In a decentralised prosumer-driven energy market, energy trading with peers and with the local grid are both an obvious and necessary consequence. Providing the opportunity to optimise and monetise energy supply at the network edge, such trading also enables aggregation to shift load management and balancing to the local level where it is most needed.
With a financial basis, unsurprisingly these use cases also are emerging as the most popular among the growing number of startups developing blockchain solutions. Indicative of the potential, Navigant Research in a new study anticipates transactive energy use cases to dominate utility spending on blockchain platforms; and even with the growth of other use cases, they are projected to still constitute about 70% of the total spend by 2026 (estimated around $3.6bn globally).
Among the newcomers is Switzerland-based Hive Power, which has been building a turnkey solution for the creation and management of energy communities.
“We see our solution as a way for the grid operator to influence prosumer behaviour by coordinating energy provision at the local level,” said CEO Gianluca Corbellini in conversation with Engerati.
The concept – and origin of the company name – is articulated in its white paper around the model of bees in a hive. The energy communities, or ‘hives’, are comprised of smart meters as ‘workers’ and the platform as the ‘queen’, with the interactions between them and with the ‘administrator’ regulated by the blockchain’s smart contracts.
Such communities can, of course, be real or virtual, the principal requirement being that the participant has a smart meter.
Energy communities on blockchain
Corbellini, who has an engineering and energy sector background, explains that Hive Power’s solution has been built on the Ethereum platform, with the benefits – such as being distributed and immutable – that blockchain brings.
“Ethereum has the largest community and the greatest number of developers, both within the Ethereum Foundation and among users,” he points out.
However, as the Ethereum token is not sufficiently stable, for transactions the platform will utilise stable tokens (of which the number are growing) pegged to currencies such as the dollar or euro.
Hive Power has been working with various partners, notable among them meter manufacturer Landis+Gyr to develop a prototype blockchain smart meter.
“Essentially all residential smart meters need is some additional computational power and we are using Samsung’s Artik 530 IoT module, which is able to run a light Ethereum node,” Corbellini says. He notes that Landis+Gyr expects to bring the next generation blockchain-ready smart meters to the market within the next two years, although their architecture is still under discussion.
The platform is expected to go live in July, following the token sale, having been delayed by development work to meet new Swiss market regulation from the financial regulator (FINMA) requiring that the token is usable from the end of its sale.
Corbellini says the first project will be a 20-building pilot including homes and offices in partnership with the utility Azienda Electrica di Massagno in the Lugano area, close to where the company is located. Some of the buildings have solar PV and some participants have electric vehicles and also there is a central battery.
The second pilot, also in Switzerland, will be scaled up to around 50 units, with others planned to follow in Germany and Sweden in the next year and other countries in Europe subsequently.
Corbellini comments that the strength of Hive Power’s solution is its degree of advancement and inclusion of use cases, including peer-to-peer trading and flexibility aggregation.
“We want to bring this to market as a business-to-business company working with grid operators to implement the solution convinced that it is better than business as usual.”
However, further developments are needed to advance blockchain, he says. On the technology side, while there have been advancements with Ethereum on aspects such as its speed and stability, further work is needed particularly on the scalability.
There also needs to be policy and regulatory oversight, he comments. Stricter policy is needed on token offerings to avoid scams and unreliable projects, while regulation should ensure markets are more liberalised. For example, in some countries, such as Italy, the opportunity to create energy communities is limited.
“We expect that under the Clean Energy Package all countries will be required to enable the implementation of self-consumption communities, but this has to be done in a way that is fair to both consumers and operators,” says Corbellini.
He also mentions the potential for making smart contracts legally binding – a function for the financial regulators. “This would be a significant advancement,” he says. “And it will happen, probably not immediately but within the next few years.”
With blockchain at an early stage of development, it still has to prove itself as the long term technology of choice.
“Simulations are fine but what we need now are the real-world tests,” Corbellini says.