Most people in the world now recognise that climate change is advancing to the stage at which it could become really dangerous on a number of levels. However, while there is much discussion of the issues, real action to solve the problem trails behind. In response to this situation, a team of young engineers have got together to empower communities, encouraging people to produce, consume and sell green energy locally and efficiently through the world’s first decentralised energy exchange, powered by renewable energy.
Through Pylon, people can exchange green energy, bought directly from renewable energy company RES. A payment method called PylonCoin can then be used to reward the production of sustainable energy as well as financially supporting projects on sustainable technologies. In short, the mission is to provide the energy markets with the financial incentives that current energy policies and governance systems, are failing, or delaying to provide, paving the way towards a sustainable future.
REM talked to Gerard Bel from Pylon to find out more about how it all works.
What is the current problem that Pylon has been established to solve?
The problem of cooperation among various (and numerous) stakeholders that interact throughout the energy value chain.
The need for cooperation becomes more pressing than ever due to the increased number of distributed energy resources (DER) and other assets being connected to the grid, leading to an exponential increase of the number of actors that need to coordinate for maintaining the operation of the grid (avoid black-outs) and for avoiding the cost of electricity to skyrocket.
For ensuring this cooperation Pylon Network creates an open, neutral, shared energy database for encouraging the exchange of digital services among all stakeholders.
We achieve the neutrality of the database by leveraging our open source blockchain technology, which is designed in accordance to the high requirements of the energy sector (meaning that it also deals with the challenges of scalability and energy consumption, commonly faced by blockchain protocols). In this way, Pylon Network uniquely combines full transparency with full privacy for open energy data.
Which particular energy markets are you targeting? For example, would this work better in EU countries at present rather than, say, in Britain, which is going through Brexit at present, or the US under Trump?
EU is a safe bet for us in the sense that the homogenized market conditions among the EU member states, offers us a potential for a more efficient replication of the model we are demonstrating in Spain and the expansion of our commercial activities to other EU markets.
However, UK is still an interesting market for us and offers some market conditions which we see fit to our development strategy. For example, UK has one of the mature market conditions for the operation of aggregators (a very important market player for the energy transition), who have a critical need for accessing accurate distributed data to coordinate multi-agent operations.
At the same time, as in so many energy markets at the moment, we see a strong trend of energy community movement in the UK. And the way we see it, this movement will not be affected by any populist agenda or anyone who is trying to devalue scientific evidence - on the contrary, it might accelerate it.
So, in few words: since we are based in Spain and we are demonstrating our technology with Spanish and EU stakeholders, EU is a "smarter" and more accessible market for us - especially for its initial, implementation stage. However, we always keep in mind that we are dealing with a global problem - it's hard to forget! - and even if regulations and policies can surely affect the rate of implementation, the aforementioned trends are, to a large extent, growing independently.
How does it all work?
It all starts with energy data and the engagement of end consumers with their electricity. And it all starts with the realisation that, in order for consumers to understand their electricity consumption, they should not be energy experts, or even be interested in energy.
So what we essentially create is a shared energy database that any consumer can access their own energy data in a simple and easy way - with the additional security offered by blockchain technology. In addition to that, we offer the ability to the consumers to grant permission to their data to any other third-party, who in turn, can use these data to offer (back) services with added value.
All the services are offered through an open energy marketplace that communicates with the neutral data-hub to extract/record data from/to the blockchain, according to the specified data access permissions. The marketplace offers an ecosystem for any stakeholder to exchange and settle energy services with each other. The marketplace offers fully transparent and secure operations and without any barriers to participate.
What particular benefits will this bring to the energy sector?
Having a common infrastructure for sharing energy data among energy stakeholders is the only feasible way of ensuring a smooth and cheap operation of a grid characterised by the penetration of DER. Without the ability to coordinate among energy asset owners (of all scales), retailers, system operators, market facilitators, ESCOs etc. the complexity of the grid operation will become inefficient and costly.
With the creation of a neutral shared database
Will this work for all current renewable energy technologies, or just the major proven ones such as wind and solar?
The platform is completely agnostic to any technology or stakeholder - however, the market conditions will affect which technologies that will join (solar and wind are expected to be the main technologies due to the very low generation costs). So, not only it can work with any generation technology but also with any energy hardware device (e.g. meters, batteries) or existing software/platform/database. This has been a very important element in our design process since the beginning of the project: make the integration with existing infrastructure of the energy sector as easy and cheap, as possible. One of the ways we encourage the integration with the energy infrastructure is by offering our blockchain code with an open-source license (to minimize integration costs and avoid technology lock-in).
I see that the model is based on Renewable Energy Cooperatives (RECs) in which “citizens jointly own and participate in renewable energy projects”. What kind of growth are you seeing in this area? I.e how many people are actually joining and working within RECs?
First of all we are working with RECs because they are the most determined actors foor change in the energy sector landscape. They have embraced innovation from the first moment and are thirsty for exploring ways that can help them become more competitive players in the market.
At the same time, RECs have a unique characteristic that even the biggest retailere have been trying - but being unable - to achieve: customer engagement and building trust in the eyes of their customer. And this translate into numbers: in EU energy citizens groups are growing with an average annual rate of 20%; another side of the same coin is the loss of market shares from the "Big Six" UK retailers (-15% compared to 5 years ago).
For us there is no doubt that customer engagement and consumer-focused services are the holy grail of the future energy markets. This is why we see so much value working closely with these groups and this truly amazing ecosystem of active energy citizens. They are doing it right and we are following closely, learning from them and applying their approach on a global perspective.
To what degree does this model depend on regulatory and policy environments that actively favour clean energy (there is considerable criticism of the UK along the lines of the country increasingly not being one of those countries, and even more so in the US under Trump)?
As mentioned before, of course it can affect a lot; and considering that fossil fuels still receive 1 trillion dollars per year as indirect subsidies (globally), one can say that the criticism is fair.
However, the model has been developed in a way that can be applied to specific segments of the value chain (is not all or nothing) and even if regulations can affect, there are some forces which will dominate on aggregate - namely the costs of renewable energy and the realization of individuals that they can shape their energy future and hence, their everyday lives.
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