Money and Markets: digital currency, security, and resilience

This post is part of the continuing Paths to Transactive Energy series. You can find them all listed by clicking on the matching metatag at the bottom of each post.

When we start a conversation about Transactive Energy, most thoughts go immediately to government-backed currency, such as Dollars or Euros. The second thought may be digital currencies for which there are wide exchanges that can be immediately converted to a government backed currency. I name transactions made using these currencies as bankable transactions, because the proceeds of a sale can be deposited directly into a bank. Large transactive energy markets, such as those for the bulk power market operated in North America by the ISOs and RTOs, have to use bankable transactions.

At the other end of the scale, in a transactive market operating a home microgrid, perhaps entirely off the grid, do not need to ever be bankable. A non-bankable currency is merely an abstract representation of value. My refrigerator is unlikely to be able to buy itself a new water filter based on its day-trading with the air conditioner. I, as the owner, may use nominal dollars to allocate priorities, but that is to make it easier for me to think about priorities, and not to give the paper shredder an allowance. When the currency does not need to be bankable, there is no advantage to using a digital currency that relies on an off-premises cloud.

The real purpose of cryptocurrencies in transactive energy is not to be bankable, but to manage information flows in markets. I use the term cryptocurrency to distance this conversation from blockchain which, while the best known and most well established technology, is not the only one, and whose limitations are right where transactive energy at small scale needs strength.

A cryptocurrency is first of all a distributed database. This database protects its information from meddling by distributing information across multiple systems to create a consensus ledger. Database systems relying on consensus transactions inherently can embrace “lazy commits” and “eventual truth”. (These features are why blockchain in logistics management is a hot topic right now). With the right technology, a cryptocurrency can be support high-performance transactions performed with very small CPUs. Some well-known cryptocurrencies, such as bitcoin, require expensive computations so as to limit counterfeiting and “mining”. If a home were operated using a cryptocurrency market, many transactions would be for less than a penny, and the IoT requires lightweight hardware.

The functions of a cryptocurrency database are identity, contract, transaction, and payment.

Parties must first identify themselves. In Credit Card transactions, a party uses a government supplied ID to establish a banking relationship. A government-issued ID is often required to prove identity for all but the most trivial transactions. The IoT cannot bear such overhead. A cryptocurrency supports establishing a local identity for each party.

Agreements are not enforceable in the world of normal commerce without a contract. A contract may require registration at the court house to be enforceable. Many bitcoin-reliant markets require extensive authentications surrounding an agreement, even within their veil of anonymity. There is no courthouse for the Internet of Things, but a distributed consensus database can provide the next best thing.

Transactions represent the moment that a thing of value is actually exchanged for a promise of payment. This may be in fulfillment of a pre-existing contract, or it may be as a result of actions on the fly. In essence, their needs to be a consensus about meter readings.

Payments, the exchange of coin, must be recorded in the database because being virtual, they have no existence unless recorded.

In the simplest ownership scenarios, there may be no need for the security benefits of a consensus database. In my house, all transfers are from my pocket to my other pocket, and I may not require validation. I may still want a standards-based micromarket to give me access to a wider market of systems, i.e., a community battery system for use in my house, for wider integration options.

Transactive Energy in Deep and Shallow Markets

This post is part of the continuing Paths to Transactive Energy series. You can find them all listed by clicking on the matching metatag at the bottom of each post.

One of the most contentious areas of the CTS is how much information market participants and market makers should have about one another. The premises pit functionality vs. scalability, echo the arguments of stateless vs stateful communications, and have ramifications for personal fulfillment and personal privacy.

In any truly transactive market, all transactions are committed. Agents that buy too much power, or power at the wrong time must find separate partners to buy or sell the difference. If your agent purchases for normal power consumption for the week you are on vacation, you pay for the power whether you use it or not. Alternately, a solar producer who commits to power sales on a rainy day must buy power on the spot market to make good on his contracts. The Star Wars character Yoda could have been describing transactive energy when he famously said “Do or Do not; there is no try.’

The minimal market information side is epitomized by TEMIX (Transactive Energy Market Information Exchange). TEMIX uses the most restrictive profile of the CTS. EMIX Agents share no information about capabilities or effects or purposes. Much as a web server can services thousands of clients because it maintains no state information, a TEMIX market can scale to high speed and high volume because of the simplicity of interaction. An idealized TEMIX market is based on peer-to-peer trading.

Many of the most fluid financial markets rely on market makers. A Market Maker may use its own portfolio to complete transactions, or assemble several purchases to enable one sale. Market Makers can maintain knowledge of market participants beyond the capabilities of a single participant. In a deep market, the most significant knowledge is where to find counterparties. Some device capabilities offer services to the Market Maker that are unique to transactive resource markets. These are touched on below.

The purpose of an end node in a transactive resource market is to support the owner or inhabitant of that end node. A commercial facility participates in resource markets to better support the business that is based in that facility. A house participates in a resource market to support the needs and interests of the homeowner. These purposes are private, as are the operation of the systems within the end node.

The systems within an end node can themselves be organized using the CTS, creating a microgrid operated by a micromarket. This market is inherently shallow. There is a limited pool of counterparties at each moment. In a trivial but concrete example, who can sell power to the smart toaster when the occupant pushes down the lever?  If a generator must be idle for twenty minutes before being tuned on again, how will the home plan? The specification that defines the CTS also describes how to communicate capabilities, or resource descriptions, using the same semantics as the CTS.

There is no universally correct answer for whether to use resource descriptions or not. Resource descriptions were developed on the models used for bidding into North American bulk power markets. The systems that run these markets are at the limit of their capabilities to handle complexity. They rely on day-ahead markets to allow pre-planning. They will not support a dynamic market with widespread deployment of distributed energy suppliers and purchasers. The deeper the market grows, the more the exchange of resource capabilities are a hindrance to dynamic balance.

A better case can be made for resource descriptions in a shallow market, that of the home and neighborhood, of the commercial building and the office park. For the near future, many systems participating in these microgrids will not natively understand transactive energy. Many systems will still be managed by direct control. Resource capabilities may enable better coordination of a limited number of market participants, i.e. systems that can buy or sell power moment to moment.

The benefits of the simpler “TEMIX” model predominate quickly as systems scale. If there are enough participants in the market, the wisdom of markets produces better results than any central planning. In an unpublished paper, Frank Wolak and Akshaya Jha show that even pure financial participants in day-ahead markets improve overall system efficiency and reduce energy costs by improving forecast quality. Financial participants do not fit into the resource description model, but can integrate seamlessly into the abstract TEMIX model.

The Great IoT Roll-Out

Today, is the largest roll-out of an open platform for the Internet of Things ever. So you have to be thinking, “How does this change my plans”

Today, millions of users are installing a securable open source IoT Platform. Users of Windows 7, Windows 8, and Windows 8.1 are eligible for free upgrade to Windows 10. Windows 10 includes an AllJoyn server as a core service.

The developers of digital controls in buildings have long been pioneers in the Internet of Things (IoT). For a long time, a strong concern was how to keep these systems off the Internet, especially as the level of security in these technologies was so poor. For the home hobbyist, the IoT began in with the release of the X10 protocol in 1975. X10-based systems were only embraced by hobbyists, because unless it was your hobby, you would never tolerate the drudgery and significant weekend time to configure and operate your systems.

Despite all the buzz, the IoT has been a confusing mass of non-standard protocols and custom applications. In 2011, Qualcomm presented AllJoyn as a common framework for interacting with the IoT. The code was later open-sourced and presented to the Linux Foundation. In 2013, the AllSeen Alliance was formed to encourage adoption of the AllJoyn platform.

The AllSeen Alliance is more than startups and communications companies, although there are plenty of those. Old line computer companies such as Microsoft and Lenovo are members. Building centric companies that shun open source, such as Honeywell are members. NREL has signed on. By now, each of your customers has probably installed some AllJoyn in a building.

AllJoyn complements the Message Queueing Telemetry Transport (MQTT), and open source bridges between the two are available. While AllJoyn is designed to handle discovery and message transfer over a proximal [local] network or local network. AllJoyn interfaces can support need from control applications to media streaming. MQTT is a publish/subscribe framework in which a MQTT broker acts as a public IP addressable node. Publishers and subscribers connect through the broker. MQTT was designed for remote monitoring and control for most part. Most deployments of MQTT deployments use WAN network atop cellular technologies.

Last week, the OBIX Technical Committee voted out OBIX 1.1 to what I hope is the final public review. The focus of the entire effort was improved interoperability of different code-bases through more abstract formal information models. Standardized encodings enable easy and accurate exchange of messages from XML to JSON, the protocol of choice for today’s web developers, and COaP, a newer protocol appropriate for very large sensornets.

All this get especially interesting when you consider Bindings rather than Encodings. One of the new Bindings defined in OBIX is WebSocket. The Smart TV Alliance has embraced OBIX encoded in JSON and bound to WebSocket as a means to communicate between consumer electronics. To a growing degree, MQTT is being used as a lighter weight, higher performance variant of WebSocket, with binding gateways also available in Open Source.

We now have some standards that stir the pot in a way the pot has not been stirred for a while. With wireless network companies supporting the AllSeen Alliance, we may soon see the open source AllJoyn as an option on your home router. A home router is a natural gateway between a proximal network and a Pub/Sub network. Less open solutions such as ZigBee will need to re-position themselves.

Larger systems using formal controls schemas, and probably OBIX, will soon look to AllJoyn as a way to extend their situation awareness. Natural bridges between the Consumer Electronics Association with the Smart TV Alliance platform and AllJoyn-based applications come from compatible bindings, compatible encodings, and open standards.

What will really turbo-charge this is the cross-platform development environment that comes with Windows 10. It can come as no surprise that Microsoft is releasing DotNet development tools for AllJoyn applications. ROTOR has long supported DotNet on multiple platforms, but support for the advanced development libraries that make DotNet so valuable on Microsoft platforms has been spotty.

This changes with AllJoyn component on Windows 10. Each version of the pre-production DotNet AllJoyn library has been released on the same day for Windows, Android, and IOS. At the end of June, 2015, the high-touch Microsoft development environment is now available to for all three platforms in all DotNet Languages.

Building system programming has always been isolated, and not really up to consumer and corporate expectations. The bar is now raised. Time to polish up your your IoT plans.

Math and Power and the System with No Name

Every once in a while you run into something that just does not fit into any categories. The world welcomes a better mousetrap, but won’t even consider a mouse dispatcher that sends the mice outside to mow the lawn. We all want things that fit the categories we know. It is hard for a new category to make our purchasing lists.

For the last year, I have been talking to a company that manages energy based on math. The founder created new math to understand how dolphins process signals over time. We create three dimensional models based on what is effectively instant access to shadows and shapes. Dolphins assemble three dimensions based on time-delays in echoes—sound is much slower than light. The founder then applied this math to digital processing of power.

Normal complex-instruction set computers are slow to do certain kinds of math. We all use special-purpose vector-processing CPUs to do graphics (“graphics chips”). In a similar way, this mathematician had to come up with special-purpose CPUs to analyze and fix power in real time. But what does it mean to digitally fix power?

These novel CPUs are now built into special purpose computer systems that take the normal dirty power we all get and make it look as much as possible like the idealized model of a three dimensional power wave. This redefines what we mean by dirty power. Normal power conditioning creates “trapezoids”, power shapes that only mimic a sine wave. True digital power quality is something quite different. And we don’t have a name for what it is.

I have written here before that the effects of digital power quality can be pronounced. Florescent lights stop humming. Motor vibration is reduced and heat generation is reduced. A closer look shows subtler effects. Power output of motors is increased. Impedance is reduced and harmful power harmonics are reduced. Outside the device, power factor tends toward one, which may reduce power bills.

A large facility with a motor load reduced power requirements by 20%, according to a 3^rd party engineer monitoring a trial. Data centers have seen power requirement reduction of 10%, as harmonic stresses are reduced. High-rises with digital power conditioning on each floor may not need to upgrade neutral throughout the building.

Sites close to the Carolinas, where 3DFS is headquartered and can monitor installations closely, can experience something new. But 3DFS is a startup, and their product is not a better mousetrap. It is something else. It is power conditioning based on novel advanced math. And for too many of us, we start the day hoping there will be no math required.