A tool developed by Frazer-Nash Consultancy demonstrates how distributed ledger technology could be used to help shape the UK energy distribution network
Systems, engineering and technology consultancy, Frazer-Nash, has been working with the Energy Innovation Centre and three of the distribution network operators (DNOs): SP Energy Networks, Scottish and Southern Electricity Networks, and UK Power Networks, as well as Cardiff University, to imagine the future of the distribution network.
The company has developed a demonstrator tool that is helping the DNOs to explore Blockchain and Distributed Ledger Technologies (DLTs) more broadly, as a potential solution for solving new challenges posed by their transition to being Distribution System Operators (DSOs), such as contracting with distributed energy resources (DERs).
Frazer-Nash Renewables and Future Networks Consultant, Tom Bransden, explains: “DNOs will have to manage high levels of distributed generation, flexible loads and energy storage, as part of the transition towards DSO. This more active role may require large numbers of contracts with DERs, and multiple transactions for multiple resources to be approved at high frequency over the course of a day. The DSO will need effective, accessible and neutral technology solutions to help them do this.
“Distributed ledger technologies offer a potential solution, and could enable data sharing in line with the aims of the Energy Data Taskforce. As part of a Network Innovation Allowance (NIA) funded project, we’ve developed a prototype flexibility platform that uses Blockchain to show how these multiple contracts could be managed. Our work illustrated the benefits and challenges associated with the technology.
“In short timescales, we leveraged Microsoft Azure, Serverless Infrastructure and an Ethereum-based Blockchain to create a smart-contracts based flexibility procurement platform demonstration. We modelled a future stage of power system for 2030, using National Grid’s Future Energy Scenarios, including quantities and market prices for DERs. Our model focuses on two areas of the UK and four sample daily periods that show very different peak demand and generation levels, two from winter and two from summer. This allowed simulation of future Electricity System Operator (ESO) and DSO services on a single platform.
“Based on the Energy Networks Association (ENA) Open Networks World A[i], this system demonstrates a novel framework that enables secure contracting via a distributed ledger to thousands of DERs. These DERs include a range of low carbon technologies, and reflect the decentralisation of demand through new load types that are being seen on the energy networks – for example, smart charging electric vehicles, residential battery storage and demand side response with electric heat pumps.
“As part of the UK’s green recovery while enabling remote working, leveraging cloud technologies to develop and share projects between collaborators is key to rapid development, deployment and scalability of solutions.”
Ben Oxley, Project Manager and Software Lead, continued:
“There are still a lot of misconceptions in the marketplace surrounding Blockchain technologies, misconceptions like high energy usage, lack of control and poor frequency of updates/throughput of transactions. Through this project we demonstrated that this is not a limitation of the technology, just of some implementations. Using a Proof of Authority consensus mechanism we demonstrated fast block mining and high rates of transactions.
“We have drawn upon our understanding and experience with a whole range of cloud technologies in order to develop and deploy this project on the short timescales demanded. The solution uses Ethereum Blockchain, Solidity Smart Contracts, React, Azure App Service, Signal R, Event Grid, ASP.NET Core, Azure Devops, Docker, Azure Active Directory – in fact, over 20 different individual applications are integrated to deliver the demonstrator.”
Potentially, suggests Tom, a Blockchain solution could increase participation in the flexibility markets:
“In the current UK flexibility markets, energy resources are typically procured through auctions: DER providers provide bids to deliver power to the network, in terms of megawatt quantities and prices for those megawatts and time windows during the day. These are generally set in advance for contracts over months and years. The long duration of these contracts may reduce the participation of smaller demand users in these flexibility markets, and limit liquidity. Moving to more of a ‘spot pricing’ market could deliver significant cost savings, and allow operators to respond more directly to demand on a minute-by-minute basis.
“With individual contracts required with each supplier, there can also be a significant administrative cost on both sides. While not completely replacing formal contracts, providing computer-generated smart contracts between parties can reduce administrative burdens and decrease contractual costs, potentially opening up the flexibility markets to increased participation.”
But operators have to be certain that any new solution will offer benefits when compared to existing systems, and these will have to be weighed against the risk of implementation. With this in mind, Tom outlines the benefits found from comparing the demonstrator Blockchain solution against a conventional flexibility platform solution.
“Through undertaking a cost-benefit analysis, we found a number of benefits in terms of lower upfront costs, lower costs of contracting, transparent security reviews, and the potential for peer verification of transactions without a trusted third party. The latter could open the door for true peer-to-peer trading between network users.”
Ben concluded: “We’re looking forward to continuing to support the energy industry in navigating the DSO transition, and exploring the potential benefits that distributed generation can bring to the networks of the future. Our work on this project has shown that Distributed Ledger and Cloud Technologies could equally be applied to solve the challenging problems faced by our customers across a range of sectors, and we’re excited to be investigating this innovative and pioneering approach.”
Glossary
- Distributed Ledger Technologies: A distributed ledger is a database that is consensually shared and synchronised across multiple sites, institutions or geographies.
- Blockchain: A blockchain is a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data (generally represented as a Merkle tree).
- Cryptocurrency: A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
- Blockchain offers solutions to problems that require consensus between multiple parties/supply chains, due to its open, peer-to-peer architecture, security and consensus mechanisms. It provides:
– An audit trail of information, due to its cryptographic hashing of blocks and transactions
– Collaboration with untrusted parties through consensus mechanisms
– Fault tolerance/distributed design, from peer-to-peer chain synchronisation
– Easy automated contracting/smart contracts. - Blockchain could also be applied to support traceable asset maintenance, traceable origin of goods, warehousing/logistics help, and integration of manufacturing with Industrial Internet of Things (IIoT) datasources.
- Smart contracts within Distributed Ledger Technologies
-Each participant on the Blockchain network, whether the DSO or DER, is able to process the same actions and record the contract. Once a contract has been offered by the distributed energy resource, then the distribution system operator can accept that, and say how much of the power and capacity they require.
[i] The Energy Networks Association Open Networks Project investigated a range of potential ‘future worlds’, in which a DNOs and DSOs would have different responsibilities, functions and roles. In world A, DNOs transition to being DSOs, which have high levels of responsibility and coordinate flexibility at the distribution network level. The DSO would also be responsible for boundary flow limits between distribution and transmission at the grid supply points.