Managing Battery Energy Storage Systems (BESS) with Blockchain – what are the advantages?

Managing Battery Energy Storage Systems (BESS) with Blockchain – what are the advantages?

‍Why Energy Storage Systems?

Battery Energy Storage Systems (BESSs) are dispatchable units that reduce electricity demand during peak hours. Large energy consumers install these systems to reduce rates, improve power reliability and reduce their dependence on a potentially unreliable power grid. These systems also help the power grid by providing fast responding voltage regulation and other ancillary services. In Ontario, the vast majority of BESS systems are installed to mitigate, or altogether eliminate, the Global Adjustment (GA) cost.

The BESS system’s operation needs to be continuously observed and tweaked during all hours, but specifically during peak hours. System operation and charge/discharge is determined by the customer’s load profile, peak demands, battery charge status and electricity pricing structures (HOEP price and ICI Peaks in Ontario). Therefore, it is essential to monitor the state of charge (SoC), current and terminal voltage, and temperature and humidity of ESS’s cells in real time. This info is critical for maintaining the battery cells and increasing their lifetime.

Since the system is being monitored and controlled, a high security Network Operation Center (NOC) is required. Furthermore, if the BESS is to be a used as a part of a larger scale IoT rollout it requires an Internet of Things (IoT) platform integrated to the NOC.  

The main challenge of the IoT platform for BESSs is the security and reliability of the NOC and its connection to the systems that will be controlled.   The features of the NOC’s security can be categorized as:  

• Data integrity – the assurance of accuracy and consistency of the data being communicated
• Device authorization – how new devices are authorized to join the IoT network
• User authentication – how new users are authorized to control and change the system

Data such as operator commands or BESS conditions requires a secure communication network between the NOC and the BESSs. Existing NOCs are vulnerable to cyber-attacks due to the processing of data in a central serve. A rogue hacker can easily attack the entire network. Also, these NOCs have data encryption weaknesses. Cybersecurity risks will only increase as Distributed Energy Resources such as BESS become more commonplace.  

Blockchain technologies will increase security in BESS and DER’s for years to come. Blockchain will also improve the rest of the electricity delivery value stack, including delivery, and billing. First, we need to understand a bit about how it works and how it relates to energy:  

What is Blockchain?

Blockchain is more than just a buzzword. Blockchain is a growing list of records called blocks that is used to record transactions across devices. Blocks hold a cryptographic hash of valid transactions in an iterative process. It confirms the integrity of data recorded by each device. Blockchain also allows users to verify and audit transactions independently and relatively inexpensively. If the whole paragraph above sounds like gibberish to you, you’re not alone, the basic point you need to understand about Blockchain is that will increase the security of energy transactions by distributing the check-points and by allowing something called ‘smart contracts.  

How does the energy sector operate?

Generators produce raw material that is processed and transported by the midstream delivery network to downstream distributors who then sell to end-users.

Example: ‍

Step 1: When electricity is delivered to your home or business, it’s sold to you through a retailer who contracts with the utility company who owns the power lines and purchases power from an electricity generator.  

Step 2:  Consumers need to use and pay for their energy. The invoice arriving in the mail at the end of each month is the culmination of this entire process.

Therefore, these conditions make the energy sector a highly suitable candidate for innovation by Blockchain technology.

How do the blockchain and energy industries intersect?

Today’s energy sector is a highly transactional and complex system with multiple sources, suppliers, distributors and middlemen. Major portions of Blockchain technology are used in peer-to-peer energy trading, smart contracts, and BESS management platforms. Up and coming IoT platforms in energy sectors are also set to benefit from blockchain because they involve many collaborating peers in a system design that is decentralized by nature.

How has Blockchain impacted the industry so far?  

A study in Renewable & Sustainable Energy Reviews published last year provided a systematic analysis of over 140 Blockchain research projects and start-ups in the energy sector, spanning countries across the world.

What are the Blockchain Initiatives?

• Metering/billing services
• Cryptocurrencies, tokens and investment
• Decentralized energy trading
• Green certificates and carbon trading
• Grid management
• IoT, smart devices, automation and asset management
• Electric e-mobility; and  
• General purpose initiatives and consortia

Commodity and offset trading. Companies spend millions of dollars to build and access proprietary commodity trading platforms that track and execute transactions.  

Blockchain technology can be used to:

• Ensure security.
• Safeguard immutability of energy trading.
• Provide opportunity in the creation and trading of green certificates and carbon offsets, which are often costly to obtain.
• Automate smart contracts and metering systems to improve offset accessibility.

Eliminating Middlemen

Blockchain transactions are also particularly effective at eliminating middlemen which lower the costs for energy retailers. Retailers sell energy from utility providers or from the bulk system. Delivering the energy using a more transparent Blockchain-based system will allow users to:

• Purchase directly from the bulk system
• Purchase electricity at wholesale prices

Peer-to-peer transactions. Blockchain systems allow:

• Users to trade energy directly including renewable sources of energy such as solar and wind
• Prosumers to enter into the energy market as a supplier
• Prosumers to sell energy to members in their communities

How Does Blockchain integration help?  

Blockchain overcomes cyber-attacks by distributing processes and safety checks between multiple gateways and servers. There are multiple backup gateways and servers to process and synchronize data. Devices such as sensors and gateways are necessary to monitor and control BESSs and facilities. Existing NOCs are vulnerable to invalid gateway connectivity sensors even though many precautions have been taken to mitigate this type of intrusion.  

Blockchain can be used for the configuration of ‘smart contracts’ where the devices themselves conduct the trades. It can also be used to ensure that only authorized devices get access to the network in the first place, finally it can be used to verify the communication between devices.  

Using Blockchain, all gateways and servers are in charge of device validation. Blockchain also adds scalability to an IoT platform as it processes 3,500 transactions per second via 18 gateways and 10,000 sensors per facility. According to studies, Blockchain increases reliability of an IOT NOC by up to 99%.  

Operators can send control and operational notifications, update sensor/gateway firmware, and deploy new versions of software on gateways. It is essential to authenticate facility operators for IoT platform access. Blockchain prohibits unauthorized access to IoT platform by recording their identities in smart contracts.  

Edgecom Energy is developing a Cloud-based Blockchain IoT (CBIoT) offering. The offering will have the following advantages:

• Authenticating registered operators
• Authorizing valid sensors and gateways in facility  
• Monitoring ESSs’ status and facility’s environment
• Managing user permissions and abnormal ESSs’ conditions

Edgecom Energy will be using BESS Systems to dispatch generation units that reduce demand during peak hours and, hence, Global Adjustment (GA) costs. Energy Storage System integration of control commands to a monitor service require a highly secure NOC. Blockchain will allow the highest level of security when control commands need to be sent to the BESS or other DERs. This will allow for unparalleled reliability, security and safety for Edgecom Energy controlled DERs.  

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