EWF’s Blockchain For Electricity Is Building Its Foundation

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In April 2018, Energy Web Foundation (EWF) was out of the shadows. As CleanTechnica said at the time:

Energy Web Foundation (EWF) has great bones. It was founded by two leading organizations in the clean energy space: the influential Rocky Mountain Institute founded by Amory Lovins in 1982 and the more recently formed Grid Singularity, a blockchain- and grid-focused organization with core Ethereum blockchain developers, experienced energy executives, energy regulators and technology entrepreneurs.

Now the company has its background paper published, defining a variety of important subjects. As a note, publications of core elements by blockchain startups are now morphing, as is usual for these types of things in the absence of regulatory requirements for specifically named and structured documents. EWF is going for the generic paper and another Australian firm has both a whitepaper with business elements and a greenpaper with architectural and technological elements.

What is EWF? There’s a clue in its name. Like the Hyperledger Foundation, the Energy Web Foundation is a not-for-profit governance organization over an open development effort intended, in its words:

“… to bring blockchain technology from “boutique” to “industry” in the energy sector, enabling pioneering market and business models that provide clear societal, environmental, and economic benefits.”

There are several foundations and governing bodies emerging in the blockchain space at large, and energy and cleantech is no exception. Bringing sense and herding cats in this current blockchain wild west is a necessity.

This is a place where EWF shines. The company has brought together an experienced set of affiliates from the energy industry as well as blockchain and tech giants such as Microsoft. Firms include Duke Energy with its North American nuclear and fossil fuels and Brazilian hydro portfolio, E.on with its strong renewables focus, Exelon and its nuclear background, Iberdrola, which has lots of hydro and nuclear as well as a reasonable amount of wind generation, PG&E, which is the largest hydroelectric operator in the USA, Shell, an integrated upstream and downstream oil and gas company, Tepco, the Japanese nuclear and fossil fuels utility of Fukushima infamy, and AGL, the Australian generator and distributor of electricity and gas, with its portfolio dominated by big coal and gas plants.

This is clearly a case of working with the generators with deep and global regulatory experience, a strong plus. But it does beg a couple of questions. Why so few renewables-focused firms? How does this fit with the Lovin’s background of soft- vs hard-energy paths? EWF responded:

EWF Affiliate diversity—geographic, company size, company type, etc.—is very important to us. Yes, there are some “legacy” companies from the world of utilities, grid operators, etc. But we have also deliberately fostered a base of startups as well. We believe that innovation and the energy sector’s evolution can and will come from many fronts. We remain steadfast in our vision that blockchain can unlock a decentralized, democratized, and decarbonized energy future—consistent with Amory’s vision of soft energy paths, his work in Small is Profitable, etc.. And we are already seeing Affiliates embrace that potential, such as with Elia—Belgium’s TSO—developing blockchain-based solutions on the Energy Web Chain to leverage distributed energy resources (DERs) for demand response.

Beyond which companies EWF is in bed with and why, there is the question of what it’s expecting to deliver, at least in early phases. Its approach is to build frameworks on a variant of the Ethereum blockchain foundation which provide the launch pads for significant innovation and development by others, creating an ecosystem which enables rapid entrepreneurialism. It’s a software play more than a Kickstarters-for-renewables play such as WePower.

What are its first frameworks?

• EW Origin: a reference app for renewable energy certificates and carbon counting
• EW Link: an Internet of Things (IoT) architecture and standards set
• EW D3A (Decentralized Autonomous Area Agent): a starter kit for energy-sharing microgrids with simulation as its first instantiation.

So carbon counting, similar to what IBM and NORI are doing, IOT somewhat similar to Xage’s work with ABB and IOTA’s work with IOT microtransactions, and electricity local markets similar to Power Ledger. The competitors in, or at least other players targeting, these spaces is indicative that they are aligned with where value is more likely to emerge.

All of these domains are regulated or will be regulated, so its focus on partners with experience is promising. This is extended with its design points of ensuring that end-points are legally identifiable, something which NEO has as a design point as well. EWF extends that with the ability to create private transactions and has obviously thought through much of the requirements in this space.

Technically, it has a somewhat mixed message. On the one hand, it touts the strength of working with the proven Ethereum blockchain, but then they go off in two different directions from base Ethereum, one in terms of governance and one in terms of development support. The first is that they have initially adopted proof-of-authority, not the Ethereum Casper proof-of-stake as the transaction accelerating consensus model. This likely makes sense given the need to provide permissioned as opposed to unpermissioned node support, as Ethereum’s Casper is an extension of its unpermissioned node model more than not, but it is a significant divergence from Ethereum’s path. The company had this to say about the decision when asked:

We’ve chosen a particular form of Proof-of-Authority consensus because we believe it will provide the kind of validator node oversight to make blockchain-based solutions more acceptable to the regulator community for the electricity grid and broader energy sector. When critical energy infrastructure is in play, we expect that having better oversight of known validator nodes—as in our Proof-of-Authority consensus—will be important. Having said that, the paper represents our current thinking and design directions, but is subject to refinement and change over time as we continue developing the blockchain in advance of genesis block in 2019.

That last point is important. The blockchain space is moving rapidly, with global innovation occurring in governments, Fortune 2000 companies, and hacker’s basements. Picking an initial direction and understanding that they might have to rip it up and go a different one are both important elements. Similarly, the team has chosen to emphasize WASM as the development framework over EVM, which is an early days element, but also less fundamental than core consensus algorithms.

On a different technical note, all of its examples of “mission-critical energy infrastructure” are things like smart meters and smart appliances, devices where lightweight IoT approaches work very well. But there’s a fundamental difference between lightweight IoT integration and SCADA devices for actually mission-critical energy infrastructure, and it’s not clear that they’ll scale. Of course, IoT is penetrating further into traditional SCADA spaces, so where the boundary actually lies is changing.

Its current model is to have the Foundation host and run the central authorization node, run the Protocol Implementation Team, and perform much of the authorization of affiliates, validators, developer KYC and other governance elements. Its funding model is opaque for that ongoing effort, although the $21 million USD the company had available in early 2018 will keep it going for quite a while. When asked about funding the centralized efforts, the company said:

Firstly, it’s important to note that although EWF will perform certain functions in the near term (e.g., Protocol Implementation Team, KYC process), in the longer term we envision divesting some of this “ownership” to the Energy Web Chain and the broader community. Our “centralized” role in these early stages will give way to a more decentralized approach from genesis block onward. Secondly, we’ll be releasing a follow-on paper that goes into greater detail about EWF’s token-secured operating model. It will provide more insight into long-term economic sustainability for EWF beyond the early-stage funding that supports this first wave of work.

Reasonable points, but as with many solutions to the challenges of blockchain implementations, early efforts require centralized as opposed to decentralized governance, management, and teams, something blockchain purists rail against. This is observable in many blockchain organizations in their early days including IOTA and NEO in different ways, and it will be interesting to observe how it evolves across the space. Certainly the Hyperledger Foundation makes no pains about its roles and boundaries, and its continued existence as a governing body for the software set.

EWF appears to be positioning itself wisely and carefully in the emerging blockchain-for-energy space. It’s not trying to boil the ocean, it’s aligning itself with the regulated marketplace for electricity and it’s partnering with serious organizations. The technical choices are very defensible and initial offerings reasonable choices. It’s one to watch.