- A field study in Switzerland of blockchain-enabled peer-to-peer electricity trading reveals an obstacle to a sustainable energy future.
- Smart meter technology already exists in which consumers can be made specifically aware of how much electricity they’re consuming and producing.
- But the kind of 'super smart meters' we actually need seem like a distant reality.
The most amusing Twitter distraction of the summer has to be #FreeDorothy. In short, when a teenaged Ariana Grande fan accidentally started a kitchen fire, presumably in a case of cooking-while-distracted, her mother took away her smart phone with an admonishment to “pay more attention to her surroundings”.
The teen, in resourcefulness borne out of summertime boredom and a desire to maintain her thriving social media network, began tweeting via a variety of connected household devices. The #FreeDorothy hashtag went viral once it became clear that “Dorothy” was tweeting using her family’s LG Smart Refrigerator.
It is unclear whether Dorothy’s mother is wise to the fact that a small global community is forming to advocate for her daughter’s release from social media banishment. According to The Guardian, Dorothy might not even have tweeted from the fridge but made it look like she was using the kind of high-tech skills possessed by teens. LG claims fridge tweeting is possible in some models; experts suggest the Twitter tag may have been altered.
The potential of smart meters
While the #FreeDorothy drama plays out to great amusement in the Twittersphere, the family’s possibly tweet-capable fridge signals something surprising about the viability of using blockchain-based peer-to-peer (P2P) trading to hasten the transition to sustainable energy.
Our household devices and smart meters are getting smarter and our teens are getting tech savvier. But are our devices and smart meters getting smart fast enough to help us cope with the transition to sustainable energy?
What is the World Economic Forum’s Sustainable Development Impact summit?
It’s an annual meeting featuring top examples of public-private cooperation and Fourth Industrial Revolution technologies being used to develop the sustainable development agenda.
It runs alongside the United Nations General Assembly, which this year features a one-day climate summit. This is timely given rising public fears – and citizen action – over weather conditions, pollution, ocean health and dwindling wildlife. It also reflects the understanding of the growing business case for action.
The UN’s Strategic Development Goals and the Paris Agreement provide the architecture for resolving many of these challenges. But to achieve this, we need to change the patterns of production, operation and consumption.
The World Economic Forum’s work is key, with the summit offering the opportunity to debate, discuss and engage on these issues at a global policy level.
As Dorothy knows, “smart” appliances are connected to the internet. Her mother’s fridge can tweet on Dorothy’s behalf. It might also have the potential, via a smart meter, to exchange complex, decentralized electricity information with a P2P trading platform.
Once Dorothy’s mom has access to such smart meters platform, she will make choices to save money that will contribute to stabilizing the local grid during peak hours. If and when Dorothy’s mom has a production capacity in the form of solar panels, she will also be able to trade electricity locally, choosing to set her selling prices and to prefer income over convenience and vice versa, all in (nearly) real-time.
In all likelihood, this dynamic, local P2P market will provide her with higher income from the sale of her surplus and her time-of-use flexibility than she can achieve now. Ultimately, she will use, produce, store and sell electricity with the help of an automated, machine-learning decision assistant.
The energy decisions she’ll make, in her family’s best interests, will work in concert with a decentralized electricity market that – in theory – will be better at balancing supply and demand locally and quickly than a centralized operator can manage.
Smart meters for smart future grids
In the next decade, more households will generate their own electricity with solar, which spikes supply in the daytime. Distribution System Operators (DSOs), that manage distribution of electricity locally, will experience more difficulty balancing the grid.
This phenomenon will require “grid flexibility” in the form of demand flexibility, which in turn will require consumers and prosumers (who produce as well as consume) to become more aware of their production and consumption and ready to make routine trading decisions quickly and easily.
Smart meter technology already exists in which consumers can be made specifically aware of how much electricity they’re consuming and producing at any given moment. But that kind of “super smart meter” isn’t what’s installed in most homes.
Most smart meters installed in homes don’t have the capability to break down consumption patterns per device, or are not portraying consumption and production information in real time. Both these capabilities are crucial in the transition to sustainable energy and the decentralized markets that provide the flexibility to enable them.
In a decentralized electricity market, super smart meters will play another crucial role – coordinating dynamic pricing that encourages consumers to adapt consumption and trading behaviour in a way that balances the local grid, using blockchain P2P trading.
As we are decentralizing electricity production and decentralizing electricity markets, we also need to decentralize computational power
P2P trading will benefit Dorothy’s mom, her family, her community, and ultimately, the environment now and in the future. So what could slow down the development of more blockchain-based trading communities in the future?
Initial results of a research experiment in Switzerland are suggesting that, as energy production is decentralized and blockchain-enabled decentralized electricity markets are developed, smarter meters will be essential. This fundamental change will go far beyond tweeting from the fridge. Just as consumers have become “media creators” in the smartphone era, they will become “smart market prosumers” in the future, using blockchain trading platforms.
When our colleagues at ETH Zurich and the University of St. Gallen began a field experiment in the Swiss town of Walenstadt that uses blockchain in a P2P electricity trading community, we expected to hear about the challenges they faced in getting participants, due to trust and familiarity issues stemming from confusion between blockchain and the cryptocurrency Bitcoin. Surprisingly, people were enthusiastic to join.
Out of the 37 households participating in the experiment, 28 are producing their own electricity. A few others own a share of a larger solar PV system, for example, in an apartment building co-operative with roof installation.
One of the PhD researchers involved in the project, Anselma Wörner, noted that participants did not express as many concerns about data security and trust as she had anticipated. The prosumers, in particular, seemed happy to form a small trading community because, in bypassing the central authority, they not only earned more for the electricity they sold back to the grid through smart meters, they enjoyed monitoring their consumption and production and knowing that the electricity – and the money – was staying in the community.
Of course, the electricity flowing into the grid from solar always stays in the community. Electrons follow the easiest path, so if your next door neighbour is producing a surplus and feeding it into the grid while you’re consuming, you are using their electricity, and vice-versa. What’s different in Walenstadt? Participants have options. They can choose to whom, when, and for what price they buy and sell electricity.
This grand study – a “lighthouse” project supported by the Switzerland Federal Office of Energy – is ongoing in 2019 and will start bearing research publications soon on questions ranging from the market efficiency of blockchain-enabled P2P decentralized trading, to the influence of such a market on consumer behaviour, to the stability of communication network connections necessary to support it.
But in order to get the research going, the scientists had to solve one big issue first – how to overcome the lack of real-time data and the lack of sufficient computational power in smart meters at the household level.
The smart meters already installed in participant’s homes weren’t up to the task of participating in the blockchain platform – they lacked the computational power to track and trace the number and complexity of smart contract transactions.
Instead, researchers installed a temporary solution in the form of a "raspberry pi", or simply, extra computing power attached to a device. Though the hack they used to solve the problem was inexpensive, the smart meters were not a certified, scalable solution that is available at the moment. Most DSOs are not interacting with such smart meters and most energy utilities are not installing them.
In the next decade, even more home devices like Dorothy’s fridge will have the capability not only to send electricity consumption information to the home’s smart meter but also to act as an electricity storage unit, buying “cheap” electricity and dropping the temperature inside the fridge to the low range to avoid cooling when electricity is more expensive.
As more and more homes require electric vehicle charging, the use of dynamic pricing mechanisms and automated decision-making assistance enabled by smart meters and blockchain trading platforms will be a crucial method to achieve local grid stability.
The falling cost of PV panels means the number of prosumers will grow. Increasing use of electric vehicles means demand will grow. More prosumers and more electric vehicles means more sustainability, but also a threat to grid stability.
Initial results of this study are suggesting blockchain can facilitate the decentralized electricity markets that create more grid flexibility – as long as we have enough decentralized computational power to support the market.
If everyone – DSO, consumers, our kids and grandkids – will benefit from this development, then who is responsible for installing the decentralized computational power? Energy providers? DSOs? Municipalities? If we want to scale up this critical smart meters grid-flexibility solution quickly, while researchers test the technology behind P2P markets, policymakers need to consider this question.