Digitalisation and New Business Models in Energy Sector

This paper reviews digitalisation in energy sector by looking at the business models of 40 interesting new start-up energy companies from around the world. These start-ups have been facilitated by the rise of distributed generation, much of it intermittent in nature. We review Artificial Intelligence (AI), Machine Learning, Deep Learning and Blockchain applications in energy sector. We discuss the rise of prosumers and small-scale renewable generation, highlighting the role of Feed-in-Tariffs (FITs), the Distribution System Platform concept and the potential for Peer-to-Peer (P2P) trading. Our aim is to help energy regulators calibrate their support new business models

Blockchain, data protection and P2P energy trading. A review on legal and economic challenges

Blockchain technology (BCT) enables the automated execution of smart contracts in peerto-peer (P2P) energy trading. BCT-based P2P platforms allow the sharing, exchange and trade of energy among consumers or prosumers as peers, fostering the decarbonization, decentralization and digitalization of the energy industry. On the other hand, BCT-based P2P energy trading relies on the collection, storage and processing of a large amount of user data, posing interdisciplinary challenges, including user anonymity, privacy, the governance of BCT systems and the role of energy market players. First, this paper seeks to review the state of the art of European data protection law and regulations by focusing on BCT compliance with the General Data Protection Regulation (GDPR) of 2018. Second, it explores both the potentials and the challenges of BCT-based P2P energy trading from a legal–economic perspective. To do so, the paper adopts an interdisciplinary approach which intertwines both law and economics, by reviewing the recent literature on BCT and P2P energy trading. Findings have revealed that the deployment of BCT-based P2P energy trading is still in its pilot stage because of technology immaturity, data protection uncertainty, incomplete disintermediation and the lack of both user awareness and collaboration among market players. Drawing on the review, the paper also proposes a selection of solutions to foster the implementation of BCT-based P2P energy trading

Using blockchain to create and capture value in the energy sector

The undergoing digital transition of the energy sector refers to the integration of decentralized ledger technologies and data-driven solutions that have the potential to truly revolutionize its ecosystem and business practices. The aim of a decentralized, inter connected and two-way interactive energy grid can be enabled by leveraging blockchain technologies. This research investigates how blockchain technology can create and capture value from data and the new business models applied in Web 3.0 and blockchain-based environments in the energy sector. A qualitative case study research design was conducted for primary data collection and pilot projects by the European Commission were used for secondary data collection. The analysis shows local energy communities as the main blockchain application in this sector, with adjacent applications such as P2P energy trading, smart contract & metering, carbon trading and grid management. The main benefits associated are transparency, integrity, grid automation and renewable energy sources promotion, and obstacles are mainly associated with the contrasting centralized design of the current energy systems. We conclude that value is created and captured through data provenance and transparency, data monetization and tokenization, and data sharing and collaboration in blockchain platforms. New business models include the decentralization and fusion between energy production and consumption, generating a new actor known as the prosumer. Fundamental to a successful implementation of local energy communities that allow energy and asset trading between peers.A transição digital do sector energético baseia-se na integração de tecnologias de registo descentralizadas e de soluções de tratamento de dados que têm o potencial de revolucionar o seu ecossistema. O objetivo de uma rede de energia descentralizada e interconectada em ambos os sentidos, pode ser concretizado através do recurso a tecnologias blockchain. Esta investigação analisa a forma como esta tecnologia pode criar e reter valor a partir de dados e dos novos modelos de negócio associados à Web 3.0 e a ambientes baseados em blockchain neste sector. Para a recolha de dados primários, foi efetuado um caso de estudo qualitativo. Para dados secundários foram analisados os projetos-piloto da Comissão Europeia. A análise demonstra que as comunidades locais de energia são a principal aplicação da blockchain, com aplicações adjacentes como trocas de energia P2P, contratos e contadores inteligentes, comércio de carbono e gestão da rede. Os principais benefícios associados são a transparência, a integridade, a automatização da rede e a promoção das fontes de energia renováveis. Os obstáculos estão principalmente associados à estrutura centralizada dos atuais sistemas energéticos. Concluímos que o valor é criado e capturado através da proveniência, transparência, monetização, tokenização e integração de dados em plataformas blockchain. Os novos modelos de negócio incluem a descentralização e a fusão entre a produção e o consumo de energia, gerando um novo elemento neste sector, o prosumer. Fundamental para uma implementação bem sucedida de comunidades locais de energia que permitam o comércio de energia e de ativos entre pares

Business Models for Prosumers in Europe

This report explores the different business models being adopted to enable renewable energy generation and self-consumption in the European Union. Individuals, businesses and energy communities that install renewable energy generation and self-consume some of that generation are called ‘prosumers’. Prosumers may be householders, businesses or communities whose primary business is not energy generation. The price of installing on-site renewables is falling, which means homes and businesses can increasingly afford the up-front cost of installing a system. At the same time, governments are removing the subsidies formerly paid to prosumers for feeding renewable energy into the grid. In parallel, energy systems are getting smarter, so it is becoming easier to account for smaller and smaller amounts of energy and to trade them between smaller players in the energy market; even down to household to household trades. The recent Clean Energy Package (CEP) for All Europeans enshrines the rights of European citizens to become individual and/or collective prosumers. Collective prosumers are defined in the Clean Energy Package by two new types of organisation; Renewable Energy Communities and Citizen Energy Communities who are empowered to generate, use and to sell energy collectively, between themselves. How these Renewable Energy Communities (RECs) and Citizen Energy Communities (CECs) are established in each Member State (MS) is a matter for each MS’s energy policy and regulation. This report explores why these RECs and CECs are necessary, what kinds of value they might be trying to capture in the energy transition, and how they can be empowered through MS’ energy policy and regulation. To do this we investigated the business models being adopted by individual and collective prosumers

Review of blockchain-based distributed energy: Implications for institutional development

The future of energy is complex, with fluctuating renewable resources in increasingly distributed systems. It is suggested that blockchain technology is a timely innovation with potential to facilitate this future. Peer-to-peer (P2P) microgrids can support renewable energy as well as economically empower consumers and prosumers. However, the rapid development of blockchain and prospects for P2P energy networks is coupled with several grey areas in the institutional landscape. The purpose of this paper is to holistically explore potential challenges of blockchain-based P2P microgrids, and propose practical implications for institutional development as well as academia. An analytical framework for P2P microgrids is developed based on literature review as well as expert interviews. The framework incorporates 1) Technological, 2) Economic, 3) Social, 4) Environmental and 5) Institutional dimensions. Directions for future work in practical and academic contexts are identified. It is suggested that bridging the gap from technological to institutional readiness would require the incorporation of all dimensions as well as their inter-relatedness. Gradual institutional change leveraging community-building and regulatory sandbox approaches are proposed as potential pathways in incorporating this multi-dimensionality, reducing cross-sectoral silos, and facilitating interoperability between current and future systems. By offering insight through holistic conceptualization, this paper aims to contribute to expanding research in building the pillars of a more substantiated institutional arch for blockchain in the energy sector

Blockchain and Distributed Autonomous Community Ecosystems: Opportunities to Democratize Finance and Delivery of Transport, Housing, Urban Greening and Community Infrastructure

This report investigates and develops specifications for using blockchain and distributed organizations to enable decentralized delivery and finance of urban infrastructure. The project explores use cases, including: providing urban greening, street or transit infrastructure; services for street beautification, cleaning and weed or graffiti abatement; potential ways of resource allocation ADU; permitting and land allocation; and homeless housing. It establishes a general process flow for this blockchain architecture, which involves: 1) the creation of blocks (transactions); 2) sending these blocks to nodes (users) on the network for an action (mining) and then validation that that action has taken place; and 3) then adding the block to the blockchain. These processes involve the potential for creating new economic value for cities and neighborhoods through proof-of-work, which can be issued through a token (possibly a graphic non-fungible token), certificate, or possible financial reward. We find that encouraging trading of assets at the local level can enable the creation of value that could be translated into sustainable “mining actions” that could eventually provide the economic backstop and basis for new local investment mechanisms or currencies (e.g., local cryptocurrency). These processes also provide an innovative local, distributed funding mechanism for transportation, housing and other civic infrastructure

Impact of local energy markets integration in power systems layer: A comprehensive review

In recent years extensive research has been conducted on the development of different models that enable energy trading between prosumers and consumers due to expected high integration of distributed energy resources. Some of the most researched mechanisms include Peer-to-Peer energy trading, Community Self-Consumption and Transactive Energy Models. To ensure the stable and reliable delivery of electricity as such markets and models grow, this paper aims to understand the impact of these models on grid infrastructure, including impacts on the control, operation, and planning of power systems, interaction between multiple market models and impact on transmission network. Here, we present a comprehensive review of existing research on impact of Local Energy Market integration in power systems layer. We detect and classify most common issues and benefits that the power grid can expect from integrating these models. We also present a detailed overview of methods that are used to integrate physical network constraints into the market mechanisms, their advantages, drawbacks, and scaling potential. In addition, we present different methods to calculate and allocate network tariffs and power losses. We find that financial energy transactions do not directly reflect the physical energy flows imposed by the constraints of the installed electrical infrastructure. In the end, we identify a number of different challenges and detect research gaps that need to be addressed in order to integrate Local Energy Market models into existing infrastructure

Finance 4.0 - Towards a Socio-Ecological Finance System

This Open Access book outlines ideas for a novel, scalable and, above all, sustainable financial system. We all know that today’s global markets are unsustainable and global governance is not effective enough. Given this situation, could one boost smart human coordination, sustainability and resilience by tweaking society at its core: the monetary system? A Computational Social Science team at ETH Zürich has indeed worked on a concept and little demonstrator for a new financial system, called “Finance 4.0” or just “FIN4”, which combines blockchain technology with the Internet of Things (“IoT”). What if communities could reward sustainable actions by issuing their own money (“tokens”)? Would people behave differently, when various externalities became visible and were actionable through cryptographic tokens? Could a novel, participatory, multi-dimensional financial system be created? Could it be run by the people for the people and lead to more societal resilience than today’s financial system (which is effectively one-dimensional due to its almost frictionless exchange)? How could one manage such a system in an ethical and democratic way? This book presents some early attempts in a nascent field, but provides a fresh view on what cryptoeconomic systems could do for us, for a circular economy, and for scalable, sustainable action