Blockchain Microgrids Could Give The Utility Death Spiral A Fresh Spin

Four years ago the electric utilities were roiled by predictions they would collapse before an onslaught of solar panels and windmills and batteries at homes and businesses that wouldn't need utilities anymore.
They pulled themselves together by rallying around the idea that they were uniquely positioned to reinvent themselves as energy-services providers: they have the equipment, the expertise, the personnel, all the convenient connections of the existing grid to serve as exchange networks for all those individual "prosumers."
But there are signs afoot that microgrids are developing without those utility services, and investors seeking clean-energy opportunities may be pouring money into the new alternatives.
"When you have a microgrid conversation, the people who come to the table aren’t even the utilities," said Ed Krapels of Anbaric Development Partners, a Boston-based developer of microgrids. "It’s typically the technology companies like Google, like Amazon, that have a completely different idea of how to digitally control an energy system than the utilities have. So it really is the beginning of an enormous change in how the electric system is organized, and it’s a real problem for the utilities that don’t get on board."
Originally a developer of interstate transmission lines, Anbaric broadened to microgrids because of a convergence of technological forces: distributed generation of solar and wind, cheaper batteries and blockchain cryptocurrencies that allow microgrid participants to buy and sell electricity faster and cheaper than they can through utilities.
Anbaric's major investor is the Ontario Teachers Pension Plan.
"They own airports and roads and all kinds of infrastructure," Krapels said. "They would like to be your electricity supplier. And that competition between sources of capital means that the monopoly position of the utilities is coming to an end, and we’re going to have a much more competitive and much more disruptive market."
The OTPP is one of many wealthy pension funds that have come under pressure from members to divest from fossil fuels, not just for political reasons but because of financial climate risk. Deborah de Lange, an assistant professor of global management studies at Ryerson University, studied Canada's major pension plans and noticed a quiet shift in OTPP's investing activity:
"I was able to surmise from a study of several years’ reports of Canada’s top five pension plans, all of them offering incomplete information, that the Ontario Teacher’s Pension Plan (OTPP) seems to be reducing its share of fossil-fuel investments. But not with any stated intention," she writes.
OTPP is not alone, as shown by the strong presence of pension funds, bankers and lenders at the Paris Climate Conference. Billions of dollars are seeking new energy investments that are carbon free and climate resilient—two key features of emergent microgrid systems.
Blockchain financing circumvents the need for utility networks or financial platforms. But utilities aren't missing out completely.
ComEd executives frequently tout a microgrid they are developing on Chicago's South Side, as Chief Operating Officer Terence R. Donnelly did again last week. Krapels and Donnelly appeared Feb. 21 at an event hosted by the Energy Policy Institute at the University of Chicago. ComEd's microgrid is in Bronzeville, adjacent to an existing, independent micro-grid on the Illinois Institute of Technology campus.
Universities like Illinois Tech were early and somewhat accidental adopters of microgrid systems, adding pieces to their heating and electrical systems as campuses grew. With rising interest in microgrids, and rising interest in clean energy, some universities are putting theirs on the market.
The Ohio State University leased its campus microgrid last year to a utility for a $1.165 billion up-front payment, but it was a French utility, the North American division of Engie, partnered with a Canadian investment firm, Axion Infrastructure, rather than the local utility in Columbus, Ohio: American Electric Power. The French companies have a 50-year contract to operate utilities for the campus and receive millions in annual fees. Part of their mission is to modernize the microgrid and reduce carbon emissions.
In many such projects, the local utility is left out. Cornell Tech opened a campus on Roosevelt Island in New York City last year that aims to generate as much electricity as it uses.
“So that’s the revolution that we’re talking about,” Krapels said.
"To me one of the genius things about the United States economy is that we’re willing to blow up industries once in a while, like we did with the telecom industry. And so I think that the revolution that is taking place at the distributed energy level is so profound and so strong that there are going to be a lot of stranded assets."
Clarification: This story originally said the OSU sold its microgrid. The partnership is based on a 50-year lease.
Read more about the new microgrid model: How Blockchain And Batteries Flipped A Power-Line Developer To Microgrids

Tip Jar: If you found value on this page, please consider tipping the author.