of heating and cooling is lost through leaky floors, poorly sealed windows, improperly insulated roofs and walls.

The growing use of air conditioners in homes and offices around the world will be one of the top drivers of global electricity demand over the next three decades, according to new analysis by the International Energy Agency that stresses the urgent need for policy action to improve cooling efficiency. Using air conditioners and electric fans to stay cool already accounts for about a fifth of the total electricity used in buildings around the world – or 10% of all global electricity consumption today. But as incomes and living standards improve in many developing countries, the growth in AC demand in hotter regions is set to soar. AC use is expected to be the second-largest source of global electricity demand growth after the industrial sector, and the strongest driver for buildings by 2050.

Regulation

 The Developed countries have issued regulations for cooling and heating of buildings and homes, this is both an economic waste and cause of emissions. The regulations, however, are applicable to new construction only;, there is need to require renovation of excising structures as well. In the developing world, there is frequently no such regulation, and only very few people pay attention to efficient cooling and heating. It is only high energy prices that induce some people to go for thermal insulation and sealing of windows and doors.

Orientation

Properly insulated and sealed houses and buildings seldom need central heating Walls are the main source of heat loss or cooling loss in homes and buildings. Thermal insulating sheets installed between double walls assist in reducing heat and coiling losses, this, however, is only possible at time of construction. The roof similarly can be insulated by placing a layer of thermal insulating sheets at the time of construction. Insulating sheets can also be placed after construction but this will involve the cost of removing existing materials on the roof.

Windows are also the means of significant heat losses or cooling losses. For starters the placement of windows should be such that the sun should provide the heat and lighting needs for at least a part of the time, this requires pooper placement and directions of windows. The first consideration for energy efficient homes should always be the location and orientation of the building. You should attempt to maximize the use of passive solar gain while reducing heat gain during summer months. Simple directional and design related tweaks can make a big difference to enjoy the summer sun without overheating the house. Good design control of passive solar gain helps reduce heating loads during winter and cooling loads during the summer.

Windows

 The maximum losses occur due the losses from the frame and the fittings. Double or triple glazing of windows help, in severe climate placing inert gasses between the panes also assist in arresting heat losses. Adopting low U-value frames and Low-E (low emissivity) glazing appropriately for the climate and direction is another critical design consideration. For example, higher altitude locations benefit from good UV rays all year round except cold winters. Proposed glazing for any site should take account of occupants' comfort level on completion.

Insulation as a solution

Reducing the heat loss from building elements such as walls and floors is imperative for designing an energy efficient home. A good design of these composite components minimizes the u-Value and R-Value, which provides a passive and long lasting benefit to the buildings' lifetime costs. There are many energy efficient systems and materials available such as ICFs (Insulated Concrete Forms), thicker wall constructions and roof insulations. Additionally, blown-in foam is also a well recognized, viable solution. It's easier to design a well insulated, efficiently lit, correctly orientated and efficiently heated building than attempt to retroactively improve it. Taking good consideration of the local climate and geography, as well as supplementing accordingly with passive shading strategies will pay dividends in the long run for your dream home. Energy efficient design should always be a key consideration for any design team for any building.

Air tightness

Air tightness assist in achieving energy efficiency Windows and doors frequently have gaps that allow heat and cooling losses, simply closing these gaps results in a significant improvement in arresting heat losses.

Ventilation

Air tight and sealed home, the recommended solution is to use heat exchangers as simple fans would defeat the purpose of sealing, will, however, need ventilation, as sealing will starve the home of fresh air. Heat exchangers use heat transfer from the leaving air to the entering air so that either heat of cooling is transferred from the outgoing to incoming air. Heat recovery should be another integral part of the building design for all energy efficient homes.   there are excessive amounts of technologies for ventilation systems. Although the fact that they can now further tweak your home's energy efficiency is a relatively new technology for the domestic market. Technologies such as Flue Gas Heat Recovery (FGHRS) or Waste Water Heat Recovery systems can provide additional cost savings.

Air tightness or leakage has an enormous impact on the energy efficiency of any building. Energy efficient homes should have proper sealing of joints, sills, ducts, doors and vents. This will significantly reduce heating costs for the final building. "Build tight, ventilate right" is a good adage to follow. Clearly, some areas need mechanical ventilation e.g. wet rooms, kitchens, etc.Ventilation systems have become very sophisticated and often include heat recovery technology.

Trees

Engineering the landscape around the building can also play a major role in energy efficiency. Planting deciduous trees on the west and south sides (depending on your geographical location of course) can help provide shade for the building during summer months. On the other hand, in autumn the trees lose their canopies and allow winter sun to heat your home passively.

Heating design

Heating costs tend to comprise at least 50 percent of a home's energy bills. Choosing the most efficient heating system is an essential design consideration and will affect the lifetime running costs of the building. Another consideration should be the addition of controls such as thermostats, weather compensators, etc. to provide an autonomous control  of the heating plant. More sophisticated control systems, Building Management Systems, can actively manage the building heating schedules.

 Lighting Issues

Lighting design is another key factor for improving your home's energy efficiency. Although fluorescent lighting is great, LED's are taking over . The technology has come a long way over the last decade and will save you hundreds of dollars (or any currency) over 10-20 years before needing replacement. LED's are one of the quickest returns on investment and can fit most of the existing light fittings.

Quantify losses

Traditionally, hot water used to be either generated or stored in a cylinder or a tank. Hot water accounts for around 15-20 percent of most domestic energy bills. When designing your domestic hot water system you should seriously consider tank-less water technology systems such as combination boilers. Clearly, the size of the house, number of occupants and hot water capacity requirements of the final home will ultimately dictate the design. A series of combination boilers instead of a large storage tank should provide the volume and supply rate needed for most situations. Additional venting and installation costs would be incurred but, this method of providing instant hot water eliminates storage or standing heat losses in the long run. Solar heating is at apr with gas heating of water , it is suggested that use of solar water heaters be mandated .

 Utilize by the sun

 Being able to generate your own electricity or supplement heating/hot water generation systems using PV or solar thermal systems is a good design consideration. In most cases, you can sell your excess electricity to the grid. However, future technology systems are also expected to enable you to store your self-generated power.

It’s not easy to calculate the return of investment as the market shifts, but it’s a fact that energy costs increase. Correspondingly, so does the cost of solar installations and your cost-savings. The applicability of this technology is of course latitude-dependent and the system size, design and orientation may not be flexible. Solar water heating should be mandated as this is at par with gas water heating. There is no economic sense in not using solar for eater heating

Efficient building Materials

Every homeowner should take advantage of the new eco-friendly technological advances in home building, because they're affordable, more efficient and greener these include: Scrap . steel It could take as many as 40 - 50 trees to build an average house. If recycled steel is used it will take just 6 scrap cars to serve the same purpose. Steel beams can be used as a replacement for wooden ones and can be ordered to fit a specific design. Steel is a very durable material and particularly useful in areas where there are earthquakes and high winds; Concrete is poured between two insulating layers and left in place. It can be used for free-standing walls and building blocks; Plant-based Polyurethane Foam. Plant-based polyurethane foam is usually made from natural materials such as bamboo, hemp and kelp. Used as insulation it offers high resistance to moisture and heat and protects against mold and pests. It insulates better than fiber glass or polystyrene. It's not really a surprise that nature once again has provided us with a better solution to our insulation problems than artificial science; Straw Bales, this material actually is. It's been used for centuries for various purposes (beds, roofing) but nowadays it can help us with its excellent insulation properties. If kept dry they can last for hundreds of years and they bond well to plaster and external render; Cool Roof, Cool roofing technology   will improve the heat dissipation and will lower temperatures in your home during summer A lot. It's also safe for the environment because it lowers heat in the atmosphere.  , it’s their reflectiveness which gives them the name. They reflect the sunlight and thus reducing the heat in your home; Structural Insulated Panels, Manufactured from a layer of foam insulation which is sandwiched between plywood or cement panels. It is fire resistant and suitable for floors, basements, foundations as well as load bearing walls. You can choose from a variety of materials but the principle remains the same. This material will help you reduce your energy bill greatly. You can consult a handyman services company if you want to know more about this; Plastic Composite Lumber, Often manufactured from waste plastic and wood fiber it is more durable and less toxic than conventionally treated wood. It is resistant to mold and rot and more rigid in the cold and pliable in the heat than purely plastic building materials. Also the one in the picture is the anti-slip variety which is suitable for bathrooms and outside decks; Low-E Windows, Low-E windows or also known as "high performance" windows are another great substitute for normal glass which will help you reduce heat during summer and block infrared radiation. They have a clear coating of metal oxide. It also helps keep the heat in during the winter. They can reduce heat flow by up to 50%; Vacuum Insulation Panels, Vacuum insulation panels or VIP (even the name sounds important) are a quick glimpse in the future of home building. Currently only used for commercial refrigeration units they could become available for general home building in the future. They comprise of a textured silver rectangle that encloses a core panel in an airtight envelope. All of this means heat loss will be reduced to a minimum and we'll have much greener homes; Earth, Earth walls.   Have many advantages over other building materials. Mainly, earth is practically everywhere around us, meaning it's pretty cheap. Walls made from earth provide an excellent thermal mass and it is up there with other renewable sources of building materials. 

Cooling Efficiencies in Pakistan

The energy, consumed in a building, can be reduced by adopting simple methods through the use of suitable building design and energy efficient strategies, such as, passive cooling strategies. Passive cooling eliminates the use of mechanical equipment and provides cooling through the use of passive processes. To improve the efficiency of the building envelope, passive cooling strategy reduces heat gains from the external sources and helps heat loss to the natural sources of cooling, such as, cool air, earth coupling and evaporation. Passive cooling is based on the principle of preventing heat from getting into a building during a hot day and bringing in external cool air into the building when the external temperature falls. There are various parameters that affect the thermal behavior of buildings, such as the climatological ones, which are environmental variables and which are not subject to human control. The other type of parameters is the design variables, which are under control at the design stage. Inadequate attention to the aspect of a building’s thermal behavior at the initial stages of its design can lead to an unwelcoming internal environment. During summer, buildings located in hotter regions often face overheating conditions due to exposure to intense amount of solar radiation and high temperature. When these overheating conditions inside the buildings surpass the threshold of thermal comfort; cooling them becomes extremely significant. Energy consumption of buildings both in the developed countries as well as in the developing countries for cooling the building has increased tremendously over the past few decades  . The reason for this is the extensive use of mechanical air conditioning for cooling the buildings. One reason for heavy reliance on mechanical cooling is due to affordable cost and easy availability of electricity as well as cooling equipment. Now, the world realizes that eventually there would be running out of fossil fuel; the main source of energy in buildings at present thereby creating problems in fulfilling the energy demands. Extensive use of fossil fuel is also causing an irreparable damage to the environment. One of the solutions to address the above issues is to build energy efficient buildings using passive heating and cooling strategies. Passive cooling techniques not only offer energy and environmental benefits but they are also very economical. Materials and Methods Methods of passive cooling Passive cooling can utilize several heat sinks and a variety of climatic influences to create thermal comfort in warm regions, unlike the passive heating, which is driven by sun only. Traditionally, passive cooling has been in use in indigenous buildings   The first step towards achieving thermal comfort conditions is to take preventive measures against the radiation from the sun, by shading and reflective barriers and also by heat transfer through the envelope (by insulation and infiltration and infiltration sealing). Minimizing the need for mechanical cooling and extending the range of passive cooling is dependent on good control over thermal gains. The thermal gains can be due to multiple sources such as infiltration of outside warm air, heat conduction through building structure, solar heat gains through windows, heat gains from the occupants and equipment inside the building   Evidently, the more these gains are, the higher will be the cooling load to achieve a desired thermal condition in the building. It is, therefore, important to control these gains in summer months in order to reduce the energy requirements for cooling. Besides the preventive measures to attain passive cooling other methods include the evacuation of heat from the building to the heat sinks. The natural heat sinks of the planet are the atmosphere, the sky and the earth. The main techniques of natural cooling according to the mode of heat transfer and fluid flow can be classified   as follows: • Cooling with natural ventilation • Radiative cooling • Cooling by evaporation • Earth cooling Some of the techniques provide a direct instantaneous cooling effect, in others the coolness is collected during night time and is released the next day, thus smoothing the effect to the accumulated heat inside the building. Natural ventilation is the movement of outside air into a space without mechanical support. One of the oldest cooling methods in buildings is ventilation. Purpose made openings in buildings, such as, doors, windows and non-powered ventilators can be used to control natural ventilation, that provide a certain degree of ventilation besides infiltration. Other methods may include, wind towers, solar chimneys and atrium (Khan et al., 2008). In each case, the system is designed to take advantage of prevailing driving forces. An air movement is also important aspect of ventilation cooling since it offsets increase in temperature while maintaining comfort ventilation cooling. When heat transfers from a hotter surface to a colder surface or external space, it is known as radiative cooling and the basic principle for radiative cooling is that a hot body emits heat energy in the form of electromagnetic radiations to the cold body that faces it. Similarly, the envelope of the building absorbs heat during the day and becomes warm. During the night when the temperature drops, the building emits this heat to the atmosphere due to which the building gets cooled down. The radiative potential of a roof/horizontal surface is greater than a vertical surface. The radiative potential of a building is reduced during hot summer nights because the hot air adds heat to the building by convection. When the sensible heat in air exchanges with latent heat of water droplets on moistened surface, it is called evaporation. In evaporation, the state changes into vapour from liquid. This is accompanied by release of huge quantities of heat (sensible) from the air that comes in contact with the wet surface where evaporation takes place. When comparatively dry air is passed over a moistened surface then direct evaporative cooling occurs. For example, when a draft or wind blows through a fountain or over a pool of irrigated field, it is cooled by direct evaporation. These landscape features have aesthetic benefits in addition to a relatively automatic control of the process. Passive cooling strategies: The bioclimatic chart tells us that conditions are comfortable in the shade and in still air; if the plotted point lies within the comfort zone. If the points lie outside the comfort zone, we need to take corrective measures to get the conditions into the comfort area. A brief description of different passive strategies shown on the chart for bringing conditions into comfort zone is elaborated in the subsequent paragraphs. Natural ventilation is the movement of fresh air into a space without mechanical assistance. Deliberate openings in buildings, such as, doors, windows, etc., can be used to control natural ventilation. In natural ventilation the movement of outdoor air across the building is caused by pressure difference. Buoyancy effect or the wind can be used to create pressure difference, which is created by humidity difference or difference in temperature. Ventilation based on the buoyancy effect utilises stacks, which are tall spaces inside the buildings. The cooler outside air moves into the building from openings near the ground, whereas the hot air leaves the building through openings close to the top of the stack. In ventilation, in order to allow to airflow through buildings, we need to keep the building open during the day. Ventilation in buildings is needed not only to provide cooling in summer but also provides fresh air for occupants to dilute and exhaust pollutants. A good ventilation design not only caters the residents comfort by making the spaces inside the building ‘airy’ (not draughty) and ‘fresh’ (not stuffy) but also ensures good air quality that has low levels of pollutants. We need to have optimum ventilation, because excessive and unnecessary ventilation during the heating season incurs an energy penalty while too small ventilation can adversely affect the health and comfort of the residents. Ground cooling, evaporating cooling, radiative cooling and convective cooling utilises the heat dissipation techniques for cooling the buildings. Dissipation of the additional heat mainly relies on two conditions: presence of a suitable environmental heat sink; and creation of a suitable thermal coupling between the sink and the building, besides adequate temperature difference required for the heat transfer. For the above referred techniques the following heat sinks are used: • Sky is used as the heat sink in radiative cooling • Air and water are utilized as the heat sink in evaporative and convective cooling • Soil and the ground are used as the heat sink in ground cooling Materials, like, brick and concrete, have high thermal mass because of their capacity to store both cold and heat. Materials having high specific heat capacities and high densities are ideal for thermal mass.. Any matter that has mass whether solid, liquid or gas will have some thermal mass. Not only soil, earth or concrete has thermal mass but the air has a thermal mass as well, though it is substantially low. Various materials are used for thermal mass, but the most common ones are mud brick or adobe brick, mud, earth, natural rocks and stone concrete, clay bricks, water, etc. In these commonly used materials, the volumetric heat capacity of water is the highest. Normally, large containers are used for keeping water. The heat capacity of other materials, such as, earth, dirt and mud, depends on a number of factors, such as, its density, particle shape, moisture content, composition and temperature. The type of thermal mass in buildings varies from climate to climate. The prevalent climatic conditions in a region decide the right use and application of thermal mass. The internal temperature peaks inside a building can be reduced by the use of the correct thermal mass which, in turn, minimizes the requirements for mechanical ventilation. The use of thermal mass to decrease temperature peaks during daytime normally needs ventilation cooling during night time to decrease the mass temperature. High thermal mass together with ventilation at night, depends on the daily heat storage of thermal mass along with night time ventilation which lowers down the temperature of the mass. During the daytime the buildings need to be closed, whereas during night time they need to be opened to remove the heat. Advantages of passive cooling: Passive cooling decreases the need for conditioned cooling by minimizing or eliminating the periods in which cooling is required. The energy requirement for heating and cooling of buildings is around 6.7% of the total world energy consumption   Out of this, we may save around 2.35% of the world energy output, just by making appropriate environmental design. The cooling energy requirements are normally two to three times higher than the heating energy requirements on an annual basis in hot climates. Utilisation of the basic principles of heat transfer coupled with the local climate and exploitation of the physical properties of the construction materials could make possible the control of the comfort conditions in the interior of buildings. A proper building design may be used to achieve thermal comfort inside the buildings, even in regions, that have average maximum ambient temperature around 31.7 °C and helps to eliminate the use of air conditioning in buildings. For example, suitable orientation with respect to the sun and the use of adequate insulation material in the construction of dwellings will not only reduce the summer and winter discomforts but also decrease the noise complaints. Passive cooling helps in protecting the environment because air conditioning is associated with various environmental problems, such as, ozone depletion etc. Studies carried out for various cities in Queensland, Australia,  show that the passive cooling strategies are very suitable for these hot and humid subtropical climatic conditions   Results and Discussions Climate: The climate has clear effects on human thermal environment. A strong understanding of the environmental features that affects a building site is extremely important for designing an energy conscious building. While designing an energy efficient building, we must incorporate the useful factors that the environment and the climate have to offer and guard against those that are unfavorable to comfort. Passive cooling utilizes the processes fundamentally related to climate, air temperature, relevant humidity, velocity and direction of wind   Different climatic variables, such as, atmosphere, sky and the earth, act as a heat sink when we are rejecting heat from the building to the atmosphere. The applicability of passive cooling strategies could be limited by insufficient information to designers and building users on the potential of passive cooling. Hence, it is important to have knowledge about climate and different climatic variables while designing energy efficient buildings. The average daily temperature of Peshawar greatly varies in winter and summer, for example in January the average temperature is around 4°C whereas it rises up to 42°C in June. The majority of the rainfall happens in the months of July to August and March to April  while it is quite low in other months of the year. Rainfall in other months of the year is very low. The humidity level is not very high and hailstorms are common in the spring   Suitability of the weather of Peshawar for passive cooling strategies The traditional architecture of Pakistan was very much environment friendly. In the hot areas of Pakistan, the buildings were of massive construction. Fountains, pools and vegetation could still be seen around some of the old buildings. They would help in passive cooling apart from giving aesthetic beauty to the surrounding area of the building. But during the past few decades, due to fast and speedy advancement in science and technology, the use of active air conditioning systems in buildings has increased tremendously. As a result, the cooling load of buildings has increased by a high percentage. To check which weather conditions are appropriate for a certain design strategy, we can use bioclimatic charts for an early examination. When we mark areas on a psychometric chart to help matching the design solutions to climatic conditions, it is known as a Bioclimatic chart   Hence this method is quite helpful in anticipating early low design approaches on the basis of existing climatic conditions. This is achieved in two ways; first by using the sun, wind and night time cooling and secondly only when these are insufficient, by selecting appropriate mechanical equipment. To check which passive strategy is suitable for a specific area, G.Z. Brown in 1985 used bioclimatic chart. On the basis of temperature and relative humidity the bioclimatic chart offers four passive cooling strategies   The bioclimatic chart is normally used for residential and light commercial buildings that have low rates of inside heat gains from lighting, equipment and people, etc. Conclusions The climate of Pakistan has a lot of potential for passive cooling. There is a need for creating more awareness amongst the people for adopting passive cooling strategies. Bioclimatic chart can be used for preliminary investigation of the weather appropriateness of weather conditions for a building design strategy. Adopting passive cooling strategies for Pakistan would not only help to reduce the building cooling loads by a significant amount but also help to build a green Pakistan. Although the climate of Pakistan has a lot of potential for passive cooling but there is a need to remove this misconception from the minds of the people that passive cooling strategies cannot be adopted in modern building. More awareness programs need to be created amongst the people for adopting passive cooling strategies in building design.

Efficient Air conditioners  

In general, the more efficient the equipment is, the more costly it is compared to the regular ones. Here are some steps that you can take when choosing energy efficient air conditioners to purchase.

1. Cooling Capacity

Determine the cooling capacity that is required of the room  Buying an oversize air conditioner is not a good choice as it is more costly and does not necessarily provide better comfort level.

2. Inverter Vs Non-Inverter

Choose an inverter model as it will be definitely more efficient than a non-inverter unit. The inverter compressor's rotation can be varied according to the requirements of the load hence the power savings is there.

On the other hand, the non-inverter compressor is only able to turn ON or OFF. It is not able to vary its speed according to the load. The frequent turning ON and OFF will consume more energy. Choose also a DC inverter compressor as it is more efficient compared to the AC inverter.  

Infra-Red Sensor

Some manufacturers   have built-in infra-red sensor that is able to detect the presence or absence of the occupants in the room. If it does not detect any movement for a certain period of time, it will adjust the set temperature higher automatically to reduce the temperature in the room. This will help to save your electricity bill.

Blockchain , Power Sector

Blockchain , Power Sector  

 Introduction

. The new energy paradigm combined with digital technology has been bringing about not only more decentralized energy production but also new services and energy products. Cost control, self-consumption, modeling and optimization of consumption, peer-to-peer power transaction, predictions of billable amounts at the individual level are some of the most prominent issues that entrepreneurs and energy companies have been solving systematically one by one.

Although it may not seem to be that way, these are all fairly complicated issues to solve in an industry that has been for ages focusing on centralization, various combinations and clusterization of processes and scale. But there is a new facilitator that could make all of this happen rather quickly, efficiently, securely and cost-effectively. It is what we call the blockchain.

Definition

A blockchain is a shared, encrypted ledger that is maintained by a network of computers. These computers verify transactions—in the case of Bitcoin, the transfer of cryptocurrency between individual users. Each user can access the ledger, and there is no single authority   Advocates say the technology could be especially promising in industries where networks of peers—electricity producers and consumers, connected via the grid, for instance—depend on shared sets of data. Blockchain is a technology that makes information into a thing. In other words, blockchain helps to make sense of the abundant free information into a scarce product, something we can trade. This is true not only for cryptocurrencies but also other asset classes and things. It’s a technology that ultimately helps us with accounting for things.

Examples

We two parties indulge in a commercial transaction  their is need  to account for the fact that  the transition has taken place and paid for. But this activity need not involve a central entity, such as bank tracking the transaction details, doing that verification for us. This makes blockchain useful anywhere where there is inefficiency in the transactions because multiple parties are involved and the transaction needs to be secure at the same time. It is essentially a way of automating a control function for a fairly complex operation.

Blockchain in the energy sector

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The blockchain aspires to become a platform that all actors connected to it can easily trust. It is undoubtedly the advent of a new way of using, sharing and accessing data, which could allow the implementation of protocols that will have an impact comparable to that of the Internet.

Many demonstrations and experiments openly display the use of the blockchain as a communication tool rather than a technologically secure workaround. It is also a particularly effective way to promote your project while raising substantial funds in record time.  An example could be a wind or solar power project that could raise financing without a secured power purchase agreements because the output could be sold to individuals at below market rates based on tokens representing solar company’s commitment to produce and sell this energy. There’re already companies   that are actively working on creating these energy trading and project fundraising platforms. 

Financial Applications

Blockchains  in its simplest form, a public ledger that records transactions   promises to radically speed up transactions and cut costs by facilitating a trusted transfer of value without the involvement of traditional intermediaries. Already widely used in the financial services sector, a growing number of industries are experimenting with the technology. Unlike in banking, however, the power sector has been slow to recognize blockchain’s potential and awareness across the industry is lacking. Now, a growing number of enthusiasts believe blockchain can significantly revolutionize a sector that is becoming increasingly decentralized and connected.

Blockchain wouldn’t be the first technology to unhinge the sector. Technological breakthroughs in panel efficiencies have seen solar costs fall by 80% over the last three years and they’re set to fall further. Advances in battery storage technology now mean households can store electricity for back up or load shifting, allowing for greater flexibility to buy and store electricity when rates are low, and consume it as needed.

Alongside the rollout of smart meters and continued development of demand side response measures, new digital peer-to-peer platforms are starting to emerge that cut out the middle man and seamlessly connect green energy producers directly with those wanting it. What we are witnessing is a power shift – the advent of an energy sharing economy. These changes are empowering consumers to take control of their energy usage and reduce energy bills.

It is these changing characteristics that are exciting the blockchain community. They are drawn by the growing complex web of transactions, the need to balance the geographical mismatch between supply and demand, and significant security and trust concerns given the proliferation in IoT connected devices.

Power Sector Applications

Electric power systems around the world are rapidly changing. For over a century, these systems have relied largely on centralized, fossil fuel plants to generate electricity and sprawling grids to deliver it to end users. Utilities had a straightforward objective: provide electricity with high reliability and at low costs. But now, governments have new ambitions for electric power systems. Many are requiring these systems to rely heavily on volatile wind and solar power; several are also aiming for a high share of electric vehicles (EVs), which can strain grids. Further complicating the matter, customers are installing their own equipment—from solar panels to batteries and smart appliances to control their production and consumption of electricity. The electric power system is undergoing a fundamental evolution. The traditional architecture is quickly evolving and new generation, control and information technologies are reshaping the foundations of the industry. However, in order to drive this evolution further and fully unlock future scenarios, more is needed in term of enabling technologies and regulations.

The traditional electric system relies on centralised hub-and-spoke grid architecture where a small number of large and very reliable power plants produced the energy necessary to feed a basically predictable consumption. Energy flows in just one direction, from the plants to the grid, from the grid to a large number of passive customers.The power system operates as a single system, with long planning cycles that have the objective to provide adequate resources to meet expected load. Operational capabilities, reserve and ancillary services grant that the system operates securely at all times.

In recent years the traditional vision of hub-and-spoke, one-way flow electric system is rapidly changing. Improvements in performance and cost reductions of Distributed Energy Resources (DERs)are offering new options for on-site generation. DERs increasing deployment is changing the way distribution grids have to be operated.

DERs, energy efficiency and new uses for electricity (e.g. electric vehicles) are changing demands patterns in the system. An unprecedented availability of computing power in the electric system allows for the collection of an immense volume of data on power and its usage, for greatly improved visibility and control on generation, grids and loads .Data, visibility and control are making possible to provide new services and added value to customers.

Moreover, climate change debate and action is catalyzing public and political attention on DERs potential as a clean and resilient option for the electric systems. Energy consumers are becoming energy producers (prosumers) and their consumption is becoming more interactive and dynamic, through smart devices they are becoming more and more connected and social.

Features of a future electricity market could include:

·         The granularity of the information available makes reconciling physical and financial flows quick and error free;

·         Participation to power markets is extended to micro generators;

·         Local resources are used to locally balance the distribution network, opening the market of grid services to all prosumers;

·         Smart appliances respond autonomously to load and price signals;

·         Prosumers can choose to buy or sell electricity within their neighbourhood and share community’s DERs;

·         It is possible to change energy suppliers instantaneously or have more suppliers at once;

·         Electric vehicles autonomously decides whether to buy from or to sell energy to the grid;

·         Electricity consumed in different places (e.g. to charge an electric vehicle) is invoiced in an central place

·         Potential applications include authenticating renewables at the point of origin or keeping a record of emissions’ permits. Many are also considering its application as a grid management tool that can record energy flows to highlight anomalies in the network. But  peer-to-peer energy trading is the use case that is gaining most traction. This is being made possible by the ability to pre-program “smart contracts” that can trigger transactions automatically.

·         These smart contracts can be set to allow prosumers to feed surplus energy into the grid through a blockchain-enabled meter. The flow of electricity is automatically coded into the blockchain and algorithms match buyers and sellers in real time based on preferences. Smart contracts then execute when electricity is delivered, triggering payment from buyer to seller. Removing financial transactions and the execution of contractual commitments from central control brings a whole new level of decentralization and transparency that the industry has never had before.

Blockchain technology could be used to digitally track the exchange of electricity across a distributed grid, enabling the secure and transparent trade of electricity directly between consumers4. A blockchain system can support a cryptocurrency in the form of tradable tokens, each representing one kilowatt-hour (kWh) of electrical power. The price of each token could be determined by regulator-approved market access software parameters interfacing with market drivers established by the grid (think mobile phone apps) and which might be designed to encourage sustainable and balanced network services (e.g. discourage long distance power transmission and peak demand use, and incentivise use of energy storage). A blockchain participant will require a digital wallet that can either be linked to a traditional bank account or charged up with digital currency. That individual's participation software can then transact with other participants, by buying and selling tokens, with immediate credit settlement, to correspond with their electricity supply and demand requirements.

Potential

The increase in small-scale distributed generation, the resulting decrease in the scale of energy transactions and the increase in trading volume create challenges for grid balancing. Blockchain can eliminate the need for a centralised approach to market clearing and trusted third parties, opening the way for a secure, transactive electricity environment where balancing is continuous

Benefits of blockchain include (i) initiating and carrying out transactions directly, quickly and efficiently between users, i.e. peer-to-peer (P2P), with no "middleman"; (ii) providing transparency, as those with access to the blockchain can view the entire chain3; and (iii) providing immediate credit settlement on transaction verification.

Tacking energy flows and reconciling them with financial ones is a complicated task today, power is produced by large generators and sold in big chunks. Grid operators then track and settle the transactions in a process that involve qualified resources and sophisticated software. The limits of this model create a barrier for the participation to electricity market of small and micro-generators.

The multi-tiered nature of power markets and of power attributes markets (green certificates and emission reduction certificates), the expensive and redundant platforms and the need for third-parties intermediaries (either to ensure trust or to redress information asymmetries) all cooperate in generating transaction costs too high to track and settle separately micro deals.

  Programs requiring aggregation and control over DERs and smart devices (e.g. virtual power plants, demand response and energy efficiency) involve a level of data sharing and trust toward a third party that few customers feel comfortable with. In order to fully exploit local DERs, integrate them in the grid service market and provide truly innovative services, grid balancing and management should be transformed from a top-down to a bottom-up process.  

 In a decentralized energy , transaction system in which blockchain and physical grid overlap, with a physical node on the grid representing a node in the blockchain network. Transactions settlement and management, and balancing of the grid are in this case ruled by smart contracts that take into account the physical limitation of the infrastructure and the security of the power system. Nodes are able to transact between themselves while operating within the boundary of the grid control system.

With this premises, Blockchain can deliver seamless reconciliation of physical and financial flows. The multi-tiered system would be simplified allowing direct transactions between producers and consumers. Every transaction (large, small or micro) is initiated by the blockchain system, broadcasted and chronologically recorded in tamper-proof distributed database and thus settled.

The direct linking between producers and consumers, the distributed nature of the system and the disintermediation of the transactions can dramatically reduce the costs, making possible for micro players to participate in the power market.

DLT is able to deliver data security and, applying zero-knowledge proof methods, the required privacy.

The power grid would controlled through smart contracts that can signal to the system when to initiate what transactions. Predefined rules will ensure correct dispatching and energy flows in an automatic way, balancing supply and demand.

The potential in term of business models is exceptional. A new product or service could be launched simply developing a smart contract (we can call it an application) on the platform. Theoretically, the match between DLT and power grids seems perfect; electricity in power grids is naturally scarce and DLT deals with creating and managing scarcity, the power grid is evolving toward decentralization and DLT manages it.

In practical terms there are still unsolved issues; scalability and consensus mechanism are the most important:

Scalability. A power grid (even geographically limited) includes a mind-blowing number of nodes, especially taking into consideration IoT development. The biggest public blockchains are today composed of thousands of nodes, the requirement for a power grid would be of a different order of magnitude. Geographically contiguous blockchains would need the capacity to work together.

  Consensus mechanism. The main innovation introduced with the bitcoin blockchain was how the combination of Proof of Work (PoW), cryptographic signatures, Merkle chains and P2P networks was used to create distributed, trustless consensus. The lack of a trust model with a responsible central authority makes necessary to establish a process by which the entire network agrees on the same truth that, in this case, is the transaction ledger stored as blockchain.

In order to make possible the use of DLT to manage power grid and market, a suitable consensus mechanism has to be found. The mechanism will have to grant all the security and resiliency characteristics of the original blockchain but also an efficiency able to cope with numbers of transactions and complexity of an electric power system. Finally, an adequate ecosystem of technologies and regulations needs to be in place to make possible such a fundamental revolution.

The case of the decentralised power grid is the most “hard-line” in term of integration between DLT and electric system; however, blockchain could also be used in more specific and limited applications.

Possible use cases are numerous, back-office processes, trading platforms, green certificates, billing and payments are just some of them.

Expectations

In 2017, start-up companies raised over $300 million to apply blockchain technology to the energy sector in myriad ways. Some of these start-ups want to enhance existing markets for trading electricity or even to create new ones, for example, by using blockchain to facilitate peer-to-peer transactions that bypass a central utility or retail energy provider. Others hope to use blockchain to track the production of clean energy. Still others have proposed using blockchain to make it easier to pay for charging EVs, raise funds to deploy clean energy, manage customer appliances, and more power systems.

As utilities struggle to sustain reliable service, meet new policy objectives, and cope with rising complexity, innovators are peddling a putative solution: blockchain technology. It’s most popular application is in recording peer-to-peer transactions of bitcoin and other so-called cryptocurrencies. In theory, blockchain technology could enable swift, frictionless, secure, and transparent currency trading. But the potential applications of blockchain extend well beyond currency trading; blockchain could also be used to cope with increasingly complex electric power systems which include variable supplies and power flows needs , also the market arrangements  allow many forms of bilateral contrast and energy sale and purchase options   

Proponents of blockchain technology liken its potential to that of the internet three decades ago. But so far, little of this potential has been realized. Although most blockchain ventures aim to replace today’s centralized power system with decentralized energy trading, the ventures most likely to achieve commercial traction in the coming years will largely work within the existing system and partner with incumbents such as utilities regulators or clearing or settlement agencies.  Like any emerging technology labeled as "disruptive", blockchain is a technology that generates both fear and hope for a revolution in various areas of its application. This phenomenon was particularly noticeable in the energy sector during 2017. The number of proposed use cases exploded along with the number of experiments and demonstrators

A real life example could be a customer who wishes to sign a smart demand response contract with the utility that authorizes the utility to turn the air conditioner off anytime the grid conditions are right. The contract allows the customer to be paid for providing this service to the utility. After signing the contract, the customer’s air conditioner will be able to turn off at any given time. The information could be stired on a blockchain. That way every time the utility would send a particular signal to the customers air conditioner, it would know it has to turn off and the transaction would be verified via blockchain. This example is just one of many potential applications we could see emerge in the energy space. Already today, most of us are connected to the Internet in some way. This connectivity increasingly includes devices, machines, etc. The experts expect 50 billion or more devices to be connected to the Internet in the near future. This means that we're going to be swimming in crushing waves of information, data, coming out of a huge number of devices and then all of us will want to interact efficiently with those devices and based on that information.

  When a renewable-power plant generates a unit of electricity today, a meter spits out data that gets logged in a spreadsheet. The spreadsheet is then sent to a registry provider, where the data gets entered into a new system and a certificate is created. A second set of intermediaries brokers deals between buyers and sellers of these certificates, and yet another party verifies the certificates after they are purchased. Such a byzantine system racks up transaction costs, while leaving plenty of room for accounting errors that can range from honest mistakes to outright fraud. The lack of transparency also scares many people off entirely. If the meter wrote the data directly to a blockchain instead Most of these problems would vanish. Many energy experts are convinced that blockchain technology has the potential to touch off a fundamental transformation of modern energy grids.

The electricity sector is, for the most part, still based on massive, centralized power plants that generate power sent long distances over transmission and distribution lines. In recent years, though, a growing number of smaller “distributed” power generators and storage systems, like rooftop solar panels and electric-vehicle batteries, have been connecting to the grid.

The owners of these systems struggle to maximize their value because the system is so inefficient, For instance, it generally takes 60 to 80 days for an electricity producer to get paid. With a blockchain-based system,   producers can get paid immediately, so they need less capital to start and run a generating business.

In such a system, neighbors could simply trade energy with one another a far more efficient process than selling electrons back to the grid first. Power Ledger has demonstrated a product that can turn an apartment building into a micro grid based on a shared system of solar panels and battery storage  

To unleash the potential of blockchain in the energy sector,   work will begin with applications like tracking renewable-energy certificates. In the longer term, though homes and buildings will be equipped with software that automatically sells and buys power to and from the grid on the basis of real-time price signals.

Conclusions

Because the electric power sector is highly regulated, policymakers will play a crucial role in determining how much of blockchain’s potential can be realized. In order to effectively regulate blockchain, policymakers should first invest in understanding it. Next, they should actively support the development of technical standards. And finally, policymakers should make it possible for blockchain ventures to set up small-scale demonstration projects, for example, by creating regulatory sandboxes that loosen electric power sector regulations to permit experimentation.

 Blockchain undoubtedly has transformative potential. The technology has the power to disrupt the structure of retail energy markets, which may or may not be desirable. Just some of the issues that would need to be addressed for its deployment include charging methodologies for use of system; the allocation of imbalance charges for mismatches between the amount of electricity sold and purchased and the amount produced and consumed; rewriting of the network codes; whether such systems at national scale require a supplier of last resort; and a potential seismic industry shift in consumer service deliver models required to support consumers in a decentralised marketplace. In addition, the lack of an intermediary could be seen as a key risk. Central oversight is a key element in today's electricity trading markets, as it protects customers and manages risk. Privacy requirements, licensing, contracting mechanisms and market access rules are all further potential barriers to immediate adoption. Whilst there are considerable challenges to widespread deployment, the litmus test for the technology will be whether customers will culturally accept the technology and will want the offerings it can provide.

UPDATE:

Major Singapore utility SP Group has launched a blockchain-powered renewable energy certificate (REC) marketplace, which is amongst the first of its kind worldwide.

The platform allows local and international bodies of any size and in any location to trade in (renewable Energy Certificates)RECs related to a range of renewable energy sources. The use of blockchain technology allows buyers to be automatically matched with sellers around the globe according to their preferences. Blockchain also serves to ensure the security, integrity and traceability of each REC transaction, which will then help spur even more integration of renewable energy onto the grid,