Developing the blockchain microgrid

Siemens is collaborating with LO3 Energy on the development of blockchain microgrids.
Published: Tue 06 Dec 2016

The blockchain concept is gaining interest in a number of sectors. It is perhaps most advanced in the financial services industry, where it was invented for trading with the digital currency Bitcoin.

Blockchain for utilities

In the energy sector, many use cases are under consideration for blockchain by utilities and other players. [Engerati-Blockchain in Utilities] For  example, RWE has partnered with Ethereum-based blockchain startup Slock.it, founded by former Ethereum CCO Stephen Tual, to develop proofs-of-concepts involving the technology. One of these is an autonomous electric charging station, integrating a smart contract that allows users to rent the station, put up a deposit, charge their car, then get their deposit back. Another involves induction charging of EVs when for example stopped at a traffic light.

A notable feature of the RWE prototype – now in live beta status under the name Share&Charge for B2C or BlockCharge for B2B – is that users are billed for the amount of electricity consumed during the charging process, rather than for the amount of time spent connected to the charging station as currently. [Engerati-Blockchain and customer churn - new bedfellows at European Utility Week - Day 2]

More recently Endesa has indicated its intention to open a blockchain laboratory to support the development of blockchain-based solutions for the energy sector. [Engerati-Utilities recognising blockchain opportunities]

Peer-to-peer energy trading

However, where blockchain is most advanced and gaining the most traction in the industry, currently at least, is for peer-to-peer trading of energy between small scale home generators and users. The first demonstration was by the US startup LO3 Energy in the Brooklyn microgrid in New York. [Engerati-Blockchain Transactive Grid Set To Disrupt Energy Trading Market]

Now the industry is also following suit, with Siemens entering into a collaboration with LO3 Energy to jointly develop microgrids that enable local energy trading based on blockchain technology. Siemens is involving its next47 unit, which was established in October 2016 to mentor and support startups in the evolving decentralized energy system market.

“The constant evolution at the grid edge requires advanced control, automation and data analytics technologies enabling secure, stable and reliable integration of decentralized energy systems as well as supporting the establishment of new business models,” says Ralf Christian, CEO of Siemens' Energy Management Division. “We're convinced that our microgrid control and automation solutions, in combination with the blockchain technology of our partner LO3 Energy, will provide additional value for our customers whether on the utilities side or on the prosumer side."

Advancing the Brooklyn microgrid

Through the partnership, Siemens’ microgrid control solution is being combined with LO3 Energy’s TransActive Grid peer-to-peer trading platform. The solution will enable blockchain-based local energy trading between producers and consumers in Brooklyn's Boerum Hill, Park Slope, and Gowanus neighbourhoods as well as to balance out local production and consumption.

To increase the efficiency of the overall systems, the platform not only manages generated and stored energy, but also handles the consumers' flexibility options. In addition, the combination of the two companies’ technologies should simplify the temporary standalone operation of heterogeneous microgrids – for example, following a natural disaster – and optimize the use of existing resources within the grid infrastructure.

The Brooklyn project also fully supports New York State's new energy strategy, ‘Reforming the Energy Vision (REV). With the help of this strategy, the state's power supply industry is to be reorganized to increase grid efficiency, minimize the power supply system's susceptibility to environmental disasters, and improve this system's carbon footprint.

"In the world of finance, blockchain technology is rapidly advancing across many sectors, but in the energy market, things are comparatively different. With our microgrid solution in Brooklyn, we'll demonstrate just the beginning of what blockchain can do in the transactive energy world," says LO3 Energy founder Lawrence Orsini.

Blockchain microgrids

Based on experience with the pilot project in Brooklyn, Siemens and LO3 Energy intend to implement additional blockchain-based microgrid and smart city projects to test out various other business models and gain insights about the replicability of solutions in other regions of the world.

Besides the microgrid energy trading application, Siemens are considering other applications for blockchain technology. For example, the tokens often used in washing machines in apartment buildings could be replaced by controllers connected with a blockchain to account for electricity costs or to define and log times of use. Or shared vehicles could manage their availability and charge for their services - something that Elon Musk is envisaging for the Tesla self-drive vehicle fleet. [Engerati-Elon Musk’s master plan]

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