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Distributed Autonomous Energy Organizations 231

12.7 WHY BLOCKCHAIN, WHY DAEO

Blockchain-enabled DAEO may help to solve several complex problems
related to the control and trustworthiness of rapid, distributed, and complex
transactions of distributed energy resources (DERs). In a move toward a
more distributed, resilient, and clean grid, blockchain may help reduce
the need for third parties through a verifiable trust mechanism. Instead of
a centralized utility, automated smart contracts could help to support audit-
able multiparty transactions based on predefined rules between distributed
energy providers or prosumers and customers. Blockchain-based smart con-
tracts may also help remove the need to interact with third parties, thereby
facilitating the adoption and monetization of distributed energy transactions
and exchanges—both energy flows and financial transactions. This may help
to reduce transactive energy costs and to increase the control and security of
DER integration by removing barriers from a more decentralized and resil-
ient power grid. One of the current needs for realizing the potential of
DAEO is the development of a secure blockchain-based smart-contract
mechanism to facilitate more distributed and complex energy transactions.
Part of the challenge is that there is not an agreed-upon transactive energy
methodology or best practice for connecting various end-loads over multi-
ple blockchains through a hybrid blockchain design. Should one materialize,
this solution would help to eliminate the limitation of using any particular
blockchain by the nation’s utilities and power companies (Fig. 12.6).
DAEO could help to realize the following goals:
1. Fundamentally transform the energy transactive system architecture from
today’s traditional clearing house process to the future’s autonomous
blockchain-based transactive systems
2. Provide a more autonomous smart contract mechanism and design that
addresses US electricity consumer needs without any cost prohibitive
changes in the current electricity infrastructure
3. Maximize the use of the national distribution system and transactive sys-
tem architectures to improve the energy market’s efficiency
4. Accelerate integration and use of the renewable generation, prosumer
base, distributed generation, and demand response
5. Provide a next-generation market design aimed at messaging and com-
munication architectures to enable a blockchain smart contract to ensure
privacy for market participants, the enforcement of physical feeder
power capacity constraints with free markets, and the design of market
mechanisms that maximize transaction volumes