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Democratizing Energy Markets

Audrey Zibelman, former NYPSC chair, Jon Wellinghoff, former FERC chair, and others in the industry have described visions where distributed energy resources (DERs) are plentiful and active contributors to a dynamic and efficient grid of the future. Though the technical capabilities of DERs to provide valuable services to the grid have been proven, market and regulatory barriers exist which prevent DERs from being able to monetize the value they provide. Currently, the tools and processes in place in the industry to securely manage contracts, transactions, and settlements are not positioned to be applied to many small DERs and it would be prohibitively expensive to do so. A mechanism for efficiently, cost effectively, and securely managing the contracts, transactions, and settlement activities of many DER participants in near-real time is needed to make it practical for DERs to contribute to grid management on a large scale.

There are several key elements that need to be in place in order to make this future grid a reality. These include: 1) the technical capability of DERs to be responsive in real time to consumer, grid, and market needs, and to balance those priorities and commitments automatically, 2) a way to value the contributions of DERs through locationally- and temporally-specific pricing, 3) a mechanism for practically, cost effectively, and securely managing the contracts, transactions, and settlement activities of many DER participants in near-real time, and 4) a market and regulatory structure that supports, encourages, and incentivizes DER participation for maximum benefit.

Companies working on VPP (virtual power plant) software platforms currently have #1 well underway, and some would argue they are already there.  See Navigant's recent scorecard on VPP platform technology leaders here for more information.  Similarly, companies and organizations have been analyzing and researching approaches and solutions to #2 for some time.  It's not easy, because these values vary from grid to grid and market to market, but we're getting there.  See this article from Utility Dive for more insight on the process of monetizing the distribution grid.

Blockchain technology is very well suited for #3.  Defining, testing, and launching projects to demonstrate the benefits of blockchain or distributed ledger technology for the energy market is critical to being able to move to #4.  Luckily, many are now attempting to do just that, and there are several good projects in the industry looking at how to apply blockchain technology to energy.  Check out the cool, interactive map of blockchain projects in the energy industry here, by Indigo Advisory.  There will be many more to come.
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