Centrica tests blockchain for buying and selling energy
May 23, 2018
UK utility Centrica and New York-based blockchain firm LO3 Energy have announced a trial to explore how blockchain technology could change the way consumers buy and sell energy.
Blockchain technology provides a secure platform for consumers to buy and sell from each other, giving them greater control. Blockchain groups buy and sell transactions together into blocks that are securely linked so that the trade history is permanent and unalterable.
Delivered in partnership with energy blockchain firm LO3 Energy, the project will see the roll out of the technology in Centrica’s £19m LEM local energy market programme in an effort to explore how new approaches could disrupt the traditional energy model. The LEM has been established by Centrica Business to test the role of distributed generation and storage in supporting local grid flexibility in the south west of England.
The blockchain trial will take this a step further, testing a range of energy transactions including multi-party peer-to-peer trading across 200 business and residential participants using LO3’s Exergy platform.
Centrica is also working with LO3 on a trial in North America to deliver the world’s first micro-hedging market for business customers. Run by the company’s North America business unit, Direct Energy Business, the trial aims to cut costs and improve efficiency for commercial businesses in Texas through a business-to-business energy network.
“Exergy is designed to empower new prosumers while enabling traditional industry players to shift business models and find their place in the energy market of the future,” said Lawrence Orsini, CEO of LO3 Energy. “Our partnership with Centrica and Direct Energy will trigger adoption for Exergy at a scale that will bring trustworthy disruption to the industry.”
Unlike the traditional model where businesses manage their electricity procurement through fixed price contracts or power purchase agreements, Direct Energy will use LO3’s platform to offer large commercial and industrial companies the opportunity to place their own orders for customised power hedges that are then matched with the best offer in a competitive system.
“The proliferation of digital technologies is having a significant impact on the energy industry, allowing us to find new and better ways of delivering energy and services to our customers,” said Mark Hanafin, chief executive of Centrica Business. “This is an exciting opportunity for us to test blockchain technology beyond the theoretical and put it into practice, developing innovative new solutions that will empower consumers in the UK, North America and beyond to take control of how they engage with energy.”
Last year, Centrica Innovations invested into LO3 Energy as part of a £100m programme to identify, incubate and accelerate new technologies with the potential to transform the way people live, work and move.