What do your car and the electric grid have in common?
An electric car needs to be recharged from time to time. The grid must balance the supply of electricity with the demand. That changes from moment to moment. The two can work together.
Not long ago, grid operators had limited choices to smooth out ever-changing demand. They could, for example, start and stop peaker plants. Peaker plants cost more to run and operate than baseline plants, which run all the time.
The emergence of battery storage technology provides them a more flexible and less expensive alternative. When supply exceeds demand, send it to the batteries. When demand exceeds supply, discharge the batteries.
The battery in one electric vehicle (EV) doesn’t amount to much. Batteries in millions of EVs become a big deal. Plug them into the grid—or a microgrid—and let the EVs and grid supply each other’s needs.
We drive into gas stations and pay for gas. Most likely with a credit card. Actual money changing hands requires banks as intermediary. One bank issues the credit card. That bank debits money from the customer’s bank account and deposits it into the gas station’s bank account. Three banks.
Blockchain technology can replace the banks as intermediary. The owner of an electric vehicle plugs it into a charging station. While it’s plugged in, electricity can flow in either direction.
So when electricity is flowing to the car, the car owner pays the charging station owner for it. Unless, perhaps, the charging station is using the car to drain off excess electricity from the grid. Or the grid needs to take power back from the car. In those case, the car owner might make some money. Probably on the order of cash back on a credit card.
Blockchain does it all without either the car owner or grid operator doing anything.
About blockchain technology
Blockchain technology is the least well understood component of this system, and perhaps not strictly necessary.
It’s the latest of a long chain of ways to buy and sell goods and services.
We easily understand person to person exchanges. I have an apple. You want an apple. We’re right next to each other, so I hand you the apple.
Millennia ago, someone invented money. So if I’m standing behind a cash register and you want an apple, we have an agreement about how much money you have to give me. If you pay in cash, it’s another simple physical exchange.
Then someone invented coins not made of precious metals, paper money, checks, and credit cards.
The bank has become a critical intermediary. It determines whether those pieces of metal, paper or plastic really represent money and how much it’s worth. It also knows whether you really have enough of it to pay me for the apple.
In our electronic age, someone got the idea that we don’t need anything physical like cash, checks, or credit cards to pay for goods and services. A whole new technology, called blockchain, uses something called bitcoin.
Blockchain technology eliminates the intermediary. It essentially puts all digital transactions where everyone’s computer has access to them. In principle, anyone anywhere in the world knows if I have a digital apple and whether you have digital money to pay for it.
No one actually sees either the apple or the money change hands. But then, no one sees gasoline going into the gas tank, either. And no one sees the driver do anything but poke a card into the pump and punch some buttons. But everyone’s happy.
Vehicle to grid communication
Auto makers, including Ford, VW, and BMW, have already developed an international vehicle-to-grid communication standard (ISO 15118).
Work started on developing it in 2009. Surely any charging station manufactured and installed since its adoption conforms to it.
With ISO 15118, drivers have no need to use credit cards or QR codes. All the authentication, billing, and other processes necessary to charge a car—or have the car help regulate the grid—happen in the background.
Simply drive up to a charging station. Plug the charging cable into the vehicle. Walk away.
Any power plant (including solar and wind farms) and any battery storage facility (including all those EVs) can now communicate their needs. Including financial details. Electricity and bitcoin can change hands with no need for any bank or other outside institution.
EVs don’t require anything analogous to a gas station.
Charging stations already exist at airports, municipal parking decks, apartment complexes, various workplaces, and various retail outlets. Gas stations will probably install them. Homeowners can even install one at home.
The entire concept is very new. Like every new technology, it will take a while for it to become widespread. With so many moving parts, not everything will operate smoothly all the time until the various components have enough experience to work the bugs out.
Blockchain, while certainly a cutting edge idea, is not critical to the system. A credit card can probably work just as well.
But it looks like EVs are one the verge of becoming ordinary. And advancing adoption of renewable energy on the electric grid.
Doesn’t plugging a car in in virtually any parking lot and walking away beat looking for a gas station? And standing in bad weather waiting for the tank to fill?
Blockchain technology for the electric grid: what will come out of today’s wild west? / Lisa Cohn, Renewable Energy World. March 24, 2017
Still don’t get bitcoin? Here’s an explanation even a five-year-old will understand / Nik Custodio, CoinDesk. January 9, 2014
V2G Clarity / Ing. Marc Mültin