The decentralized energy model with the new opportunities it brings also demands a new decentralized billing and payment model and blockchain appears to offer promise to fit the bill.
While blockchain is attracting interest in a number of sectors, it is still nascent and not surprisingly, the first and most advanced application in energy is for peer-to-peer energy transactions. This was pioneered by the startup LO3 Energy with its TransActve Grid platform in the Brooklyn microgrid in New York. Envisaging an opportunity, Siemens is partnering with LO3 Energy to develop the concept further with connectivity of its microgrid controller to the platform. In addition the two companies will demonstrate how blockchain data can be used to balance a microgrid.
At the same time blockchain is gaining growing interest on the opposite side of the globe. LO3 Energy has opened an office in the Australian town of Byron Bay, about 160km south of Brisbane, from where the company intends to set up trials of TransActive Grid in the country.
And the Perth-based startup Power Ledger has developed a blockchain technology, named Ecochain, which is being piloted in peer-to-peer trading in both Australia and New Zealand.
“We see great potential for blockchain for energy trading in Australia,” Power Ledger chairperson Jemma Green told Engerati. “We have a high and fast growing penetration of rooftop solar – now more than 17% nationwide – and battery storage is becoming cost competitive, so that consumers will be able to store their energy and it will allow them to monetise their rooftop.”
This is echoed by LO3 Energy’s director for Australasia, Belinda Kinkead, referring to the market conditions in Australia being “an almost a perfect storm for peer-to-peer energy trading and community-focused energy systems.”
Transactive energy trials in Australia
The first test of the Ecochain technology was launched in a National Lifestyle Villages retirement village in the western Australian town of Busselton, about 220km southwest of Perth, in August. This involved 20 households – 10 as sellers and 10 as buyers – over an 8-week period. There, electricity retails for around 26c/kW while solar generators get 7c/kW for their excess power on the grid and the aim was to achieve a peer-to-peer price of around 15c/kW to the benefit of both sellers and buyers.
This is being followed with a second trial, which started in December, in a Curtin University led sustainable housing development, White Gum Valley, close to Perth itself. The development is interesting in its own right as it includes housing with solar PV and storage and is managed as a ‘strata development’ (i.e. comprising multi-unit buildings and common property) with residents paying their energy bills to the strata body rather than the local energy retailer. Four buildings comprising 80 households are involved in the trial, with energy trading both within the buildings as well as across the local microgrid.
At the same time a trial involving up to 500 sites, including households, schools and community groups, has been launched in partnership with Vector in Auckland, New Zealand.
"This arrangement empowers consumers to better manage and profit from their energy supply and demand," said Vector chief executive Simon Mackenzie in an October statement. "This is a natural extension of our exploration of new technologies with the emergence of a new electricity network that offers consumers greater choice and control over the sources of energy they use."
New technologies that Vector is supporting include rooftop solar with the Sun Genie energy monitoring and management application. The company has also partnered with Tesla to bring the Powerwall and Powerpack batteries to Australia and New Zealand.
Green says that Ecochain is Australia’s first indigenous blockchain platform and was developed to overcome the energy intensive demands of bitcoin.
“While it is entangled to bitcoin, it uses ‘proof of stake’ rather than ’proof of work’, which makes it more energy efficient, and also it is secure.”
Commenting on the regulatory requirements, Green says that blockchain could be covered by the wheeling access arrangements in place in Australia. “The framework is there but it needs to be tested and maybe reforms aren’t needed,” she says, pointing to a generally supportive approach to new technologies by the region’s regulators.
She also believes that in the long run blockchain could benefit utilities by retaining consumers as grid users – and thus payers for its use – rather than being lost if they go completely off-grid. “It is both a risk in terms of losing income but also an opportunity to share the revenue derived and to build an enduring relationship with customers.”
For Power Ledger the future is looking up. Next up are projects in Victoria and Queensland, including one focusing on large scale renewable sales to households, while further afield there is interest from Latin America and Europe.
For its part LO3 Energy is continuing to develop and expand the Brooklyn project to a larger number of prosumers. Kinkead says the technology has been demonstrated but a key finding is that it has to be driven by the individuals involved to ensure sustainability for the community, the local utility and any service providers involved.
Ultimately the company’s goal is to use blockchain “to get to real-time and economically driven transactive control over production, consumption and storage in order to support load balancing and voltage support a more distributed and resilient grid,” she says. “Peer-to-peer trading is part of that, but also we need to transact device controls, energy efficiency and demand response and ultimately control and trading of ancillary services.”
In Australia discussions are being held with local energy players and a number of trials are expected to be announced early this year.
Blockchain and energy globally
Besides Power Ledger and LO3 Energy there are a little more than a handful of companies known to be working on blockchain opportunities in the energy sector – in Africa Bankymoon, in China Energy Blockchain Labs, in Europe ConsenSys, Grid Singularity, Powerpeers and Innogy, and globally SolarCoin. And even fewer utilities, among them RWE in Germany, Vattenfall in Netherlands, Fortum Oyj in Finland and Marubeni in Japan.
Given the current status of blockchain applications, there is still a way to go before they become mainstream. But with the pace of developments that is likely to occur within the next decade, according to Bloomberg New Energy Finance.