Pioneering blockchain company LO3 Energy is gearing up for international projects set to lay foundations for future of its distributed ledger system, Exergy.
Scott Kessler, LO3 business development manager, said in an interview that the three projects involve novel local energy trading market places based around the Exergy platform in Texas, the UK and Australia and that while “all projects are a little different in scope, application and intention, the unifying goal is demonstration of the Exergy platform and its benefits not just for consumers but for distribution utilities, retailers and all existing actors on the grid.”
Since first making waves in 2016 when it completed the world’s first financial transaction of a peer-to-peer energy using blockchain, LO3 has been refining Exergy and has secured investments from Centrica, Siemens and Braemar Energy Ventures.
By collaborating with electric utilities, retailers and other stakeholders, Kessler believes that the new projects will not only demonstrate the technology’s versatility across scenarios, but provide “further opportunity to develop solutions based off of real-world findings.”
Like others doing pilot work in this space, LO3 could be transformational to the energy sector.
“We’re looking to provide a global, standard data platform that allows participants on the electricity grid to share data.” Such a platform, he explained, opens the doors to countless new products and services characteristic of emerging decentralized markets and the on-going shift from energy as a commodity to energy as a service.
But Kessler said that Exergy — which encompasses both the software and hardware required — isn’t only about creating new products, but also “increasing [the] number of participants in those markets and the amount of liquidity; it’s a win-win for retailers and customers.”
Participants may include consumers, producers, and prosumers at all scales, large industrial players or producers, or new service providers.
Micro-Hedging and Using Locally Produced Energy
In the Texas project, Exergy will enable micro-hedging purchases by commercial and industrial businesses. Such companies typically seek to reduce energy risks, and costs, via fixed price contracts or power purchase agreements, but blockchain-based Exergy, provides an alternate route to savings by enabling hedging not over days or more, but over intervals of hours or even minutes.
“It’s a product we think can be enabled via Exergy and will be of great benefit to users in the Texas market,” said Kessler.
In Australia’s Latrobe region, Exergy is being deployed to establish a local energy market between dairies and other small-scale consumers. The region’s issues in grid reliability and electricity price volatility but high levels of solar PV penetration mark it out as an ideal candidate for opportunities provided through blockchain.
Kessler explained that the aim is to see Exergy allow users to take advantage of solar PV generation via peer-to-peer transactions and low electricity prices, whilst also assisting network operators by smoothing out peak demand.
A similar local energy market project built around Exergy is being established in Cornwall, England. “We intend to bring environmental and economic benefits to these areas,” said Kessler, explaining that the projects involve working with local power players to design appropriate pricing signals and market structures to advance the solutions in play.
With blockchain only just coming to market, the full scope of opportunities it may yield is hard to gauge, but Kessler believes some advantages of Exergy are already clear.
“For the energy companies, they gain access to new customers, an ability to provide new services, and can manage grids more effectively by tapping into resources. From a grid standpoint, it’s about moving [away] from designing for peak circumstances, [and] achieving the highest capacity factor for the grid.”