LO3 Blockchain to Connect Microgrids to European Wholesale Power Market

LO3 Energy and European electricity exchange EPEX Spot plan to develop blockchain energy trading and transaction systems to link microgrids with the European wholesale power market.

Staging an international launch event in Paris this week, EPEX Spot and New York-based LO3 Energy signed a memorandum of understanding to share their expertise.

LO3’s technology will initially be used in community microgrids to connect local, peer-to-peer markets with EPEX Spot wholesale markets. The partners will focus on the United Kingdom and central and western Europe, where EPEX Spot operates.

First steps in connecting microgrids and wholesale power markets

LO3 Energy is currently developing microgrids in the southern German town of Landau and the Allgäu region. EPEX and LO3’s first joint pilot project will also be located in these areas, said Wolfram Vogel, EPEX Spot director of public and regulatory affairs.

The partners will focus their blockchain microgrid concept at locations where flexibility, demand response and grid congestion management will best integrate with local and regional utility grids, Vogel told Microgrid Knowledge.

EPEX Spot and LO3 Energy first will design a proof-of-concept community microgrid blockchain platform. Then, using lessons learned, the partners will tackle specific pilot projects.

“The establishment of a connection between a first microgrid and the wholesale market will depend on the implementation of the microgrids, which are still ongoing. As soon as these processes are completed, we can make a more precise estimation of the overall timeline,” Vogel said.

Prosumers, i.e. businesses and households that produce as well as consume electricity, stand to benefit from the arrangement because it will allow them to sell surplus power to a much wider array of buyers, according to the companies. They also will gain greater market price discovery and transparency.

For example, prosumers can feed excess electricity from their solar panels into the grid, and consumers can satisfy shortfalls at market prices and optimize their energy consumption using batteries. All market participants benefit from market reference prices and exchange services, and from further market opportunities involving clean energy, according to the companies.

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Unprecedented challenges, groundbreaking opportunities

Utilities and energy services companies are facing unprecedented challenges amid the shift to decentralized, digital, and cleaner energy infrastructure and markets. The partnership aims to transform these challenges into advantages.

“This is a unique opportunity to engage customers from the retail level that have been isolated to a large extent from power markets,” Vogel said.

Vogel added that the company’s complementary assets will allow them to develop “a unique project that could become exemplary in the energy world.” EPEX SPOT brings extensive expertise in wholesale markets while LO3 Energy is a pioneer in microgrids

“As a forerunner in market coupling and as a major contributor to the establishment of the Internal Energy market in Europe, EPEX SPOT has always been driven by visions, and this project is visionary just as much as it is concrete, which is very motivating,”  Vogel said.