As the number of smaller scale distributed generators grow, the next obvious need is for a mechanism to enable them to trade their energy.
One option which is attracting interest is for load aggregation to trade in wholesale markets. [Engerati-California Rooftop Solar To Participate In Wholesale Market] Another option which is being piloted in a microgrid setting in New York is peer-to-peer trading via a blockchain. [Engerati-Blockchain Transactive Grid Set To Disrupt Energy Trading Market]
Joining these emerging models is another in the UK, developed by the startup Open Utility, with an innovative platform that matches renewable suppliers with buyers. Following a six-month trial, Open Utility’s Piclo platform is to be made available to business customers across Britain by the independent renewable company, Good Energy.
Renewable energy matching
In an interview with Engerati, Open Utility CEO James Johnston explained that Piclo matches renewable energy purchasing customers with local suppliers, based on current supply and demand from measured smart meter data.
“The aim is to bring transparency and choice to the process of buying and selling energy so customers can see which companies and types of renewable energy they are purchasing from while generators can see who they are supplying,” he says.
At the outset of the trial, customers were given a free hand to select and prioritize suppliers. In practice a strong preference for local suppliers was shown and has been adopted as the primary matching criterion. However, customers also have the ability to “pause” or "increase matching" with generators if, for example, they prefer wind power over solar and that supply is available.
Likewise, in the trial suppliers had the ability to set tariffs but the limited uptake of novel pricing indicated the complexities in tariff setting. Going forward the tariffs are set by Good Energy.
“Initially we gave both customers and suppliers a lot of control but we found they wanted a ‘helping hand’ and we feel we have now achieved the right balance for both to have their preferred levels of interaction.”
Will Vooght, research and innovation manager at Good Energy, told Engerati that the company is currently developing the customer proposition. In order to participate as either a supplier or customer, a smart meter with half-hourly settlement is required. Hence also the restriction to business customers currently as only a limited number of residential and SME customers have smart meters and the full rollout is yet to start.
With a network of over 1,000 independent renewable generators, Good Energy is well placed to source sufficient supply to meet demand.
Peer-to-peer energy trading
Johnston envisages Piclo as a “stepping stone” towards the development of local energy systems in which the customer not only has a relationship with their supplier but also with “the wind turbine down the road.”
The next step will be to extend its availability to residential customers and a trial is to be conducted with Good Energy in a residential community in Scotland.
Then there are additional benefits of a decentralized system that can be unlocked and one that Open Utility is focusing on is distribution use of system charging. Currently distribution charges in Britain cover essentially the whole network. However, if it can be demonstrated that only a few kilometres of the grid were utilized between supplier and customer, then there is potential to reduce the system charge.
For example, for the Eden Project in Cornwall, trial data indicates that local generation matching could reduce the annual system charge by up to 39% or £20,000.
Johnston says that discussions on these concepts with parties such as DNOs and Ofgem have been positive and that there is interest to explore them further. Within the next year it is anticipated to set up a trial with a DNO and then to follow with a formal regulatory change proposal to Ofgem.
“The DNO business model is evolving from asset operator to that of a system operator and a solution such as Piclo could help to unlock this more active role,” he says.
He adds that a rollout of the platform to residential customers would be envisaged to go hand in hand with the smart meter rollout. “We are working with a factory in Liverpool with solar panels on its roof which is both a seller of energy on weekends and a buyer on week days, and that is the sort of model we would like for residential consumers.”
Beyond that the company is also investigating other markets outside Britain and is in discussions with retailers in both Europe and the US.
“Peer-to-peer trading is a topic of growing interest in energy markets and we want to be having the right conversations with the right people to implement our model in other regions.”