There has been a spate of announcements in the utility sector, regarding tests and pilot projects centered around blockchain technologies. The utility market is one of the most promising areas for blockchain adoption, mostly due to the advent of distributed energy resources (DERs). Distributed ledger technologies (DLT) offer a way to build trust between multiple parties, which is very important for trading electricity between them.
The other more promising areas for DLT products and services are in supply chains and logistics applications, where if they were used centrally, could cut out a lot of time delays from legacy paperwork and admin systems. Automotive applications, like Gluon’s, are another area that has attracted a great deal of interest, as they would allow a car or asset to be better tracked and serviced throughout its lifecycle.
Documentation and time-stamping (notarization) is another one, which has applications in areas like medical records, scientific laboratories, and professional certifications – essentially, anywhere you would like an authoritative record of qualifications.
But there is a great deal of skepticism in the viability of blockchain and DLT technologies, not helped by bitcoin’s continued bad press. As it stands, many utility-themed pilots are being conducted, but they are all small in scale. We aren’t seeing utilities throwing money at the concept, but there is broadly a reserved enthusiasm about the technology’s potential.
Centrica, the owner of British Gas, has been pretty active in the sector, investing in LO3 back in October 2017. LO3 was one of the first companies that Riot encountered working in utility blockchain, with a pilot project in New York that facilitated trading between neighbors, using a blockchain system to track output and consumption from solar panels.
The company hasn’t disclosed how much it has invested in LO3, but it has now announced that it will be working with LO3 to deploy its blockchain technology inside Centrica’s Cornwall-based Local Energy Market (LEM) testbed. That £19m project has predominantly tested the scope of DERs and battery storage, using 200 residential and business participants.
Outside of England, LO3 and Centrica are also establishing what they say will be the world’s first ‘micro-hedging market,’ in North America. It will be run by Centrica’s Direct Energy Business, and aims to cut costs and improve efficiency for commercial business customers in Texas.
The LO3 system will allow Centrica to those businesses to place orders for energy in a more flexible manner than the current system of fixed-price contracts and purchase agreements. The hedging element lets them better cope with the volatility in the energy markets, although the system is more commonly used between the utilities and the wholesale producers – hedging bets on fluctuations in the price of power, via staggered purchase orders.
In the micro-hedging project, Centrica will be acting as a conduit between third-party suppliers and these larger customers, using the LO3 system to keep track of and facilitate trades. If it goes as intended, the system should let both parties reduce their exposure to the risks of prices going up or down – smoothing out the market for both parties’ gain (in theory).
LO3 is pretty confident that the two demonstrations are going to drive interest in its new Exergy platform. Its CEO, Lawrence Orsini, said “Exergy is designed to empower new prosumers while enabling traditional industry players to shift business models and find their place in the energy market of the future. Our partnership with Centrica and Direct Energy will trigger adoption for Exergy at a scale that will bring trustworthy disruption to the industry.”
Away from Centrica, WePower has announced that it is previewing its green energy financing and trading platform, in an alpha-stage release. Unveiled at EnergyAustralia’s Startupbootcamp, the system hopes to allow businesses to pre-sell the energy they produce and use that revenue to fund the construction of solar farms or wind projects. Those sales, catalogued as tokens on WePower’s blockchain-based system, could then be cashed in or held on to as investments – similar in some ways to the hedging dynamic.
The next phase will see WePower move to become a bridge between renewable energy producers and consumers, and to this end, it is working with utility EnergyAustralia to test how to use tokens to facilitate trades between EnergyAustralia’s 2.6m customer accounts. It’s an extension of WePower’s work with Elering, which we covered here.
“We have been very busy working towards the Demo Day event with EnergyAustralia and other program mentors to structure our business and product approach tailored to the Australian energy market. What we have set out to build is unprecedented in the Energy industry. Being able to work together with the experts in Australia combining knowledge gathered during the Estonian pilot helps us to move fast towards realizing our mission of accelerating world’s energy system transition towards 100% renewable future,” said Nikolaj Martyniuk, co-founder and CEO of WePower.
The final two pieces of blockchain news come from Power Ledger and IOTA. The former has announced the first commercial deployment of its energy trading platform in the US, with Northwestern University installing the system at its Evanston, Chicago, campus.
For Power Ledger, an Australian company that has raised $34m in an initial coin offering (ICO), this is a promising step forward – following a trial partnership with Japanese utility KEPCO. In Chicago, Northwestern will be using the system to participate in the Clean Energy Blockchain Network – trading excess solar energy inside its own campus, without having to upgrade pre-existing meters.
The initial deployment will cover four buildings, with plans to expand to the whole campus. Northwestern students will also be looking for other areas in Chicago that would benefit from the system. “We’re looking forward to synergizing participating graduate schools together to create opportunities on the energy smart grid sector using the Power Ledger cryptographic platform,” said Mark Werwath, director of the university’s Master of Engineering Management Program.
And finally, the IOTA has announced a collaboration with InnoEnergy to demonstrate how energy can be traded on the Tangle platform. IOTA uses a different DLT than things like bitcoin and Ethereum, and gets very upset when people refer to it as a blockchain. Based on a Directed Acyclic Graph (DAC) technology, IOTA wants to prove the viability of its system – which it is pitching as a better alternative to blockchain thanks to the promise of no transaction fees.