Interview: Jon Ferris, Strategy Director
Prior to the conference, Jon and Martin Voříšek, co-founder of, oEnergetic’s caught up about the transforming energy sector, the role of blockchain, and the benefits of flexibility trading.
The full interview is found below.
1. Q: What are the main challenges the energy sector will be facing in the years to come?
A: The main challenges can be summarized as the 4 Ds — Decarbonisation, Decentralisation, Digitisation and Democratisation. The declining costs of renewable electricity means that it has come to dominate investment in new generation. The decarbonization of heating and transport will likely be achieved in large part through electrification, further changing the dynamics of demand. The challenge for balancing the electricity grid is being turned on its head from controlling generation based on forecasts of demand, to forecasting generation and controlling demand side assets. To do this will require the participation of many millions of assets, coordinated across electricity, heat and transport. This will not be achieved without appropriately managing data from monitoring equipment and sensors, and the sharing of this data to maximize its value to the system will require a change in mindset. These trends will increase the incentives for and capability of smaller, often consumer owned assets, to actively participate in the energy system.
2. Q: Do you think that Blockchain is the answer to some of those issues?
A: Yes — with both data and markets becoming increasingly fragmented, there is an increased need for collaboration and coordination, and this will be difficult to achieve without breaking down data silos. Addressing fragmentation through a centralized approach typically results in a powerful central monopoly platform, which doesn’t guarantee that the underlying issues of out of date, poor quality data are addressed. Blockchain offers an alternative approach, that better aligns the incentives in the evolving industry structure.
3. Q: How does the Electron Flexibility Trading Platform work?
A: The core module is an Asset Register enabling shared end-to-end visibility of the assets connected to the grid, their characteristics and contractual commitments. The trading platform enables open development of apps where different products can be traded and retraded by these assets. This will enable better coordination between industry participants, and for the assets to discover the full system value of their capabilities — in short the platform enables the development of smart markets.
4. Q: What kind of benefits does your platform bring to its users?
A: The platform brings access to markets for Distributed Energy Resources that were previously unable to trade for various reasons, including the cost of establishing identity, and transaction costs that require scale. As an open platform, traders of decentralized assets can participate in product development, bridging the gap to the historic top-down approach — after all, it takes two to trade. Further, the platform provides transparency and demonstrable fairness to all participants.
5. Q: Electron supports transition to smart grid infrastructure and new market norms of decarbonisation, decentralisation, digitisation and democratisation. What do you mean by democratisation?
A: Energy markets have traditionally been dominated by large generators and retailers, with smaller participants deterred by high transaction costs. The democratization of energy is the trend towards consumer ownership of generation, and the opportunity for their assets to participate in price and value discovery. This will initially be facilitated by smart meters and time of use tariffs, but increasing uptake of electric vehicles and domestic batteries will enable more active participation by consumers.
6. Q: With distributed renewable energy sources, people can now generate and sell their own electricity. Do you think that peer-to-peer transactions will become common?
A: I can understand why this gets attention, but even the most aggressive forecasts suggest that 35% of generation capacity will be transmission connected, and the different technologies will probably deliver nearer 50% of electricity. In cities, generation capacity is even more constrained, and the global trend towards greater urbanization is likely to mean that for most people large scale electricity generation remains a key feature of the energy system. In such a diverse system ranging from local, small scale solar generation to offshore wind farms with 15 MW turbines, peer-to-peer transactions will have their place, but the dominant trading mechanisms are likely to be those that most closely match the physical network.
7. Q: One of the tools which will grow in importance is Demand Side Response. Nowadays, this service is usually provided by industrial consumers. Can the blockchain technology spread it amongst other consumers such as small businesses or households?
A: One of the aims of our platform is to deliver better coordinated price signals for both operations and investment. The technology ensures that each asset, large or small, is able to participate in markets based on transparent rules, demonstrable fairness and at least cost. Demand side response may be provided at a very local level, but will need to demonstrate its value against other forms of flexibility. Value will ebb and flow around the system and there is likely to be an ongoing tension between economies of scale, and economies of location.
This interview was originally published by oEnergetice.cz, and has been re-published here with their kind permisison.