Project

Building flexibility for the energy market with blockchain

Context

Kai Schmied

Market Facilitation

The modern energy landscape needs to integrate increasingly decentralised and flexible energy sources. As renewables come to make up a greater percentage of the market, there will be more intermittency in supply – and at the same time, central generation will be less available (nuclear, gas, coal).

As a result, we’ll see an enormous hike in the number of transactions, as a greater share of flexibility will come from smaller assets. This increase in transactions may be a significant operational challenge, especially for contracting and settlement with new parties. If we are to build an energy system ensuring future flexibility and reliability, we need to integrate new technologies more scalable today.

Elia Group and partners tested blockchain’s suitability for this. They have worked on a pilot project to explore using blockchain technology to automate key processes, with the intention of making transactions simpler and more secure for parties at all levels of the energy system. The processes in question include validating contractual links between Elia Group and other parties, recording and validating physical assets’ metering data, and settling associated financial operations.

Extract from video: Blockchain

Approach

The secure and decentralised nature of blockchain technology is well suited to an increasingly decentralised energy system, reliant on multiple secure transactions. Blockchain is unalterable, transparent and secure; it enables reliable data storage and makes it possible to implement and automate smart contracts in peer-to-peer networks. It can then provide a scalable solution to lower entry barriers for small players – for example by reducing the amount that needs to be escrowed in order to participate.

The trial itself will involve Elia Group and Actility carrying out multiple simulations to test the functionality and limits of blockchain. The project includes developing and testing multiple hypotheses around how blockchain can support decentralised flexibility, and ways in which it can speed up and simplify activation processes.

Extract from video: Blockchain

Description

Flexibility of renewable energy

The increasing use of renewable energy sources is great news for the environment, and it’s our responsibility to build an energy system of the future that can cope with variable supply and demand. Depending on conditions outside our control, like the weather, renewable energy supply may go up or down – which may not be in line with consumer needs. That’s why Elia Group is working with more parties than ever before to provide reliable and sustainable power across the country.

Decentralised secure technology

Elia Group works with multiple parties to keep the grid balanced – we need to integrate the transactions, contracts, supply and demand of thousands of smaller-scale prosumers alongside large-scale energy suppliers. What’s more, those transactions take place between multiple parties. Blockchain – decentralised secure technology – may be the ideal solution to managing and automating these transactions, with the potential to profoundly change how the energy sector operates.

Results

Blockchain is a ready to use technology for the energy market and brings trust via automated escrow management and immutability of data. It facilitates certification of metering devices and accelerates the settlement process of system operators.

However, the technology cannot fully disintermediate the electricity settlement process due to the physical connection. Blockchain is not a flexible technology, which can be a barrier for some energy applications due to constant evolution (e.g. ancillary services). It needs to implement specific confidentiality turnaround to be compliant with energy market requirements.

Partners

Actility

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Settlemint

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Energy Web Foundation

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