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Blockchain and Smart Tech: Enabling Local Energy Markets and Relieving Intermittency

Session leaders

  • Scott Kessler, Director of Business Development, LO3 Energy
  • Fritz Rettberg, Head of Innovation Management, ie3 Institute of Energy Systems- TU Dortmund University (Presentation


To open this session, Scott Kessler, Director of Business Development, LO3 Energy, explained the basics of blockchain, a peer-to-peer database, and how it can enable energy transactions between distributed energy resources and consumers on the electric grid, as well as within microgrids. One key difference from traditional microgrids is that rather than being held by a traditional centralized database, all the users hold the data. That is to say that the blockchain architecture enables energy trading through a decentralized, peer-to-peer management system. First developed for Bitcoin, each “block” in a “chain” is a set of transactions—like a page in a ledger—that references the previous block of transactions from which that particular block was built, making a chain. This mapping validates the transactions with other blockchains in the network.

One of the key advantages to a blockchain-enabled grid is that it allows real-time load balancing of the grid. That said, members of the Brooklyn Microgrid value this system because it provides a local supply of renewable energy and makes their power source more resilient in emergency situations. Although it is virtual, LO3’s blockchain microgrid interacts with the main grid in the same way as a physical microgrid, such as providing demand-response services.

Filling out the Smart Technology perspective, Fritz Rettberg made the connection between Smart Technology and the opportunities to incorporate blockchain. He indicated the primary challenge in Germany is how to stabilize grid dynamics by introducing system redundancies and developing an information and communications technology (ICT) that can manage them. Currently German cities operate in a highly-centralized context in which smart infrastructure is typically managed using an external Smart Meter Gateway Administrator (SMGWA), but they are working towards decentralized management models. As such, they are in need of technical infrastructure to deal with the challenges of privacy, control and security and to support refinancing the decentralized management system—blockchain can solve these issues.

Rettberg described Germany as an “engineering-driven society” where it has been difficult to try new innovations, like blockchain. However,  the current social environment is dismantling the traditional regulatory boards that are not designed for decentralized energy systems. Also, the right price signals will be necessary to drive investment and blockchain offers the potential for micro-businesses. For Germany to reach its national goal of 80% renewable energy power the grid by 2050, a decentralized energy system, like Blockchain, will be necessary.


Much of this dialogue dove more deeply into the session leader materials. Participants wanted to know who operates a virtual microgrid and learned that LO3 Energy intends for utilities to be the operators of its community microgrids, or what the utility sector refers to as a ” distributed system platform.” This system is meant to succeed as a good business decision, not through incentives: The utilities operating the distributed system earn revenue from the services they provide through that platform, and the decision to put in a microgrid is made by a neighbourhood based on market signals that make it favourable.

Key Takeaways

  • Blockchain enables peer-to-peer trading without centralized control
  • Neighbourhoods opt for microgrids when exposed to evidence of their effectiveness
  • Utilities have economic incentives to operate microgrids
  • Virtual microgrids interact with the main grid in the same way as physical microgrids
  • Regulatory frameworks are not set up for microgrids and there is pressure for regulations to adapt.

See the video by LO3 Energy, who co-lead this session, below: