Programmable Energy, The Challenge

How digital tokens could accelerate the energy transition and our participation in the energy eco-system.

This is the first post in a series explaining the programmable energy concept.

Analog to Andrew Singers article on programmable money in 2020, programmable energy may be the next evolutionary stage in the energy system. This should be introduced evolutionary as all economies consider energy as one of their critical infrastructures, hence the heavy regulation to ensure we keep the lights on. There are pilots and experiments all over the globe ever since the inspiring Brooklyn Peer-2-Peer blockchain was front page news on all newspapers back in the days.

With the Central Bank Crypto Currency programs running everywhere the marked have been educated on one aspect of tokenization. We collectively learned from the overhyped ICO and recently with catchy Bored Ape Yacht Club NFTs and the likes. The news is now focused on Web3 and MetaVerse initiatives.

Our energy system is experiencing major challenges that might turn into a “perfect storm” or a devastating tsunami. We need a systemic approach to address our energy transition.

Lets apply Sun Tzu here by understanding our “why of position”, both the current and the futures position along with the “why of movement”.

The Energy Transition

All countries are contributing to the Paris agreement to reduce the greenhouse gas emissions. This leads to a global phenomenon to replace fossil fuel power generation with renewable energy generation using Wind and Solar. This major change in the supply of energy is happening while all industries are electrifying as well to reduce their emissions, down to the consumer with its EV and heath-pumps. The dogma of large central generation sites to leverage economies of scale is rapidly being replaced by decentral deployments.

Current state of the energy system

As we have been optimising our utilities over the last 5 decades to deliver cheaper energy while maintaining the reliability, all processes, ways of working, systems and assets are currently running without headroom capacity.

And now suddenly we are asking a 5-10x increase of the energy volume which will require a drastic change on all major components of the system: generation; consumption and grid reinforcement for the transmission and distribution.

?To me there are two dominant questions looking forward:

1. Can the current preposition hold true, where electricity is supplied on an “all you can eat” basis, aka a demand led system?
2. Can the central planning system accommodate this change? A system where each party sends in day ahead their E-program (energy generation and consumption) along with a T-program (transport request from generation to consumption locations on the grid)? A central entity “System Operator” collecting all the data and is running calculations to determine if the parties can be accommodated with their E-program and T-Program, reflecting their trades on the forward energy markets.

Requirements for an alternative

If we conclude “the end of” the planned economy way of running the energy industry and our grids we need to be very careful not to trough the baby with the bathwater when proposing an alternative solution. Any new or enhanced solution needs to ensure the energy security, as we are more and more reliant for all aspects of life on energy.

In the next episode we look at lessons learned from the blockchain projects that are trying to create new ways of collaborating.