The Economist

54 Business The EconomistAugust 4th 2018

2 would not be safe says Mr Ng).

It might sound as though Drive.ai is

cheating by simplifying the problem in so

many ways. But the end result is still a use-

ful service; letting workers visit theretail

park for lunch without having to worry

about driving or parking. And it provides a

foundation from which to expand the ser-

vice in future in Frisco and elsewhere.

Drive.ai plans to license its technology

to others and has struck a deal with Lyft a

ride-hailing firm to operate vehicles in and

around San Francisco. “I think the autono-

mous-vehicle industry should be upfront

about recognising the limitations of to-

day’s technology” says Mr Ng. It is surely

better to find pragmatic ways to work

around those limitations than pretend

they do not exist or promise that solving

them will be easy. 7

T

EPCO Japan’s largest energy firm is an

unlikely advocate of techno-anarchy.

The firm is best known for the meltdown at

its Fukushima Dai-ichi nuclear-power

plant in 2011 during which its buttoned-

down executives showed corporate Japan

at its most stultified. Yet it is trying to rein-

vent itself as a pioneer of one of the edgiest

forms of energy. It is embracing blockchain

technology with an aim no less of over-

throwing the old order in the electricity

business to make it more decentralised.

Blockchains the technologies on which

bitcoin and other cryptocurrencies are

built may at first appear to be an uneasy fit

with the energy business. Electricity has in

the past been generated centrally run

across vast physical grids with constant

management by system operators to keep

power flowing smoothly. Blockchains are

distributed digitalledgers which are not

managed by a central authority but collec-

tively by a group of users. If anything

cryptocurrency blockchains are a drain on

energy rather than a support for it. Digico-

nomist a blog estimates that just one bit-

coin transaction uses as much electricity as

an average household in the Netherlands

uses in a month.

Yet in an era when more businesses

communities and households are generat-

ing their own energy chiefly via solar and

wind power startups and big utilities alike

believe blockchains will help speed the

move towards decentralisation. They are

finding ways to do this with minimal ener-

gy consumption.

There is lots of hype and a degree of her-

esy given that stodgy utilities are making

use of an anti-establishment technology.

Almost all blockchain applications are still

experimental. But the scope of potential

blockchain-energy businesses is so wide

that there may be successes to come. The

applications range from ways to promote

buying selling or trading of clean energy

between individuals (also called peer-to-

peer trading) to balancing wholesale elec-

tricity markets (ensuring that supply al-

ways matches demand) to trading carbon

credits. Further uses are enabling house-

holds to provide charging stations for elec-

tric cars and funding the development of

solar power in poor countries.

Numbers are hazy. The Energy Futures

Initiative a think-tank led by Ernest Moniz

a former American energy secretary says

that $100m-300m has been invested in

over 100 blockchain-related energy ven-

tures. Specialists at theCouncil on Foreign

Relations (CFR) an American think-tank

say most investment so far has gone into

peer-to-peer trading and grid-balancing

applications. A “try-anything” attitude pre-

vails. “It is like looking at cell phones circa

1995 and not knowing what the future of

mobile communications will be” says

Sam Hartnett of the Energy Web Founda-

tion (EWF) a non-profit venture aimed at

developing core blockchain technology for

the energyindustry.

Tepco for instance appears to be

throwing the digital equivalent of spaghet-

ti at the wall to see what sticks. In Decem-

ber it made an investment of an undis-

closed sum in Electron a British

blockchain company that is focusing chief-

ly on handling the multiplying options for

flexible demand in electricity systems. In

April Electrify a Singapore-based startup

said it had signed a memorandum of un-

derstanding with Tepco to experiment

with peer-to-peer electricity trading. The

Japanese group is also one of more than 70

firms including utilities Duke Energy and

Centrica and oil firms Royal Dutch Shell

and Equinor that are part of theEWF.

Among many initiatives the EWFis pio-

neering a blockchain application that

tracks renewable-energy certificates used

to offset carbon emissions to make them

more transparent and granular.

Experts say it is important to bust two

myths—one too positive the other too neg-

ative—about the blockchain and energy.

First there is a view promoted in many ini-

tial coin offerings thateveryone will be

able to use the blockchain and cryptocur-

rencies to trade locally-generated energy

(rooftop solar for instance) with each oth-

er without a centralised utility in the mid-

dle. This is largely nonsense. Electricity still

needs to travel down poles and wires for

which the transmission and distribution

companies will want hard cash. The block-

chain will be used if at all at either end of

the grid.

On the negative side a view prevails

that the blockchain will guzzle too much

electricity for energy applications to make

sense. But this assumes that projects will

use a public blockchain such as bitcoin

which anyone can access with the right

software requiring lots of computing pow-

er and time to verify each transaction and

protect the blockchain. Energy firms could

in fact employ blockchains in which only

trusted participants can join making the

process of maintaining the blockchain fast-

er and less energy-hungry.

Mr Harnett says that while bitcoin tran-

sactions can consume the energy of a me-

dium-sized country when done regularly

those ofEWF are “of the order of a medi-

um-sized office building”. The use of

trusted pools of participants is where the

utilities spy an opportunity to co-opt a po-

tentially insurgent technology; they will

use it to remain central to the decentralisa-

tion of electricity. “The [blockchain] ven-

tures most likely to achieve commercial

traction in the coming years will largely

work within the existing system and

partner with incumbents such as utilities”

says the CFRreport. Or as Electrify’s Martin

Lim colourfully puts it “It’s ironic. Every

subversive turns into a dictator.” 7

The blockchain and energy

Greens meet geeks

Hope hype and heresy as energy rides

the cryptowave

Cryptohipster joins the grid