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Special Report | January 2018

Gearing up for Blockchain

<span style="font-weight: bold;">From using IoT for basic automation to turning towards crypto currency, digitisation is delivering tools that offer dynamic solutions in power sector too. </span> <p></p> <p> Digitisation has been at the forefront of power sector for the past decade in India. Evidently, the stakeholders in the electricity value chain have been investing considerably in the Internet of Things (IoT) to enhance efficiency. In all segments of power, be it generation, transmission or distribution, we have seen automation taking place in a better manner in comparison to the earlier days. </p> <p>Digitisation or automating the process in turn means the entire value chain becomes smarter and interactive. The digital space in India has seen major evolution especially in the last couple of years. Power segment also joined the bandwagon by introducing digital payment schemes, open access, Supervisory Control and Data Acquisition (SCADA) system in transmission and distribution, etc. Now the segment is all poised to take the next leap - the implementation of smart metering and smart application.</p> <p>In other words, the power sector looks at IoT solutions - an internet-based tool that will help in monitoring and predictive maintenance of a wide variety of assets in its value chain. The equipment are monitored continuously and the collected data is passed on to cloud. On the basis of the collected data, a conclusion can be drawn on the health and impending failure of the assets by using Aritificial Intelligence, and determine the optimal time to perform maintenance. The proactive predictive nature will enable the companies to schedule the maintenance in advance and also avoid major shut downs and down times. That also means considerable savings in time and cost.</p> <p>India witnessed a major blackout in its northern part including New Delhi in 2012. The transmission grid has been unreliable in many ways. The reasons could range from ageing equipment; poor maintenance; and in many cases, the struggle to upgrade power systems to keep up with very high annual demand growth rates. A lot has improved over the last couple of years as the companies started investing in technology and grid management tools in a bigger way. </p> <p>According to the Asian Development Bank (ADB) publication Energy Outlook 2013, Asia and the Pacific will require a cumulative investment of about US $11.7 trillion in the energy sector to meet business as usual (BAU) energy demand from 2010 to 2035. The integration of renewable energy into the grid in large capacity had increased the need of having smart meters. In the true form, the smart meters can communicate with each appliances in the houses of consumers and define the power consumption pattern. To elaborate further, if all your appliances work at the peak load time, the smart meter will be able to send a message to the consumer to reduce consumption thus saving higher electricity bill. Smart meters collect and exchange consumption data between the consumer and the utility enabling the latter in managing peak loads in a better way.</p> <p>The IoT scheme comprises of three major factors. Digitisation, the fist step that enables utility to have end-to-end control over the system. This is followed by systems that collect data like SCADA in distribution network, smart meters at the consumers end, etc. The third and the biggest player is the last step where the collected data helps in forming algorithms to further regulate and control the power supply system in the country. </p> <p>The two consumer-oriented tools - smart meters and smart thermostats - have redefined the power sector in a bigger way globally. Smart meters have widened its performance offering by upgrading from data collection to enhancing the utility with net metering, allowing to prepaid purchase of electricity, energy management, help in identifying the outage location, reducing losses and so on so forth. </p> <p>The second device, the smart thermostat is a tool that measures the humidity and temperature in a room. This device is connected through internet so that you can remotely access it. According to the data received and the algorithm based on that, one is able to adjust the temperature of the room using a smartphone application. As per the analysis, it is not proven that with this there is a saving of upto 12 percent in the electricity bills. </p> <p>These concepts and devices are gaining prominence in India as the country is moving to the digital and smarter cities with energy efficient and intelligent buildings. IoT will play a key role in the coming days especially in the power sector as the country is aiming at decentralisation and defossilisation of the power sector. The transformation will be driven by IoT playing the significant role in the following scenarios (a) renewable energy is generated close to load centres; (b) energy is stored using storage devices and deliver when the demand is high; (c) responding to the demand by balancing; (d) based on real-time predictions of variable renewable generators, the backup plants switches on for generation; and (v) to manage power, a dispatch logic, and controllers are used. </p> <p>These schemes are under pilot projects in Asia, and the aim is to achieve the near 100 percent renewable energy integration into the grid. <span style="font-weight: bold;">Hemant Dabke, Vice President, Strategic Industries (Federal, State, Public Services, Telecom and BFSI), </span>SAP Indian Subcontinent pointed out, 'The future of the power sector lies in the new value chain amplified and interconnected by digital technologies. New age technologies such as IoT can power insights and connectivity, enabling power companies to manage assets and energy consumption better. </p> <p>'As we pursue India's thrust for digital transformation, it is important to reflect new structures of power generation, transmission and distribution to create new processes in a competitive and collaborative economy. SAP enables power sector companies to handle the ebb and flow of energy generation, transmission, distribution, and retail by digitising energy management processes to meet changing regulatory, environmental, operational, customer, and technological needs. That is why we continue to be the trusted partner of choice for companies including KEC International, Hero Future Energies and several others for their digital transformation journeys.'</p> <p><span style="font-weight: bold;">The impediments</span><br /> According to Asian Development Bank (ADB) report, the total potential economic impact of IoT will be in the range of US $3.9 trillion to US $11.1 trillion per year in 2025, quoting the McKinsey Global Institute report. The report further says, 'On the top end, this would amount to 11 percent of the world economy. General Electric (GE) predicts that US $1.3 trillion of value can be captured in the electricity value chain from 2016 to 2025 globally by IoT.'</p> <p>But this comes with couple of major challenges. And in Asia pacifica most of the below listed challenges were in existence for a considerable period of time. Funding: This requires a large amount of investment for upgrading / modernising the infrastructure before reaping the benefits of IoT. The investment for IoT should be done along investment in infrastructure.</p> <p><span style="font-weight: bold;">Policy level challenges:</span> Electricity continues to be a concurrent subject and in most of the countries, there is political pressure to keep the rates low. The health of the distribution utilities also may play a spoil spot.</p> <p><span style="font-weight: bold;">Communication:</span> The transformation to a fully integrated IoT platform is possible only when there is a network that transfers information flawlessly. That calls for enhancing the skills of the workforce. A strong information and communication technology and analytics skills would be required.</p> <p> <span style="font-weight: bold;">Blockchain in power </span><br /> A report by PricewaterhouseCoopers (PwC) titled, 'Blockchain -an opportunity for energy producers and consumers?' elaborated on how blockchain would work for the power sector. </p> <p>Blockchain is a special technology for peer-to-peer transaction platforms that uses decentralised storage to record all transaction data. The first blockchain was developed in the financial sector to serve as the basis for the cryptocurrency 'bitcoin'. </p> <p>Blockchain technology changes the way we transact, with the underlying transaction model shifting away from a centralised structure (banks, exchanges, trading platforms, energy companies) towards a decentralised system (end customers, energy consumers). Third party intermediaries, whose services are needed today in most industries, are no longer required in such systems - at least according to the blockchain theory - given that transactions can be initiated and carried out directly 'from peer to peer'. This can cut costs and speed up processes. As a result, the entire system becomes more flexible, as many previously-manual work tasks are now carried out automatically through smart contracts.</p> <p>Blockchain technology shows a lot of promise. Other than being used to execute energy supply transactions, it could also provide the basis for metering, billing and clearing processes. Other possible areas of application are in the documentation of ownership, the state of assets (asset management), guarantees of origin, emission allowances and renewable energy certificates.</p> <p> The Way forward There are reports about how blockchain is swiftly moving beyond financial services and cryptocurrencies, and offers a glimpse of a growing challenge to the $2 trillion energy market.Going by recent developments, it appears that the blockchain technology will drive the electricity market from here.</p> <p> <span style="font-weight: bold;">-RENJINI LIZA VARGHESE</span></p>
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