This article discusses the Distributed Micro Generation (DMG) (a subset of Distributed Energy Resources) theme.
In our previous introductory article on the Power Blockchain, we discussed the impact of Power Blockchains on the energy markets and identified five opportunity themes. This article discusses the Distributed Micro Generation (DMG) (a subset of Distributed Energy Resources) theme.
DMGs are physical small capacity power generation assets with connection to low and medium voltage grids. Frequently, but not all the time, DMGs are behind-the-meter or connected directly to the distribution system. Examples of DMGs are rooftop and community solar installations, electric vehicles, small energy storage, and demand response. Distributed Micro Generation installations have grown rapidly in the most developed markets in recent years that has been predominately driven by:
- socio-political pressures demanding cleaner renewable energy sources; or
- ageing power assets reducing the reliability of power supply with DMGs proving to be a cost-effective solution.
While DMGs have different attributes and contributions to the system, many of them can be used to increase grid resilience, which can reduce operating costs and improve reliability.
According to the North American Electric Reliability Corporation (NERC), Distributed Energy Resources (DERs) have had an impact on the interaction between the distribution system interactions with wholesale power systems. The Distributed Micro Generation alter the flow of power and the grid operation.
Certain types of DMGs, such as community rooftop solar have high levels of generation variability. Since 2012 in the United States, wind capacity has grown by 40%. This is because most DERs do not follow a dispatch signal and are generally not visible to operators. The significant and unexpected DER supplies coming online can often result in high levels of system inefficiency and unnecessary cycling from other generating units such as natural gas.
While some grid operators leverage sophisticated forecasting and create larger balancing to better respond to changes in power demand variability, other operators do not have the infrastructure, operational practices, technology mix, or regulatory structures to make these improvements.
Blockchain, if implemented properly can provide unsurpassed visibility and tradability of power sources and concurrently allow to meet the complex need of the power grid operational requirements as the power markets become more defragmented.
The blockchain can be easily accessed by the owner of a DMGs facilitating the power transactions. A blockchain enabled Distributed Micro Generation units integrated with the grid and utilities can create a trusted, secure system for managing the transactions of the distributed resources including DMGs. This empowers the grid operators with information giving them detailed visibility required to manage loads efficiently as well as ensuring reliability to deliver dependable and uninterrupted power system.
Smart Contracts deliver a new level of efficiency either through a manual trigger (such as during a disaster response) or automatic trigger (such as a price signal) which can respond to demands locally. Smart Contracts can automate power transactions between parties in the ecosystem to allow an automated and frictionless exchange of power. These advanced applications and grid designs improve the optimisation of the balance of power supply and demand.
In most markets, the DMGs are undervalued by energy markets. For example, Distributed Micro Generation can support operational flexibility that allows grid operators to meet daily, hourly or sub-hourly fluctuations in supply and demand. For example, in Australia, the commercial DMGs (eg: business with rooftop solar) are not compensated for the power which is exported to the market. This is a distraction for many businesses from investing in DMGs as their operation follows a cycle which does always not require a full load.
Often utilities are invested in existing generation technology, and therefore distribution systems may not be configured to properly manage these new power sources. This may create high barriers to entry for grid edge DMGs. Blockchain can make transactions faster, simpler and cheaper which in turn contributes towards better valuation of DMGs. With the right market design, blockchain can unlock value and encourage participation from DMGs, including from households.
The power sector is developing methods to ensure that DMGs are more efficient and effective for the grid. One design approach is the use of aggregators that group DMGs via smart metering infrastructure in a power system to act as a single entity when engaging in power markets or selling services to the operators.
A Distributed Micro Generation management system can analyse gradual load behaviours in the platform and produce a response for optimising the benefits of these aggregated resources. Blockchain and Smart Contracts take this further by creating an automated mechanism through which Distributed Micro Generation entities can share their data, signal their intention, and be compensated for specific load behaviour.
In more sophisticated use cases, blockchain enabled microgrids can enable peer-to-peer energy markets. The Smart Contracts can be predesigned individually but operated autonomously without requiring centralised oversite.
In this market, a consumer could choose the specific power source (eg: the neighbour or a community solar farm). Furthermore, the preference of supply could also be built into the contract and either a preprogrammed price trigger or demand trigger can direct the desired power sources towards the home.
At Atlantic Power Exchange we are building a blockchain enabled peer-to-peer energy exchange platform to empower the DMGs, encouraging investments in the renewable power sources.
At Atlantic Power Exchange, such future energy market is being created to allow the adoption of more Distributed Micro Generation technology that improves energy resilience whilst give energy users a real choice in their energy source. This will allow the interaction of energy producers and consumers directly.