Kyocera and LO3 Energy are working on a joint project to test the feasibility of a virtual power plant managed by blockchain technology, the same technology used in cryptocurrencies like Bitcoin.
The test, at Kyocera’s Yokohama Nakayama office in Kanagawa Prefecture, Japan, will be on a small virtual power plant that uses the company’s solar photovoltaic modules and batteries. The virtual power plant comprises 100 solar modules with a total capacity of 26 kW that are connected to a 3kW, 12 kWh energy storage system.
The energy will be controlled through LO3 Energy’s distributed ledger technology to log and manage energy flows. LO3’s blockchain technology will be used to verify and record transactions, enabling consumers to share the energy they produce with their solar panels via a microgrid.
The longer-term goal of the project is to make it possible for external parties to bid their controllable loads into the local power market to help achieve load reduction and flexibility, Scott Kessler, director of business development at LO3, said. Later phases of the project would include tying the virtual power plant into wholesale markets and incorporating a wider variety of distributed energy resources.
The tests are expected to last until around 2021, but Kyocera said it could continue testing beyond that date, if warranted.
If the tests are successful, Kyocera and LO3 Energy would jointly develop a platform that would be able to make solar power more viable in Japan and help support a new energy system that is under consideration by Japan’s Agency for Natural Resources and Energy.
The Japanese market was recently liberalized, so competition in retail energy markets is still relatively new. In addition, feed-in tariffs for solar power are being phased out. Currently virtual power plants are not eligible to participate in Japan’s wholesale markets, but that is expected to change in the coming years.
“The virtual power plant tests are in preparation for future market changes meant to better value DERs and VPPs,” Kessler said.
The Kyocera project grew out of LO3’s prior projects, including its Brooklyn Microgrid, which played “an important role in figuring out how we might design a local marketplace that also works in coordination with wholesale markets,” Kessler said.
The virtual power plant test project is part of Kyocera’s effort to develop smart energy networks and remotely controlled distributed power resources.
Blockchain technology operates on a peer-to-peer basis as a form of distributed ledger. It allows for autonomous and secure communications that cannot be altered, and is being heralded for its potential to greatly reduce accounting costs. Blockchain technology is being explored in uses ranging from energy to financial services.
LO3, based in Brooklyn, N.Y., is among the first companies to design blockchain technology in conjunction with a microgrid.
The company’s pilot project in Brooklyn uses blockchain to allow the residents of several buildings with rooftop solar panels to buy and sell power among themselves without cumbersome accounting procedures. The technology can also be used to assure customers that they are, in fact, buying renewable energy from a local source, rather than from a distant aggregation of renewable resources.
Eventually, LO3 hopes to be able to use blockchain technology to sell the output of the aggregated solar panels of its Brooklyn Microgrid project into New York’s wholesale power market. “We are still considering various models to make it work, so we are not currently executing any transactions,” Kessler said.
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