Shanghai-based startup Energo has announced its expansion into South Korea, following tests in China and the Philippines. The plan combines two trends in our IoT sphere, blockchain and smart grids, and hopes to provide a trusted platform for consumers to trade energy on. Blockchain has huge potential in environments that require trust between a number of third-parties, and a microgrid is a great use case.
Using its own smart meters (which do look rather neat), coupled with a smartphone app for the consumers, the announcement sees Energo declare its intent to build a decentralized autonomous energy (DAE) community – with Energo taking a slice of the action, of course.
Energo would install one of its EME 1.0 meters in each participating home, which houses a SIM card that conveys the readings back to the cloud. Energo then uses those readings inside its blockchain (more on that later), and conveys this information to users via the smartphone app. Energo is banking on South Korea continuing to be one of the fastest growing PV solar markets – an environment that lends itself to the microgrids that Energo can target.
Energo isn’t the first company to explore energy blockchains. Riot’s first mention of the subject was back in April 2016, when two startups caught our eye in Brooklyn. LO3 and ConsenSys demonstrated an Ethereum-based blockchain that recorded transactions between two neighbors, with one selling solar electricity to the other. Called the TransActive Grid, the joint initiative drew the attention of Siemens, which resulted in a partnership with green-energy advocate LO3 that aims to set up a trial microgrid in Brooklyn.
In Japan, utility Tepco has carried out a trial deployment to investigate how distributed energy resources could be integrated with its central transmission network using blockchain-based systems. To this end, Tepco is helping to set up the Energy Web Foundation (EWF), an organization that aims to accelerate the commercial deployment of blockchain tech in energy markets. Other major backers include Centrica, Elia, Royal Dutch Shell, and Sempra Energy.
Energo says that South Korea is currently one of the largest energy importers, relying on foreign oil and gas to produce electricity. The company believes that as South Korea’s export industry grows, the demand for electricity is going to rise by 1% each year – and that meeting this rise “requires a balanced electricity portfolio that not only decreases reliance on energy imports by also decreases carbon emissions.”
As such, smart grid and solar power technologies are well-placed to grow on the back of that demand, as solar provides a way to locally generate electricity, often on the roof of a home. At utility scale, solar and wind have been buoyed by the advances in energy storage, which can use batteries help even out the variable supply of renewables and be used to power smaller energy grids that serve specific customers in proximity to their main generation source – calling on the national grid and power plants when needed.
So consumers with space on their roof are well-placed to install solar panels and reap the rewards of lower energy bills. However, those panels will often be generating electricity when there is not demand for it, as day time usually coincides with people leaving their homes to work – and unless that electricity can be stored in the home or exported to the grid, the panels are wasting their output (and are usually shut down).
“This can be real-time peer-to-peer energy trading, where someone can ask for a specific amount of energy and pay money through the Energo app, or by using clean energy stored in the microgrid battery and paying the producer directly with the monthly electricity bill,” notes the Energo announcement.
The main benefit of a blockchain ledger here is the trust between numerous third-parties that the immutable record can provide. It should be able to track every transaction between homes and a utility, as well as directly between the homes. Because each stakeholder will not inherently trust the others, as money is exchanging hands, there needs to be a way of reassuring everyone that things are being done fairly – and a blockchain system provides a proven way of recording these transactions, so that Person A can be paid fairly for the electricity they sold to Persons B and C. Blockchains could also enable IoT sensor data markets at scale too.
Now, utilities will not want to concede ownership of such a system, and so we anticipate their slow adoption of such technologies, as they integrate renewables into their grids and begin establishing storage-enabled microgrids. Companies like Energo will aim to sell to these utility customers, and we don’t see many communities of consumers grouping together and doing the work themselves – although some will, certainly.
Energo is not a pure software approach, and supplies measurement devices that can be used alongside a home’s smart meters. The blockchain component is not based on the popular bitcoin and Ethereum blockchains, but instead on the open source Qtum platform – a modified version of Bitcoin Core Infrastructure with a intercompatible version of the Ethereum Virtual Machine, according to Qtum, which “merges the reliability of bitcoin’s unfailing blockchain with the endless possibilities provided by smart contracts.”