British energy giant Centrica plans to advance its development of local energy markets (LEM) with the introduction of blockchain to its LEM programme in the southwest county of Cornwall.
Taking advantage of both the latest technological advances since the project was initiated and Centrica’s investment into US blockchain startup LO3 Energy, the initiative seeks “to explore how new approaches could disrupt the traditional energy model”, according to a statement.
Using LO3’s new Exergy blockchain platform, the trial will test a range of energy transactions including multi-party peer-to-peer trading across the 200 participating business and residential customers.
“The proliferation of digital technologies is having a significant impact on the energy industry, allowing us to find new and better ways of delivering energy and services to our customers,” says Mark Hanafin, Chief Executive of Centrica Business. “This is an exciting opportunity to test blockchain technology beyond the theoretical and put it into practice, developing innovative new solutions that will empower consumers to take control of how they engage with energy.”
Cornwall local energy market
Centrica has had its local energy market initiative under development in Cornwall over the past 18 months.
The £19m programme, which is supported with £13m from the European Regional Development Fund, is focussed on trialling a virtual marketplace through which participants can buy and sell energy and flexibility to the grid and the wholesale energy market.
Cornwall was selected for the trial because as a county it has made significant strides in terms of renewable energy uptake but as a result is facing challenges in terms of network capacity with a queue of new renewable generation projects with high associated grid connection costs.
The project is testing how energy storage, flexible demand and generation such as solar PV and micro-CHP in domestic and commercial settings can be combined with smart technologies to support the local electricity distribution network and potentially reduce their energy costs. If successful, Centrica believes the local energy market approach could be transferred to other national and international regions facing similar challenges.
Other participants in the project include the distribution network operator Western Power Distribution as the procurer of flexibility which is developing the marketplace software, the University of Exeter as academic partner to evaluate the impacts of the LEM, and National Grid as system operator ensuring coordination of activities.
Local energy market advances
Much of the first year of the project, which runs to March 2020, has focussed on set up. Applications for residential participation closed in October 2017, with some 300 homes registering interest for the 100 slots.
Business registrations exceeded 120 and participants are being identified across a variety of sectors, including manufacturing, renewables, food and the public sector. Among the latest to join up is the Carbis Bay Hotel on Cornwall’s north coast, where Centrica is installing two in-house designed 35kWe CHP units with an almost 90% efficiency rating.
At another, the Goonhillly satellite radio-communication station, the installation of sensors to monitor energy consumption has just been completed.
Testing also is under way with organisations with the LEM platform, which is currently in beta form prior to full launch expected in the second half of 2018.
LO3 Energy advances
The project also marks another advance in what is becoming a busy year for LO3 Energy.
Very much at the forefront of blockchain development globally after its pioneering efforts in the Brooklyn Microgrid, the company has just launched another project with Centrica subsidiary Direct Energy in the US to trial a micro-hedging market for business customers in Texas.
Unlike the traditional model where businesses manage their electricity procurement through fixed price contracts, Direct Energy Business will use LO3’s platform to offer large commercial and industrial companies the opportunity to place their own orders for customised power hedges that are then matched with the best offer in a competitive system. Such a market has the potential to cut costs and improve efficiency for the participating businesses.
Further afield, in Australia, where blockchain is also advancing following Power Ledger’s pioneering activities and LO3 has established a presence, the company is leading a study on the feasibility of creating a ‘virtual microgrid’ across up to 200 dairy farms and over 100 household and business customers in the Latrobe Valley in the state of Victoria.
The project, which has just been awarded funding from the Australian Renewable Energy Agency, is described by CEO Ivor Frischknecht as the first step in transitioning one of Victoria’s primary agricultural regions towards renewables.
The study is due for completion by the end of 2018 and if successful a pilot could be rolled out in 2019.