EO3 DLT — Transforming the Energy Sector
It’s not a secret that there’s a lot of hype around Blockchain, the distributed ledger technology (DLT). As I wrote in a previous post, getting to a desired maturity level is probably years away. Much of the conversation that is happening in the media is concerning crypto-currencies and the ecosystem built around that. Even though immediate impact of the disruptive technology is on financial services, there’s a lot of innovation which is happening outside the financial sector.
LO3Energ is an energy company that is aiming to remove barriers for ‘Transactive Energy’. At its core, Exergy, their Blockchain product, which is looking to decentralize the way energy is being consumed and supplied through an automated marketplace applied in local communities.
The idea of power supply microgrids stems from the way energy is produced and consumed. Creating energy is a wasteful process. In their business whitepaper, LO3Energy are mentioning that 86 percent of energy in the US market is being wasted in its conversion and transportation into the useful product. The result is significant cost challenges for the end consumers as well as environmental and health issues.
This is mainly due to how power supply is managed, centrally. Large regulated corporate organizations who dominate the generation and distribution of power are loading their costs on the customers at the edge of the grid. Consumers have no choice but to pay the required rates to keep the lights on. These large companies are backed by strict regulation which locks in those models of wasted energy missing the opportunity for innovation and improvement.
A new wave of technology is driving a paradigm shift in this industry. Renewable ‘Greener’ energy is at the forefront with services like rechargeable batteries, solar panels, smart IoT devices and many more. This technological revolution is enabling not only saving energy, but also creating energy in new places that wouldn’t have been possible before.
Today, one billion individuals globally do not have energy access. EO3 predicts that as demand would continue to grow, so does the likes of distributed supply and generation services. Beyond technology, it’s an increasing adoption trend where such models are being more broadly accepted. Our society will continue to use smart devices and appliances more and more as it’ll make our life easier.
How EO3 is Planning to Solve this Problem?
LO3 has developed a technology that is utilizing the wasted part of the energy and bringing the system to equilibrium. In thermodynamics, this process is called Exergy and hence the name of the Blockchain product. The solution is comprised of IoT hardware device and software. The IoT device is collecting energy data via meter and control functions that enable balancing energy services.
This data is tokenized and is written to the Blockchain making is possible to be exchanged by multiple parties automatically. Any user can set its preferences for consume or exchange electricity. This can include when they want to supply or consume energy, in which maximum or minimum prices and then the Blockchain execute those machine-to-machine transactions via smart contract when this criteria is met. If somebody is caring more about how its power is being produced based upon his environmental care preferences, he can set the system to consume Green electricity.
Will customers care? According Molly Webb, who is leading Energy Unlocked organization “Whether that means everyone is going to care or change their behavior to something altruistic, probably not…but a lot of customers DO care about buying local produce or having a cheaper choice for whatever products they are buying and not having to encounter difficulty in accessing that.”
For businesses who are looking to fund their infrastructure services this can also become a new opportunity. The new ecosystem is encouraging decentralization of services at the edge. Based on that new companies that were limited by the traditional services model are now becoming relevant. This includes local network operators, aggregators and others. The Blockchain marketplace is enabling reaching out to more consumers, find the right price point for their services and fund infrastructure that’ll be essential for continuously developing and improving this service.
The benefits from the new way of this energy value chain are far reaching. First, since this is an open marketplace which isn’t dominated by large central players the pricing of services should converge and become cheaper. Secondly, the system is more reliable and flexible for changes in the sense that there is no single failure point. Moreover, in case one of the nodes goes down, other network participant can be automatically detected and serve as an alternative new source of supply. Third, an open marketplace is continually driving innovation by removing entry level and inviting new members and the creation business models. Forth, the data that is gathered in the Blockchain is publicly available, can be enriched and be used for next generation innovations (e.g. big data analytics, AI, etc.). Fifth, asset owners can balance capital investments with faster returns. Lastly, the overall customer experience is positive and is creating constant interactions between energy businesses and local communities.
In next posts, we’ll discuss other innovation in Blockchain. What cool Blockchain projects did you come across?
