Schneider Electric and software company Arensis will team up to develop smart microgrids using blockchain to help those in remote areas of the world make electricity transactions.
A major player in microgrids, Schneider Electric has already delivered several distributed energy projects with California-based Arensis. The companies will now focus on building a blockchain Application Programming Interface (API) platform for ENTRADE IO, a newly formed company founded by the CEO of Arensis.
The platform will support the financing and sale of off-grid and renewable energy projects with the ultimate goal of enabling access to electricity for the one billion people who still live without it.
Blockchain to tackle financial challenges
When a power generation plant is built in a developed country, a relationship between an investor and an off-taker is created. Financial institutions are willing to lend money to credit worthy off-takers, based on reliable currencies like the US dollar.
“When we start talking about other parts of the world, you lose this. First of all, finding a credit worthy off-taker, what does credit worthy mean in a country without a stable currency?” said Mark Feasel, Schneider Electric vice president for smart grid in North America.
The size of the deal is also a challenge. Given the high overhead costs incurred by traditional banks and investors, financing distributed generation for a small community with a low value is not worth the time. That time and money is better invested in projects worth a few to hundreds of millions of dollars.
The blockchain API is designed to address some of these issues, by enabling peer-to-peer transactions. It can connect smaller investors to each other, such as local leaders in the community or high net individuals, and enable them to invest in projects. It provides a low cost way to bring investor and off-taker together, without the huge overhead.
From a ‘one-to-many’ to a ‘peer-to-peer’ world
As well as the initial investment, blockchain can step in to help with metering and billing. A typical billing system works on a ‘one-to-many’ relationship — a single utility interacts with many customers. The utility is the keeper of the metering, accounting and billing systems, and the historical records.
“We’re going away from a one-to-many to a peer-to-peer world. If I live in a rented home, and my next-door neighbor owns their house, they can install extra solar panels and sell excess electricity to me. Neither of us want to install a fancy, expensive billing system,” explained Feasel.
Blockchain is a mechanism to facilitate this. A distributed ledger is created, which means everyone involved on the blockchain has a copy of the transactions made. Ledgers are reconciled against each other, and any bad data is flagged. People can trade with each other with an open, transparent set of books. Small investors can be connected to their customers by this method, without the need for a utility-like metering and billing system.
Using augmented reality to simplify operations
“For the last decade, microgrids have been bespoke in nature, and as such they’ve been technically complex. They’ve been applied to only the most power critical loads,” Feasel said. “In order to connect people to electricity for the first time, it’s really important that the solution is more off-the-shelf, it’s modular and it’s scalable.”
In communities with potentially less engineering experience, the microgrid solutions delivered should be simplified to allow the installation and maintenance to be successful with the available resources.
Augmented reality is an area of focus for Schneider Electric. Information, data and warnings can be overlaid on a real world interface. For a technician, instead of opening a box that exposes her or him to danger, a mobile device can be held up to the box to obtain the required information. This helps less skilled people interface with the equipment; it also allows Schneider Electric to provide remote trouble shooting and system support.
Reaching a tipping point
Over the next few months, Arensis and Schneider Electric will focus on finding financiers and off-takers to use the system, and ensuring that the microgrid controls can communicate with the API.
Success for Feasel means creating a platform that shows real returns for investors and successfully facilitates energy transactions.
“Once you can show there’s a way to get these last billion people onto the grid without waiting for some government to do it for you, then you’re at a tipping point. This is where we intend to go,” he said.