Siemens and New York-based startup LO3 Energy have announced that they are partnering up to make the energy-sharing economy a reality through the development of microgrids that use blockchain technology to enable local energy trading. The microgrid project will be based in Brooklyn, and allow rooftop photovoltaic systems to feed excess electricity back to the local grid and receive payments from purchasers.
The collaboration, which builds upon LO3 Energy’s existing Brooklyn blockchain-based microgrid pilot project, is now being further developed with Siemens’ Digital Grid microgrid platform and next47, a unit of Siemens set up to fund startups and disruptive technologies. This marks the first time that a microgrid control solution from Siemens is being combined with the peer-to-peer trading platform from LO3 Energy known as TransActive Grid.
“We’ll be providing our microgrid management software, which links to LO3’s blockchain platform, allowing the two systems to communicate with one other,” explained Siemens’ Annie Satow. “Linking the two enables real-time analysis of the microgrid's operation, along with trading between consumers and producers. It's a first-of-its-kind project and something we'll hope to bring to other parts of the world based on what we learn in Brooklyn.”
This solution will enable blockchain-based local energy trading between producers and consumers in Brooklyn’s Boerum Hil, Park Slope and Gowanus neighborhoods, as well as balance out local production and consumption. The partnership is also designed to serve as a starting point in the development of other joint microgrid projects in the US and other countries.
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Blockchain technology is an innovative method of storing and validating data that permits direct transactions between energy producers and consumers. Transactions are trackable and tamper-proof on distributed systems without the need for centralized monitoring. Thanks to a cryptographic process and distributed storage, the possibility of manipulation is virtually eliminated. In addition, authentication processes guarantee the confidentiality of user data. As an example, the cryptocurrency Bitcoin uses the blockchain process in the financial world.
Siemens says it sees “tremendous opportunities” for the use of blockchain technology in microgrid applications.
“Its big benefit is that it permits transparent, efficient trading between multiple participating systems and stakeholders while taking grid-specific requirements into account,” Thomas Zimmerman, CEO of Siemens’ digital Grid Business Unit, said in a statement.
LO3 founder Lawrence Orsini added: “In the world of finance, blockchain technology is rapidly advancing across many sectors, but in the energy market, things are comparatively different. With our microgrid solution in Brooklyn, we’ll demonstrate just the beginning of what blockchain can do in the transactive energy world.”
Preliminary tests of peer-to-peer transactions between neighbors were successfully completed in April 2016.
In addition to managing generated and stored energy, the platform also handles consumers’ flexibility options in order to increase the efficiency of the overall systems. The combination of the TransActive Grid technology from LO3 Energy and microgrid control solutions from Siemens will simplify the standalone operation of heterogeneous microgrids — for example, following a natural disaster — and optimize the use of existing resources within the grid structure.
The Brooklyn project also fully supports New York State’s new energy strategy, “Reforming the Energy Vision” (REV). With the help of this strategy, the state’s power supply industry is to be reorganized to increase grid efficiency, minimize the power supply system’s susceptibility to environmental disasters, and improve this system’s carbon footprint.
Following the Brooklyn pilot project, Siemens and LO3 Energy plan to implement additional blockchain-based microgrid and Smart City projects to test a variety of other business models and gain insights about the replicability of solutions on other regions of the world.