By Myrna M. Velasco
SINGAPORE – The blockchain-enabled trading of electricity within communities or aggregate of end-users can flourish with the support of legislation that will allow the flourishing of micro-grids as well as in breaking down cost barriers.
In an interview, Cedrik Neike, member of the managing board of German industrial giant Siemens AG, noted that in their blockchain pilots for electricity trading that are done with partner LO3 Energy, they had seen some concerns that may only be remedied with the support of policy or legislation.
“The technology is mature, and we know when and how it has to be done, but now we realize that we need a legislation,” which he emphasized could be integrated in forthcoming regulations or policies for microgrids.
Neike admitted that blockchain power trading – chiefly on the solar energy space – had not progressed as anticipated because of challenges like not-so-free grid access; as well as the imposition of layers of costs upon those that are interested to participate in the trading platform.
“Legislation needs to take its place to be able to allow for seamless trading – because what you need to do is to allow you to freely use the grid, to enable the trading platform that you need for it. There is a need to free up communities or small grids to be able to trade with themselves without putting a lot of additional costs which are always the difficult challenges,” he pointed out.
In the LO3 Energy-Siemens tie up for blockchain power trading, several pilot ventures already advanced from their initial foray in the trading of photovoltaic (PV) solar generated capacity in a community in Brooklyn, New York.
The next ventures included those with Enexa in South Australia; a microgrid project in Allgau, Germany; and the energy micro hedging project in Texas.
Blockchain trading of electricity is a technological innovation currently being experimented on also by different Southeast Asian countries, including Thailand and Singapore.
In the LO3 project in Brooklyn of Siemens, this is considered a trailblazing blockchain-underpinned micro-grid system in which transactions are done with what they term as “exergy,” or energy token which takes the form of distributed ledgers with cryptographic security.
This enabled the connection of 60 solar sites and has been empowering facility owners, not just to exercise hedging but also for them to sell and buy electricity to and from the system at any time they want.
Going forward into the future, blockchain technologies are being pushed into core power markets to become part of energy’s digital future. It is reckoned that pioneers and early adopters will eventually emerge as the winners in the electricity marketplace.
The decentralized systems, like micro-grids, are considered perfect candidates for blockchain application. On the whole, this could democratize and revolutionize how energy is traded across the market chain.
It is also seen that these digital tools would be able to create new business models from energy suppliers to the consumers, and it will be expanding the choice for electricity end-users.