When we take a look at the Belgian energy grid and the players operating there — electricity generators (nuclear power plants, wind turbines, solar panels …); the transmission system operator (Elia), trading and transmitting high-voltage energy across Belgium; the distribution system operators, responsible for maintaining the energy grid; and the retail companies who send us our energy bills — we believe it is fair to say that our energy network — or patchwork — is relatively complex. And that’s putting it mildly.
This makes it extremely difficult for the distributors to provide the suppliers with accurate consumption data, so that they can correctly bill their customers. And it makes it even harder for the transmission system operator (TSO) to accurately forecast or predict the energy consumption and to buy and sell energy accordingly in order to keep the country’s energy grid in balance.
As many sectors, the energy sector is currently in a transition phase, evolving from a centralized to a decentralized and distributed structure. However, unlike other sectors, the energy industry has never been disrupted yet, which makes the challenges — increase customer empowerment, drive operational efficiency and embrace digital transformation opportunities — even bigger. On top of that, the digitalization of processes, energy flows, IoT deployment, the arrival of new digitally agile competitors and service providers, platforms and community-based projects as well as the increase of distributed energy resources across the planet (solar panels, wind turbines, etcetera) makes the need for leveraging the opportunities offered by new technologies even more important and urgent to level up the game and the services, if the sector wants to provide consumers with personalized and proactive services, give them access to their consumption, and integrate prosumers.
Unfortunately, a number of elements are slowing down the transition. An inadequate structure and infrastructure for starters, which is getting really old and sometimes even dangerous. But also a difficult demand control and imperfect flow tracking, as there are no smart meters and people are increasingly switching to alternative energy sources. And to top it all off, an increasing vulnerability of smart grids and a limited integration in energy market evolution, since integrating distributed energy resources such as solar panel owners is more or less impossible in the traditional energy grid.
Blockchain as the solution
Blockchain, ‘a technology for decentralized storage and a decentralized consensus mechanism enabling peer to peer transactions, according to predefined rules, without the need for third parties to enforce the rules and provide trust in the enforcement of those rules’, could be the answer to a number of these obstacles.
Of course, blockchain isn’t a solution for everything. It cannot solve problems that are unsolvable. It will take a couple of more years before the technology is robust enough to tackle use cases like peer-to-peer energy networks, local energy markets, retail trading and centralized exchanges. And for use cases like virtual power plants/microgrids, independent power producer trading, wholesale trading and grid settlements it is more a matter of mentality than technical ability; the stakeholders simply aren’t ready yet. But being distributed, offering a shared source of truth, immutable (cryptographically secured), and with smart contracts offering compliance upfront, it has three characteristics that could prove very valuable for the energy sector, for use cases involving BillPay (cryptocurrencies), customer billing & switching, electric vehicle charging and renewable energy certificates.
What makes it particularly interesting for parties like EnergyMint, is that in parallel with blockchain, there are many other projects in the energy sector, using different technologies. Sun for Schools for example is a project in Brussels that puts solar panels on the roofs of schools, making these schools 100% self-sustaining. If we can combine these kind of projects with batteries to store the energy surplus; with smart meters showing how much energy is left in a battery and how much you are going to activate; with artificial intelligence to make forecasts (based on previous consumption, the weather forecast and the time of the year); and with blockchain as the foundational technology to automate the settlements, it will become so much easier to trade the energy surplus with other parties.
The edge of EnergyMint
The energy market is undergoing a total transformation. One year ago, there was hardly anything, but now it is moving, the ecosystem is growing and everybody is talking about it. When we look at the distribution of project types worldwide (in 2017), we see that metering accounts for 10%, just as IoT. Grid management and EV charging each account for 20%. And the biggest part of the cake (40%) goes to decentralized generation.
Whereas most of these energy start-ups are focusing on microgrids, p2p energy networks and decentralized exchanges, trying to replace the traditional energy grid (which — for now — is virtually impossible), EnergyMint realized from the start that it is vital to collaborate and cooperate with existing players that know their business, that know how complex it is to keep the grid balanced, and that are aware of the risks.
The past year the most promising projects, the ones that really moved forward, were all projects that focus on integrating blockchain in the traditional energy market. All the others are still in the proof of concept phase, trying to figure out how they can make it work. SettleMint is one of the only start-ups that is really building something that makes it possible to integrate blockchain in the traditional energy grids. We do have some competitors, but none that are focusing on working together with the existing partners and making blockchain for them, in their systems. That’s our big differentiator.
But it’s not our only one. Instead of buying pre-built blockchain-based solutions, with limited flexibility in terms of personalization, or building these blockchain-based applications in-house, which can be extremely time consuming, EnergyMint offers the best of both worlds. Providing the necessary guidance during the whole application project and giving expert advice based on our broad experience. But most importantly, we provide the toolbox so that the existing players can keep everything in-house, without having to dive into all the complexities of blockchain technology.
Elia test project: demand response
Together with Actility, EnergyMint is currently doing a test project for Elia. What is it all about? As we already mentioned, Elia buys and sells electricity from and to neighbouring countries in order to balance the energy grid. But since it’s all about forecasting and predicting something that is unpredictable by nature, this proves to be extremely difficult. Fortunately, Elia has installed a couple of mechanisms to make sure that we don’t have a total blackout. Normally the energy is traded one day in advance, but sometimes — due to unforeseen circumstances — they have to activate their energy reserves. When their primary and secondary reserves — power plants and large companies — prove to be insufficient, there is also a tertiary reserve: companies with solar panels that want to be a distribution point for energy. But in reality, it is not simple to integrate these distribution points, and that’s where EnergyMint comes in.
In one way or another you have to gather all the information, and you have to centralize everything to have enough power to be interesting for the grid (10 megawatt is cute, but it won’t bring you very far). That is why all the distribution points in Belgium are currently gathered around BSP’s (balanced service providers). Whenever there is a need for tertiary reserve, they look what they have in their distribution points and how many megawatt or gigawatt they can actually activate. The BSP will activate the reserve at the distribution point, and then send the energy — and the bill — to Elia.
Ready to change
With this proof of concept Elia wants to see how they can change the current processes of billing and activation of flexibility to make a stap more towards the Energy Grids of tomorrow. Making it easier to integrate and activate these distribution points and allowing the system to ask them directly if they have a certain amount of megawatts or not. And making sure that the data is correct, that we can bill based on that data, that the price of the activated energy will be assured in advance through smart contracts, that we all align on how much energy is activated and when, and that we can trace back everything that happened on the distribution point. This is great news, because it means that they are ready to change and to really disrupt the way they have been functioning for years and years.
EnergyMint is not looking at a function to calculate the baseline for the energy price. We are not interested in the features and how everything is computed. We just provide the tools to make it happen. The point is to prove that the system works and that it is possible to scale it one way or another; to show that you can add players to the grid without disturbing everything and without endangering the balancing process. So that in the longer run — not tomorrow, but within several years — it will also be possible to integrate prosumers and have some sort of microgrid.