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Applying blockchain in the energy market

Towards a new energy market model

Quantoz and Energy21 present the first outlines of a new energy market model and blockchain based application at the E.ON: agile Demo Day.

The market model and application enable decentralized communities to optimize their energy use and build up their flexibility portfolio. Prosumers can use this flexibility to balance out the market for a profit while grid operators use this increased flexibility to mitigate congestion problems. Among a wide range of innovations presented at the Demo Day, E.ON chose this project as one of two to be further developed.

A new market model?

The increasing amount of renewable energy causes grid congestion. Since this problem normally occurs limited hours per year, in contrast to the rather costly solution of increasing grid capacity, the answer can be found in increasing grid flexibility.

Simultaneously, with the installation of local production consumers (now prosumers) are also looking for methods to locally manage both their production and consumption. The installation of smart meters, issued by the European Union, is an important first step in this development. However, the current energy market model was not designed to facilitate local production and flexibility.

Therefore, Quantoz and Energy21 first developed a new market model for decentralized communities. After analysing the pricing mechanisms, market processes and actors of the current energy market, they designed new market rules and a framework at community level running on USEF‘s Plan–Operate–Settle-cycle, in which:

  • Prosumers are core actors and have full control over their energy;
  • The market responds to energy availability (reactive energy use);
  • Flexibility is monetized and traded on the market.

Second, they used the results of this first step to develop a blockchain based application for both grid operators and consumers.

App for grid operators prosumers and grid operators

The application enables grid operators to set up community energy markets where suppliers and customers are managed by smart contracting. Per power time unit (PTU), local production and consumption are matched by an algorithm that also calculates the local energy price.

For example, imagine a situation (beat 12 in this example), where Supplier A and Supplier B are active together with 4 consumers.

Blockchain for grid operators

The above dashboard screenshot of the application shows the matching price of the community market for beat 12 as seen by the grid operator. Using this dashboard the grid operator can manage the suppliers and consumers that have access to the community market. Furthermore, the grid operator can have an overview of the expected production and flexibility for each beat.

Prosumers building a flexibility portfolio

Also, pronsumers can have full control over their production/consumption and monetize their flexibility. They can trade their (solar- or windenergy) produced electricity on the community market. Simultaneously, they can connect their consumer appliances such as smart refrigerators, electric vehicles or home batteries to their blockchain account using smart connectors (see screenshot below). The accounts are protected by private keys to ensure data security.

Blockchain for consumers

The combination of this blockchain application, their smart meter and the smart connectors enables consumers to optimize their energy use and build a flexibility portfolio that can be used to balance out the market for a profit. It is also possible to outsource the optimizing activities to an aggregator.



For more information about this project, please contact Michiel Dorresteijn (Projectlead Market Analysis & Blockchain Technology) via +31 6 11716927.