According to Martin Lim, COO of Electrify.Asia, a company facilitating peer-to-peer energy trading across the distribution grid, blockchain technology doesn’t take utilities out of the equation, but rather it adds another layer of potential revenue for them and helps reduce the cost of delivering energy to homes and businesses.
Electrify.Asia uses an IoT device called a PowerPod, which it created, to track power that is either being generated or consumed between users who are part of its pilot program in Singapore. The company is building a trading platform that tracks trades between the power producer or “prosumer” (a homeowner with solar PV who sometimes uses the PV and sometimes sells it) and the consumer. The platform is created around energy market rules and is responsible for the “settlement” or the delta between the wholesale electricity price and what the consumer is paying for the solar PV.
“So think about it this way,” said Lim. “When we talk about trading power across the main grid, the physics of it is very different because energy is always consumed through the path of least resistance.”
Lim explained that the power being generated by PV and then put onto the grid is most likely being consumed by neighboring homes and businesses.
“That’s how the electrons actually flow,” he said.
But that neighbor might not be actually buying the power.
“Instead your cousin who lives across the city may buy your power. So, the issue isn’t moving the power between people, it’s always about the settlement,” said Lim.
And that’s where the utility comes in – just as it always has.
Lim said that despite the “old blockchain adage” of how blockchain dis-intermediates between utility and consumer, in fact, “for us to dis-intermediate and remove that central entity, that’s going to be kind of tough because you do need the network.”
And this is beneficial for utilities in two ways. First, by consuming energy close to where it is produced, stress is reduced on the grid and efficiency in the form of reduced line-losses is increased. Second, utilities are able to receive some of those settlement charges.
“With potentially with more trades, the grid operator also is able to have… a different settlement layer, so this is greater engagement with the community [and] they get paid as well,” said Lim.
“So think of it as a win-win situation for all parties involved: both the prosumer, consumer as well as the central operator,” he added.
Electrify.Asia has a small pilot project that will kick off in Singapore in October. Currently in alpha stage, the company has created “Synergy” its trading platform and its PowerPod IoT device and will be working with a small group of pilot participants to test the system.
The 4th largest utility in the world, Tokyo Electric Power Company (TEPCO), has invested a small amount of money with the company even though it wasn’t looking for money.
“That’s how a large company will express interest,” said Lim.
Should the proof of concept in Singapore prove successful, the company plans to launch a pilot in Tokyo next year. Lim said that Korean utility KEPCO is also starting a blockchain-based trading platform.
“We have seen that the energy companies know a change is coming so rather than just sitting it out and pretending it is not existing, they are actually saying ‘this is worth exploring.’”