The South Korean government has pledged 4 billion Korean won (about $3.5 million) to support a blockchain-enabled virtual power plant (VPP) in Busan, the country’s second-most-populous city after Seoul. Busan officials said they have selected a project to build a VPP on a “citizens-shared” blockchain.

Technology Aggregates Resources, Standardizes Transactions

A VPP is a cloud-based distributed power plant that integrates the idle capacities of multiple energy resources in order to optimize power generation. The Busan project announced December 10 will aggregate power sources such as Busan-area factories, energy storage systems, and solar power.

Officials said the project will be part of a national competition next year hosted by Korea Electric Power Corp. (KEPCO). The VPP was proposed by Busan city officials, along with Pusan National University, and local companies including Nuri Telecom, an energy management firm; Busan City Gas; and Korea Industrial Complex Corp., a real estate company.

Also Monday, South Korea’s second-biggest commercial bank, Shinhan Bank, launched a blockchain-based initiative designed to make its recording of transactions more efficient and less prone to errors.

“Prior to the blockchain-based process, there had been no standardized rules governing the keeping and managing of financial records, a reason why market participants had to rely on their own records, which oftentimes led to errors despite the cross-checking process requirement,” a Shinhan official told The Korea Times.

Blockchain ‘Well-Suited’ for Power Industry

Executives from Publicis.Sapient, a purpose-built platform that combines digital solutions and business technology for companies, including the energy industry, in a recent email to POWERabout blockchain for energy said, “Blockchain as the platform is very well suited for the power and utility players. Recently, many of the startups have come up in this space to facilitate the end-to-end transactions between the producers and the consumers directly. Blockchain platforms in energy will result in new business models and changes to the existing business models.”

Jesse Morris, chief commercial officer at the Energy Web Foundation, an open-source, scalable blockchain platform specifically designed for the energy sector’s regulatory, operational, and market needs, recently told POWER: “There are dozens of potential applications of blockchain technology in the energy sector.” He noted that utility operations that can utilize blockchain include “customer billing and electric vehicle [EV] charging settlement. This isn’t some far-off reality; from RECs [renewable energy credits] to EV charging, several Energy Web Foundation affiliates, from the UK to Southeast Asia, are experimenting with these use cases today.”

Busan officials have been developing and promoting blockchain technology. Yoo Jae-soo, minister of economic affairs in Busan and former director general for financial policy at the Financial Services Commission, has had discussions with other government officials about establishing a special zone in the city for the development of blockchain and the energy-intensive cryptocurrency industry, for which blockchain was originally developed.

South Korea’s Industry-SW ICT Convergence Association in June of this year announced plans to build a blockchain center in Busan modeled on Crypto Valley in Switzerland. The South Korean center is planned for Haeundae, a beachfront and tourist destination in eastern Busan.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).

Ed. note: POWER will publish a special report on blockchain technology in the January 2019 issue.