Siemens has collaborated with a New York-based startup, LO3 Energy for the development of microgrids which will facilitate energy trading based on blockchain technology.
The concept of blockchain microgrid is that user in a microgrid can purchase extra energy directly from another user.
Blockchain technology is an innovative way of storing and validating data which lets direct transactions to take place between two or more parties- including energy producers and consumers.
The transactions through blockchain technology are traceable, tamper-proof and are stored in distributed systems.
Manipulation of transactions is eliminated altogether by the use of cryptographic processes. In addition, authentication processes in place ensure user data is stored confidentially.
When blockchain technology is combined with microgrid technology, the result is that excess energy from rooftop solar panels can be sold to energy users through the microgrid.
LO3 will receive support from Siemens Digital Grid and next47, a technology unit from the infrastructure giant, to develop blockchain-based microgrid in the New York borough of Brooklyn, US.
The microgrid planned in Brooklyn was a pilot project of LO3 Energy which will be further developed with help of Siemens Digital Grid in the US.
Brooklyn project will combine Siemens’ microgrid control solution with the peer-to-peer trading platform from LO3 Energy known as TransActive Grid to facilitate energy transaction between producers and consumers in Brooklyn’s Boerum Hill, Park Slope, and Gowanus neighborhoods.
It is being claimed as the first in the world and a starting point in the development of similar technologies around the world.
Siemens’ Energy Management Division CEO Ralf Christian said: “The constant evolution at the grid edge requires advanced control, automation and data analytics technologies enabling secure, stable and reliable integration of decentralised energy systems as well as supporting the establishment of new business models.
“We’re convinced that our microgrid control and automation solutions, in combination with the blockchain technology of our partner LO3 Energy, will provide additional value for our customers whether on the utilities side or on the prosumer side.”
With the new microgrid, customers with photovoltaic systems on the roofs of buildings in Brooklyn can supply the excess electricity back into the existing local grid and receive payments from the purchasers.
In April, the companies have completed the preliminary tests of peer-to-peer transactions between neighbours.
Siemens’ Digital Grid Business Unit CEO Thomas Zimmermann said: “Just as our partner LO3 Energy we are envisioning tremendous opportunities for the application of the blockchain technology, especially in microgrids with distributed and decentralised energy systems.
“Its big benefit is, that it permits transparent, efficient trading between multiple participating systems and various stakeholders while taking grid-specific requirements into account.”
LO3 Energy founder Lawrence Orsini said: “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.”