The weekend read: EV charging meets Blockchain
There are a number of reasons to be bullish on electric vehicles. Government support is growing, battery prices are falling, and the technology is constantly developing. But, for the prospect of owning an electric car to become even more attractive, existing EV charging infrastructure needs to be enhanced. This is where blockchain comes in.
Germany’s innogy, a spin-off of utility RWE, launched a pilot program using blockchain to develop a distributed, P2P charging marketplace.
You may have heard about Wiebe Wakker, who set off on a trip from the Netherlands to Australia in an electric car. It took him more than 800 days to reach his final destination in his 2009 Volkswagen Golf, which had its petrol engine and fuel tank replaced with a 37 kWh battery, giving it a range of 200 km. His journey smashed records for the longest distance covered in an electric car.
But, if you were on a tight schedule and didn’t want to rely on other people’s generosity to offer you a plug to charge the car, like Wakker, you would need an established charging infrastructure along your route. The electric vehicle (EV) charging infrastructure market is, undoubtedly, building up momentum in a bid to cater to the thriving global EV market. According to GTM Research, it will comprise as many as 40 million public and private charging points around the globe by 2030, as electric vehicles are forecast to make up 11% of new car sales, up from currently around 3%. North America alone is expected to draw $18.6 billion in charging infrastructure investment by 2030. Looking further into the future, Bloomberg New Energy Finance estimates EVs will dominate new car sales, with 55% by 2040, and account for 33% of the global vehicle market.
The rise of EVs is accompanied by improvements in the charging infrastructure, ranging from superfast charging solutions to services that will enable EV chargers to be grid interactive, and make EVs part of a greater connected, distributed energy landscape. Against the backdrop of the changing use of vehicles in the future, a number of projects have put blockchain, a brand new player in the energy sector, to work. The two technologies are off to a promising start with a number of use cases, such as history and data tracking, vehicle identity, and supply chain tracking and transparency – most recently initiated by car manufacturer BMW to track cobalt’s journey from mines in the Democratic Republic of the Congo to batteries used in its EVs. A few projects have also brought blockchain to EV charging.
Still in its infancy, blockchain, an immutable distributed ledger of transactions, known as the technology that underpins cryptocurrencies such as Bitcoin, has already built up a portfolio of use cases in the energy industry. Its applications range from Renewable Energy Certificate (REC) trading, through P2P power generation and distribution through microgrids, to real-time transactions to balance supply and demand. It has already shown potential to speed up the energy transition on the back of an increasing number of distributed energy installations across a wide range of markets. Blockchain can be of great use in any system that needs a trustworthy system of record. It represents an innovation in data registration and distribution that eliminates the need for a third party or central server to facilitate digital relationships.
The constantly growing list of transactions, called blocks, are recorded and added in chronological order using cryptography, so the data cannot be tampered with. Each block includes the cryptographic hash of the prior block in the blockchain, linking the two. Meanwhile, each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically. Mining nodes validate transactions, and add them to the block they are building, and later broadcast the completed blocks to other nodes, thus building the chain of blocks. It is no surprise that it has already been introduced to the EV industry. Blockchain has shown potential to facilitate a larger and more efficient EV charging network, streamline energy payments and coordinate maps of charging stations.
While a vast number of new charging points is expected to come online over the next 10 year period, the question arises as to how to optimize the already existing EV charging infrastructure, bearing in mind that the oft-cited reason people don’t buy electric cars is range anxiety – the fear that the battery will run flat before reaching their destination.
According to the International Energy Agency’s Global Electric Vehicles Outlook report, the number of private chargers at homes and workplaces in 2017 was estimated at almost three million worldwide. In addition, there were about 430,000 publicly accessible chargers worldwide in 2017, a quarter of which were fast chargers. Addressing the limitation of public charging infrastructure, a potential solution has been piloted by RWE’s subsidiary innogy, through its e-mobility venture Share&Charge. Leveraging a public Ethereum blockchain as a transaction layer, the company has developed a distributed, P2P charging marketplace, described as the ‘Airbnb for EVs.’
The platform allows charging station owners to rent out charging time on their stations to EV drivers participating in the network, as well as to receive payments for the service using Mobility Tokens, euro-backed digital tokens that can be acquired through the Share&Charge app. The platform is open to electric cars of all kinds, regardless of manufacturer or electricity provider. It was piloted in Germany last year connecting hundreds of EV charging assets all over the country, and launched in California in partnership with eMotorWerks, an Enel Group company, soon afterwards. The financing of this open source project will take place via a token sale, which will begin in the coming weeks.
Meanwhile, in one of its latest EV charging-related applications, blockchain tracks how much power is being generated and used at a solar PV and battery equipped garage in the city of Santa Clara, California, while it also automatically digitalizes and issues low carbon credits, which are sold to big firms seeking to offset their carbon emissions.
As the California Air Resources Board’s Low Carbon Fuel Standard (LCFS) administration is currently a pretty onerous one, Perth-based blockchain startup Power Ledger and Chicago-based startup Clean Energy Blockchain Network (CEBN) have recognized a great opportunity for blockchain to streamline the process. They say they were fortunate to start discussions with a forward-thinking entity like California’s municipal utility Silicon Valley Power (SVP). “We knew that credit tracking and trading would be an excellent first business case for blockchain in the energy space, as current systems for RECs and carbon credits are hindered by long and costly audits,” says Michael Ashley, CEBN Vice President.
The current accounting process for earning credits is complicated and records are often reconciled quarterly, using metering and other data to calculate the amount of fossil fuel displaced per unit of EV charging. With the help of blockchain, this process is replaced by a transparent, auditable, and automated record of energy generation, storage, and consumption. “The first phase of the project is about verification, tracking, and audit of the energy source that is charging EVs. This part of the project will commence soon,” says Cameron Drummond of Power Ledger, adding that the project is on track, with a final product design and implementation plan underway in consultation with SVP.
The second phase is about creating tokens to represent LCFS credits, which can later be sold to fossil fuel refiners and importers in California that are due to acquire and surrender a set level of LCFS credits to lower their emissions footprint. “The tokenization of the LCFS credits functions to nominate value and create a digital (and cryptographically secure) asset that is autonomously created according to the carbon intensity of the electricity used to charge an EV. Token generation, subsequent transactions, and ultimate retirement will be executed, verified, and recorded on the blockchain, providing transparency and guarantees of ownership throughout the life of an LCFS credit,” Ashley explains. In this initial phase of the project SVP, as the EV charging station owner and operator, will be the entity that will earn LCFS credits based on the EV charging networks that it provides (with enhanced credits awarded if that electricity comes from a renewable source).
“Tokenized credits will be autonomously awarded to SVP based on EV charger load and the energy mix that powered those chargers. They will then be able to sell those credits to dirty fuel producers,” says Ashley. Beyond the initial phase, individual EV owners will be able to participate in the credit-trading process and benefit from the LCFS scheme, an additional incentive for all users of the Santa Clara charging facility. “SVP may choose to pass on some of their LCFS revenue on to registered EV drivers in the form of rebates or credits to their electric bill,” Ashley says.
The six-story Santa Clara Electric Vehicle Charging Center, is the largest public EV charging facility in California, featuring 48 Level 2 chargers and one DC fast charger. It has a 370 kWh PV installation and a battery system to help offset peak power demand with stored power to lower costs. While the solar power does not go directly to the charging stations, it does flow into the local SVP grid, which in turn provides the facility’s electricity. Currently, the LCFS credits produced at the garage cannot easily be tracked or their number precisely determined under the current system, which will be completely changed with the arrival of the blockchain-based smart accounting system.
“We are improving the ability for SVP to claim their LCFS credits. The end goal is to increase participation by EV owners in this market by providing the ability for infrastructure owners to pass on the value derived from the LCFS credits they generate,” says Drummond. Guided by the main idea of the SVP project, CEBN has embarked on another venture. It has started developing a ‘packaged’ solar canopy + battery storage + EV charging system to be deployed in parking lots.
“This builds upon the idea of clean energy ‘tracking’ that is so important for the LCFS project, where we can follow energy from generation to EV (potenially via an external battery for anytime charging). With this type of project, billing and asset ownership can be executed and recorded using blockchain,” Ashley says.