First-Blockchain Trading Can Get You Own Electricity Prices - Know How? - Seeker's Thoughts

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First-Blockchain Trading Can Get You Own Electricity Prices - Know How?


World’s first-blockchain trading trial that lets household set their own electricity prices has found the technology is workable with consumers and valuable for network operators faced increasingly decentralized energy systems.


Australian government-backed trial of peer to peer solar trading using blockchain.

The trial, funded in part by the Australian federal government, ran between December 2-18 and January 2020 as part of the RENeW Nexus project and involved using power ledger’s blockchain technology to track the transaction of rooftop solar energy traded between 48 households in Fremantle Western Australia.

what-is-phishing? Read here......



It is one of the Australian government’s Smart Cities initiatives.

The result, published on June 18, 2020, indicated the multi-pronged approach pursued in the trial could increase localized energy autonomy by 30-68% and deliver more cost efficient network outcomes than existing systems.

About the project

RENeW Nexus forms part of the Western Australian state government’s research into how to shift away from a centralized large-scale energy generation system and toward a hybrid system that would integrate distributed renewable and battery storage.

Take-up of rooftop solar in the region’s electricity grid, the South West Interconnected System, has reportedly been significantly more advanced than other grid systems and has therefore been identified as a promising way to meet decolonization goals. 

The state government’s Energy Transformation Strategy is studying how to tackle the key challenges involved in moving away from existing systems, such as managing grid stability and encouraging the use of distributed energy resources, while keeping costs low.

In addition to the P2P trial, the project also includes a study of a distributed Virtual Power Plant (VPP) as well as a microgrid with a 670kWh battery that will service homes within the East Village development in Fremantle.



Using the existing electricity network and working with the local energy retailer, Power Ledger’s platform enabled households to buy and sell excess rooftop solar energy in near real-time at a price agreed between them, with residents able to view electricity usage in 30-minute intervals. 

As noted in a report into the project prepared by Power Ledger, Curtin and Murdoch Universities and released, the trial showed that P2P energy trading is technically feasible and desired by customers.

The report also found that energy trading is able to provide a potential price signal instrument to deliver localized energy markets that can contribute to lower-cost grid stability in what would be a major win for network operators. 

However, it also noted that under the current electricity tariff structure in WA, some participants’ financial outcomes were largely dependent on their daily energy consumption rather than trading volume.



What is a Virtual power plant?

A virtual power plant (VPP) is a cloud-based distributed power plant that aggregates the capacities of heterogeneous distributed energy resources (DER) for the purposes of enhancing power generation, as well as trading or selling power on the electricity market.
                                              Picture credits - Researchgate


Benefits of distribution virtual power plant

The report found the potential for virtual power plants (VPPs) to give battery owners access to additional revenue streams and in doing so decrease the payback period on investment in a battery. A VPP could increase localized energy autonomy by approximately 30% with the current prosumer-consumer mix in the SWIS where battery system sizes were 15kWh, “Up to 68% local energy autonomy as possible when half the cohort were prosumers which would deliver a greater amount of system benefits at the same time,”

As a result, the report notes, VPP energy trading could further reduce the excess solar during the day, thereby improving the resiliency of the grid, and then dispatch that electricity when the system actually needs it with households being financially better off even with a reduced feed-in tariff.

Report co-author and Power Ledger Chairman Jemma Green added that “P2P and VPP trading is a viable alternative to curtailing the output of renewables, or needing more subsidies to encourage the consumption of excess solar during the day.”

If governments around the world are serious about incorporating renewable energy into their future energy planning then it needs to be price-competitive,” “For markets that have or are retiring their feed-in tariffs, P2P and VPP trading market mechanisms can replace FiT income for households and at the same time facilitate a more stable grid, dealing with the grid problems that renewables can cause.”



What is blockchain trading?

Blockchain in financial trading means transparent pricing, new alternative markets, faster payment processing, and immutable transaction recordkeeping. 

Block chain’s ledger technology is enabling people to trade for lower costs and at faster speeds than ever before.

What are the results and recommendations of this Trial?

Phase 1 of the RENeW Nexus trials led to a financial loss for a majority of the participants. Seventeen of the 18 households experienced higher costs than they would’ve received under Synergy’s A1 residential tariff. Since energy generation costs in the WA electricity market make up only 15-20% of an electricity bill, participants that consumed less energy that is below 11.5 kWh/day, were worse off due to inflexible tariffs. “Unbundled tariffs that reflect system costs via a high fixed-supply charge favor higher energy consumption because higher energy use brings down the per-unit cost,”

Another contributing factor was the suboptimal ratio of prosumer and consumers (70% prosumer to 30% consumers), which led to limited demand for P2P energy resulting in more rooftop solar electricity being sold to the retailer. Participants in Phase 1 purchased 19.3% of their energy from peers, with the remainder purchased from the retailer.

The outcome was different in Phase 2 that resulted in a financial benefit for a majority of participants: 18 of the 29 participant households (62%) experienced lower costs than if they’d been charged the A1 tariff whereas 11 participants experienced higher costs. In this phase, the prosumer to consumer ratio was reversed, with the new cohort initially consisting of 20 consumers and 10 prosumer. All recruited participants had a historical average consumption of 11-16 kWh/day, which aimed to cover the $3.30 total daily fixed costs when compared against using the A1 tariff. As a result, energy bought from peers rose to 38%, while the remainder was sold back to the retailer for the default buyback rate.



Conclusion

Overall, “participants had a positive view of P2P energy trading and could see its benefits but stated that changes to the tariff structure would be required to make it attractive,” the report found. 

Therefore, the report recommended P2P coupled with a dynamic feed-in tariff as a way to deal with excess solar during the day so that prosumer would be able to monetize their excess solar at all times of the day, without any subsidy, and also provide services to the grid.

The report recommends energy network and market operators should explore alternative methods and structures of charging for network usage to more accurately reflect the benefits to transmission and distribution delivered by P2P trading. 

To make this possible, network operators should improve metering infrastructure in their systems by installing advanced meters and designing systems for collecting and communicating the metering data to third parties.








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