Peer-to-peer trading based on blockchains

© Allgäuer Überlandwerk GmbH, Photo: Philip Herzhoff

Pebbles Kick-Off-Meeting, April 11-12, 2018.

Fraunhofer FIT, Siemens AG, AllgäuNetz GmbH, Allgäuer Überlandwerke and Kempten University of Applied Sciences are developing a unique digital platform for local trade and digital services exchange in future energy supply systems based on blockchains. The €10 million project Pebbles is funded by the Federal Ministry for Economic Affairs and Energy.

Due to the stagnating expansion of the domestic and in particular cross-border electricity grid as well as on an advancing technological development, intelligent, decentralized solutions to design future energy supply systems are increasingly becoming the focus of attention. Local or regional trading mechanisms are hereby addressed as they provide the possibility to increase the regional self-consumption. Their realization is facilitated by innovative technologies for monitoring and control of distributed energy resources. To ensure the safe and reliable operation of energy supply systems, distribution system operators must provide network-oriented services that anticipate the interactions between market and power grid (e.g. by means of traffic light functionalities). These innovations, which can be realized with the help of digital technologies, face a variety challenges (e.g. coordination, compatibility, secure and transparent processes, reliability, information technologies, etc.).

Development of a local blockchain platform for P2P trading and digital services

For this reason, Siemens AG, AllgäuNetz GmbH, Allgäuer Überlandwerke, Kempten University of Applied Sciences and the Fraunhofer Institute for Applied Information Technology FIT launched the Pebbles project, which is funded by the Federal Ministry for Economic Affairs and Energy. The main goal of the project is the development of a local blockchain platform for P2P trading and the exchange of digital services. On the one hand, this includes the implementation of innovative business models and services from and for companies and end customers. On the other hand, new approaches for transaction processing and documentation are demonstrated. The consortium analyzes and tests the effects of blockchain-based processes on all relevant physical and information technology levels. Thereby, both the opportunities and challenges of innovative business models and services for the stakeholders can be taken into account. Furthermore, the developed P2P trading platform will be demonstratively embedded in the existing electricity markets via a virtual power plant as part of a field test and the influence on the operation of the distribution grid will be analyzed.

Tasks for Fraunhofer FIT

Within the project, the two Fraunhofer FIT departments "Digital Energy" and "Cooperation Support" are working on the conceptual design and multi-criteria optimization of the digital platform. A special focus is placed on the consideration of limits and the necessary changes to the current technical, economic, institutional and legal-regulatory framework. Based on a simulative preliminary study, potential business models have to be identified which offer a high economic potential for the involved stakeholders (in particular energy supply companies, distribution system operators, end consumers and plant operators or prosumers). The existing institutional framework should be used as a reference for the examined future scenarios. In addition, an evaluative analysis of different blockchain infrastructures for the implementation of the developed business models is carried out. When designing the business models, it is also assumed that:

  • The digital platform can be used both for P2P trading and for the exchange of network services (e.g. exchange of ancillary services, dynamic network charges).
  • The possibility to choose conventional trading options such as trading in spot and reserve energy markets is still given.

In this context, it will be investigated to what extent virtual power plants are suitable as an interface between P2P trading and centralized markets and how the new requirements can be integrated into existing operational scheduling processes. In order to ensure the validity and representativeness of the statements, a simulation environment is to be developed which enables the investigation of a large number of business models, objects of investigation (grid topologies, load and generation situations, etc.) and blockchain infrastructures beyond the project-specific context. In addition to the theoretical and software-related conceptual design and co-development of digital platforms for future energy supply systems, another objective of the Fraunhofer FIT is the creation of techniques for the visualization of trade and power flows within the demonstrator. The blockchain participants and other platform stakeholders should be given the opportunity to visualize the platform processes. This should make a significant contribution to increasing public acceptance of the project and in particular of the demonstrator.