How Should You Convince Senior Management About Blockchain

The utility industry has understandably adopted a wary attitude towards blockchain. The technology has become a hard-to-escape buzzword, a magic dust that, when sprinkled, will solve all business problems and then some. For the most part, the hype is fueled by lack of knowledge about the actual blockchain and its capabilities. 

But the wariness has fueled a chicken-and-egg problem. Skeptical industry executives are missing out on an important technology trend that may have the power to transform their business. So how can utilities best integrate blockchain into their operations. A panel discussion at the recently-concluded Greentech Media forum for Blockchain in Energy attempted to fashion an approach to sell the technology within the industry. 

One of the first problems utility executives interested in testing blockchain for operations face is convincing senior managers about its utility. “Most of my effort today is spent on gaining management buy-in,” said Alex Rojas, director of distributed technologies at Ameren Corp. 

The utility announced a project with software firm Opus One Solutions to explore the use of blockchain in developing transactive energy marketplace for Distributed Energy Resources (DERs) in its grid in April this year. The misinformation and mystery associated with blockchain is a problem only so far as it does not explain the technology’s utility to their business. 

To that end, Rojas counsels tech teams to provide examples and proof to demonstrate use cases involving blockchain. “You have to convince them that it is something real before you delve into possible use cases,” he said. Ameren’s project is currently in a pilot phase and the utility plans to test it on its University of Illinois campus at Champaign. 

Rojas worked with his team to demonstrate use cases in the network of EV chargers that the utility is developing across Illinois. He focused on the improvements and efficiencies available to users due to blockchain. According to him, blockchain’s hype cycle has resulted in expectation and disillusionment in equal measure. “It is important to manage expectations (for senior management),” he said. “Oh, by the way, this is not about blockchain but about the user experience,” is how Rojas framed their approach to senior management. 

Sometimes, however, focusing on simplifying user experience is not enough. CK Umachi, expert product manager for blockchain at PG&E, tried to streamline his utility’s approach to renewable energy credits with vendors using blockchain. “It turned out to be a nightmare and headache,” he said. 

Among the problems he faced were incomplete understanding of the process and the complexity of contracts that the utility had drawn out with each vendor. “It is probably not the best solution for that marketplace considering how the business works today,” he said. 

Given the complexity of a utility’s business, it is also important to build a cross-functional team. “It (blockchain implementation) works best when the person working on it has a strategic role and has leeway with the product and legal teams and has extensive experience with technology,” said Mohit Anand, an independent consultant. He said blockchain testing and implementation teams need to think through 10 steps ahead about other problems that might come into play, once they begin work. 

While that may be a sound strategy, it can only be accomplished with a mature technology. Blockchain, for all its hype, is still a nascent technology and faces several teething problems, from data security to scalability in the number of transactions. When asked to identify important trends, panelists identified an assortment. For one, the development of zero-knowledge proofs, which allow confirmation of transactions without revealing customer details, and the potential to run queries on data without being able to access the database were important to a future where utilities will become responsible for customer data and are responsible for safeguarding it. Not all utility data will need to be kept on a blockchain. “It really depends on the kind of data and level of aggregation,” said Anand, the consultant, adding that hybrid models will prove to be the most popular.   

Interoperability and development of standards was another key trend that will shape the future of utility blockchain efforts. Currently most blockchains are not interoperable, meaning they do not talk to each other. As a parallel, consider the http standard that seamlessly establishes handshakes with websites for all types of computer and mobile systems. A similar parallel does not exist for blockchains. The Energy Web Foundation (EWF) is attempting to build an open source blockchain with participation from multiple stakeholders; but it is unlikely that major utilities will divulge their entire dataset for the chain. In the end, utilities may end up with a mix of infrastructure technologies, representative of a mix of public and private blockchains.