Volkswagen pilots blockchain to integrate electric vehicles with power grids

Automobile makers everywhere are betting big on electric vehicles as the world begins to push for environmentally friendly modes of transportation. For example, while fewer than 1% of cars on the roads in the United States today are electric, a number of automobile manufacturers are aiming to change this by stopping sales of gasoline-powered cars. 

At the end of January 2021, General Motors said it would stop selling gas-powered cars and trucks by 2035. In addition, automakers such as Tesla, Ford, Volkswagen and even Porsche have announced plans to introduce new electric models in the coming years. At the same time, President Joe Biden recently announced an executive order to replace the U.S. government’s fleet of about 650,000 vehicles with electric models.

The desire to move away from gas-powered vehicles is clear, but this goal may be easier said than done. Despite the potential for clean energy, major silos exist between EV solutions and global power grids today. For instance, more electric vehicles will surely result in the need for additional charging stations and careful planning from utility companies to accommodate EV requirements. As such, a digital, common frame of reference is needed to integrate EVs into global energy markets.

A blockchain network for EV integration

In order to demonstrate this, Energy Web, a nonprofit focused on energy transition through open-source technologies, announced a partnership with Volkswagen Group Innovation, the research department of Volkswagen, to investigate ways of using open-source software to integrate EVs and charging stations into global power grids.

Jesse Morris, the chief commercial officer of Energy Web, told Cointelegraph that the company’s vision is to enable Volkswagen EVs or charging stations to be digitized and able to participate in any energy market:

“What we’re talking about is creating an environment where drivers, fleet owners and charging station operators can be incentivized to (or to not) charge at certain times of the day in response to grid conditions.”

For example, Morris mentioned that if there was local grid congestion at a particular time of day, Volkswagen drivers could be paid in either fiat or crypto not to charge during that period. He further pointed out that if there was an excess of renewable energy on the market and utility providers wanted to pay EVs to soak up the energy, this could also be done. “In order for these kinds of transactions to take place, assets like Volkswagen EVs and charging stations need a way to seamlessly hook-in to grid operator systems. That’s where our partnership comes in,” said Morris.

Energy Web’s partnership with Volkswagen Group Innovation will develop and test open-source software to enable electricity market participation for electric vehicles. The pilot will test pair Energy Web’s open-source tech stack with Volkswagen’s IT stack to determine the most efficient way to integrate all of Volkswagen’s assets. 

According to Morris, once this integration is complete, it will become much easier for Volkswagen’s assets to be incorporated into global energy markets. The pilot will also pair existing EV charging standards with Energy Web’s tech stack, including the ISO 15118 Plug and Charge standard, along with the PKI of Electrify America, one of the world’s largest EV charging networks.

Regarding the role of blockchain, Morris explained that digital identity is at the core of this entire integration. As such, Energy Web works to establish identity for assets, such as EVs, charging infrastructure, solar panels, customers, businesses, grid operators and other energy market participants. Morris said:

“These identities can be thought of as passports that have different permissions associated with them. For example, an EV in California would not be able to participate in a German energy market, as this would all be tracked using the identities. With identities established, it becomes much easier for those identities to integrate into a variety of different energy markets, each with their own local rules and regulations.”

Once assets are assigned identities, these “digital passports” are anchored on a blockchain network. Morris mentioned that in most cases, this is the Energy Web chain, where all the credentials associated with those identities can be proven. Morris explained that other business functions, like sending messages from EVs to grid operators, will be conducted off-chain using other technologies. “This is fundamentally how the Energy Web stack works,” he said.

Blockchain could drive innovation between EVs and power grids

While the success of the pilot is yet to be determined, Marvin Schroeder, project leader at Volkswagen Group Innovation, mentioned that the company is keen on exploring the possibilities that blockchain technology can have for smart charging applications. “At this early stage of the EV industry, we have a great opportunity to shape and improve standards on how EVs like ours integrate into markets around the world,” he commented.

This pilot could be extremely beneficial for Volkswagen Innovation Group in particular, as the company will invest about 35 billion euros in electro-mobility in the next five years. The group also plans to have launched about 70 all-electric models by 2030. Other EV manufacturers may follow suit if the pilot is successful, as Morris remarked:

“If we’re successful, the moment an EV rolls off the lot of a dealership, that car will be fully integrated into the energy system in the area. Customers can then be paid for their EVs to help balance the grid in near real-time.”

Even if the pilot produces positive results, market reform could be challenging. Morris pointed out that energy markets have taken a lot of time to evolve over the years, which may hamper the adoption of emerging technologies.

Although this is the case, Morris believes that market rules and regulations are quickly changing, noting that the time is ripe for automotive players like Volkswagen to adapt to these new markets. For example, Morris noted that initial demonstrations of a solution like this will likely be focused in a region such as Germany where Energy Web already has a strong presence. Germany is also driving innovation for the digital energy economy through its use of distributed energy resources, along with compliance with the European Green Deal.

However, as with most blockchain solutions, there are no geographical boundaries involved with the work Energy Web is conducting with Volkswagen. “We want all of their assets to be able to participate in low-carbon energy markets everywhere,” he said.