Community Energy Blockchain: Potential business models, risks and opportunities 27/03/2017 By Pure Leapfrog Event Digest Our most recent networking event, on the 7th of March, explored the topic of Blockchain technology in community energy, building on from our previous events that have explored new opportunities and business models for community energy. The event was kindly hosted by Latham & Watkins and supported by Co-operative Energy. Mark Billsborough, Head of Hedging and Renewables, kindly gave us a brief insight into the Cooperative Energy’s newly launched community energy strategy. Blockchain technology enables ‘peer-to-peer’ transactions, bypassing the middleman. In its most basic form, Blockchain is a ledger code, with each transaction being added to the code, which is subsequently verified and authenticated by a distributed network. In the energy sector, this can translate into enabling a community of individuals being able to sell their excess energy directly to each other. It has the potential to really shake up the energy sector and the implications for community energy could be significant. Blockchain technology is getting a lot of attention but what are the potential applications to the energy sector and community energy, what are the risks and how will consumers react? However, Blockchain is not a business model. It’s a technology. As such, in order for community energy groups to capitalise on the opportunity, the sector will need to develop business models which take this technology into account. We had three speakers who informed, challenged and explored some of the ideas with us. Below are some of the highlights with links to respective presentations. Presentations Grant Bourhill, COO of Catapult Energy System kicked off the discussion by talking about his team’s experience of wrestling with low carbon heat for the past five years. In order for the UK to meet its target of 80% reduction in carbon emissions by 2050, a recent report has suggested that around 1.4 homes every minute will need to be refurbished to the highest standards. In order to help achieve this, Catapult Energy System are exploring new technologies and business models. Two main points to consider coming out of Grants presentation: What do people actually want from electricity – do people simply want cheaper electricity, or do they want more control? How do you get people to take up new technology such as Blockchain? Some people have never switched suppliers so how do you get them to trust in something completely different? Molly Webb, Founder of Energy Unlocked then went on to talk about the definitions of energy Blockchain and the myths surrounding it. Myth number one - there is no need for a supplier. In fact, Molly has only heard of one project that is not using a supply licence, Power Ledger + Vector in New Zealand. Due to regulations in many countries, supply licences are still required in many cases if energy is traded between prosumers. Myth number two - there is loads of innovation surrounding Blockchain and energy. This view might be due to the fact that many organisations are hesitant about sharing too much, including what they are doing and have learnt, before revealing their business models. There are also very few new energy Blockchain platforms being developed. Could this be because we don’t need anything new? It seems that the main place for innovation at the moment is with testing with actual customers and how they would actually interact or react to the new technology. Myth number three - Blockchain-enabled decentralised energy costs less. Whilst there are some niche examples that are very exciting and bringing costs down, such as ‘Borderless Energy’ developed by M-PAYG, the costs are not being brought down in the UK. Lastly, we heard from Scott Kessler from LO3 Energy via video link from New York! This was the first time Pure Leapfrog has attempted this in an event and we are extremely grateful for the team at Latham & Watkins for making it such a success. LO3 Energy are making use of Blockchain technology in their flagship project the ‘Brooklyn Micro-grid’. The project is currently in the first phase of deploying Blockchain technology in three Brooklyn neighbourhoods that will directly connect local renewable energy producers to neighbouring energy consumers. The local aspect of the project means that more of the financial value can be retained for those trading in the local area. LO3 Energy have partnered with Siemens on the project and they hope to scale up and replicate the 50 meters they currently have installed in Brooklyn to prove that their model works. For more information about this innovative project, see this video. Where to next? As always, the expertise in the audience added to a great Q&A and talking points for the drinks reception afterwards. One stand out delegate was Joanna Hubbard from Electron who have developed Blockchain based platforms. The asset management platform has the potential to significantly reduce costs for the industry, requiring a new approach to valuing liquidity in the market. To embed this technology, we will need to work more collaboratively. With energy Blockchain now in the spotlight, there are a number of questions we want to address: How will consumers react to it? Will this remain an able-to-pay technology, or can it address issues such as fuel poverty? If it truly can value infrastructure in a new way, what is the future role of organisations like the National Grid and by implication how should communities be engaging with these actors? What are the enabling regulations that will support Blockchain to transform the system as we know it? If you are developing or considering activity relating to Blockchain then we’d love to hear from you. . We would like to thank all of our speakers for giving such informative and insightful speeches and for making their presentations available. We would also like to thank everyone who attended for making it such a lovely evening. A selection of photos from the event will also be available on our Facebook page. We look forward to seeing you at our next event!