Originally designed to support the first decentralized digital currency (Nakamoto, Bitcoin Whitepaper, 2018), blockchain technology is garnering interest in various industrial fields.
The financial sector was one of the pioneers to seize this technology to simplify some of its activities such as asset exchanges, fundraising, or interbank transfers by using consortium blockchains such as the Ripple network or the Corda platform model.
Other industrial actors have joined this movement, designing their own solutions or using existing blockchains to improve the efficiency, traceability, and security of their exchanges. For example, in the food industry, IBM has developed and distributes the ‘Food Trust’ solution which uses the Hyperledger platform, for data sharing and product traceability. The Luxury industry has also multiplied initiatives, highlighted by the launch of the Aura consortium blockchain by LVMH, Cartier and Prada, designed to exchange information on product origins and to issue digital certificates guaranteeing their authenticity and origin.
Although less visible to the public, the energy sector is also interested in the improvements that blockchain technology can bring. It is considered to solve problems as vast as electricity origin certification, CO2 emission quotas, or even decentralized adjustment between energy production sources and consumption points, to name just a few.
In the current context of a global call for an "energy revolution," this technology seems more relevant than ever. To understand how it can meet the contemporary challenges of this sector, and with what reservations, it is necessary first to recall the different types of blockchains and their uses. It is also interesting to analyze some examples of applications specific to the energy sector in order to appreciate its potential and better understand the impact and possible developments that this technology can offer.
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The blockchain is primarily known to the public thanks to the advent and popularization of Bitcoin. This digital currency launched in 2009, also known as cryptocurrency, relies on a register and transaction validation protocol shared by millions of participants on the internet. More specifically, it works thanks to a "distributed" and synchronized register by these participants, which contains all the history of Bitcoin exchanges. This register is updated approximately every 10 minutes by adding a block containing new transactions. Because it is built in the form of successive blocks, the still unknown creator named it "blockchain". Its integrity - that is, the fact that its content cannot be changed - is guaranteed by the multiplicity of participants who validate the transactions and by a unique cryptographic imprint, called a hash, added at the beginning and end of each new block. This "hash" allows participants to quickly verify at any time that the value of past transactions has not been modified in the register they share and update.
Since the creation of Bitcoin, other types of blockchains have emerged, broadening the application prospects beyond just cryptocurrencies. Some of them are based on coordination rules and register update rules that are less energy-consuming. Others, like the famous Ethereum blockchain, go beyond simple transactions: Ethereum thus allows decentralized execution of programs and recording of their states and results in its blockchain. These programs are referred to as "smart contracts". It is therefore possible, on these blockchains sometimes called "smartchains", to link users or addresses to computer scripts, and to program their execution. They pave the way for autonomous and decentralized regulation and management systems via the internet. This type of blockchain, which allows decentralized execution of programs, seems the most relevant for the deployment of energy management solutions. The Hyperledger or Corda platforms, well known in the industrial and financial sectors, also allow this type of program.
One very popular type of blockchain application in energy relates to microgrids (small independent networks) that serve as labs for future smartcities. Let's mention a few examples: the German project led by the startup Conjoule, which plans for Peer to Peer (P2P) exchange of photovoltaic energy; the Brooklyn microgrid project or the RENeW Nexus project, which use a blockchain with a cryptocurrency allowing the sale or exchange of surplus solar production.
In this emerging world of microgrids and smartgrids, several types of uses are envisaged:
The first is to use a blockchain to record and store energy transactions on these networks in a decentralized way. However, this type of use raises two questions: how to approach a "transaction" from an energy point of view? And why maintain a record of all past transactions? Indeed, energy consumption is a continuous process and requires ideally having a multitude of intelligent sensors and controls for each device to be interested in each state change, for each consumption or production point. Moreover, is it relevant to keep the history of these transactions? Such exhaustiveness could ultimately represent a lot of electricity consumption just for data sharing and unnecessarily complexifying the operation of the networks.
A second type of blockchain use involves allowing decentralized purchases and sales between individuals of a surplus of green production. In this case, the network and its connected objects are not globally optimized. It is the local production surplus that is sold without an intermediary from a production point to a consumption point. However, the P2P energy exchange does not solve the problems of anticipation and network balance, which have their own technical constraints. Thus, these blockchains must interface with the management tools of the electric operators, limiting their interest and decentralized nature.
We, therefore, believe that a blockchain associating each consumer and producer (or mixed actor) with an energy consumption and production statement, modelled on Ethereum, would offer more possibilities and flexibility. We will expand this reflection further at the end of this article.
Beforehand, it seems useful for us to talk about other types of applications.
One of them relates to network balancing.
This type of application is carried by the Sonnen project, associated with the "Flex Platform" program, which uses blockchain technology to facilitate network balancing via the use of storage batteries. This very interesting project is built on the Hyperledger blockchain, which is somewhat complex. An even more interesting improvement would be to interface these storage and balancing issues with a blockchain managing the states of consumption or production of the actors as we will develop later. The operating model of Ethereum could offer more flexibility in this respect. Alternatively, the development of generic protocols allowing the various energy blockchains to connect - modelled on Polkadot – could also be a solution to ensure this interface and optimize the management of energy networks.
Another application relates to energy trading, modelled on the Enerchain project, to cite but one, which aims to allow purchases and sales without the intervention of market operators. Nevertheless, unless I am mistaken, the currently thought solutions design these transactions, even if they are decentralized, from one actor to another only. Therefore, they face a real-time adjustment problem and require the exact meeting of an energy supply and demand, without allowing its optimization over time: indeed, some sources can be sold, then stored, then mobilized and billed afterward to a consumer. For this to happen without a network operator managing nominations and withdrawals, an interface with a blockchain managing the network's flexibility or storage, or even a more comprehensive blockchain solution, would once again deserve to be designed. Finally, without exhaustively listing all the possible applications of the blockchain, let's point out that a distributed register can also answer the transparency problems of renewable energy certificates, carbon credits, or effacement certificates.
Blockchain technology is therefore the subject of several possible applications, and research programs have multiplied to test its interest for different types of uses. However, a global and integrated vision is still lacking in being able to extract its full potential.
Recent innovations in "DEFI" (Decentralized Finance) represent a remarkable source of inspiration to meet this challenge. Indeed, instead of understanding a transaction between two places, of considering energy balance at the level of each actor or network, pools of green energy exchange, fossil energy, consumption effacement and even energy storage deserve to be created via smartcontracts, just as DEFI has created liquidity pools contracts on Ethereum to automate financial exchanges and balances.
In this perspective, Ethereum's operating model appears to be very relevant to maintain a record of each actor's consumption and production, while specifying the amount of renewable energy, effacement rights or carbon credits. The creation of smartcontracts managing storage capacities, storing surpluses in a mutualized way, organizing pools of supply and effacement of energy or even pools representing balancing areas would also facilitate the operation of networks, and over time, render obsolete the cumbersome processes of nominations and imbalances compensation of these.
In this perspective, the potential of blockchain becomes dizzying and offers real opportunities in terms of decentralization and autonomous management. It also offers unique tools to monitor and optimize with ruthless efficiency energy policies in real-time. But again, between the theoretical idea and practice, the path may still be long, especially since the blockchain ecosystem applied to energy remains for now the preserve of large energy players, guided by other major digitalization players anxious to place their slightly centralized solutions. It does not yet benefit from the astonishing innovation capabilities that DEFI knows today, strongly stimulated by personal and quick enrichment perspectives of blockchain geniuses. May my peers forgive me for this last observation…
Florie Mazzorana
The opening of the natural gas market to competition is in principle an opportunity to benefit from favorable price developments, by changing suppliers. Alone, or as part of a buying group. The Public Procurement Code and the 2005 order provide various legal possibilities for launching a procurement procedure for the supply of natural gas.
However, many calls for tenders ultimately prove unsuccessful. Why and how to avoid it?
Most natural gas suppliers are responsive and capable of offering you quotations. However, they differentiate themselves in terms of strategy and response capacity: depending on the size of the market, the number of group members, the geographical location of your delivery points, the duration of the contract and the validity period of the prices you require, the price formula you impose.
If the legal form or some clauses of the administrative or technical specifications of the tender are too far from their strategy, some suppliers will not respond. Your ability to anticipate and the speed of decision making is therefore the key factor in a successful call for tender.
Our knowledge of the natural gas market, market price trends and fixed or indexed price quotations, and above all, of suppliers, allow us to advise you on the best strategy to reconcile the formulation of your needs with the specificities of alternative suppliers.
Thanks to our teams and our tools, we then assist you for the quick and effective operational implementation of your strategy: drafting of the constitutive agreement of the group, preparation of the tender documents, evaluation of the offers, preparation of the administrative documents for the closing of the market, etc.
See our service to support public purchases of natural gas and electricity supplies
Author: O. Choffrut / Contact: o.choffrut- at -zelya.com
In France, the distribution of natural gas is a local public service (SPL). As a result, in the past, some territorial communities and their public institutions have entrusted the construction, operation and development of natural gas distribution networks in their territory to a separate entity. Playing their role as grantor authority, the communities have signed "concession" contracts.
Numerous concession contracts are thus due to expire each year. Whether there is a call for competition launched by the grantor authority or not, negotiations between the grantor authority and the candidate(s) for takeover will obviously focus on the rates of network use by third parties, since these rates condition the future level of operating revenues.
However, since the tariffs for access to the natural gas distribution network are approved by the Energy Regulatory Commission, what room for manoeuvre do the grantor authority and the candidate(s) for takeover have in terms of negotiation and setting new network usage tariffs?
In case of renewal of the concession, the regulation specified five key principles governing the structure of usage tariffs:
The Energy Regulatory Commission is called upon, before the renewal of the concession, to deliberate on the compliance of the offer(s) of the candidate(s) with the relevant regulatory texts.
In the end, the candidate(s) for the takeover of a concession can freely propose three parameters:
These three parameters are also those that the grantor authority can freely negotiate.
In case of renewal of natural gas distribution concessions, Zelya Energy assists you, whether you are a candidate for takeover or the grantor authority, in terms of:
When consumers of natural gas and electricity, industries, hospitals, communities, agricultural cooperatives, group together with a view to renewing their individual natural gas supply contracts, they have in principle the possibility of pooling the tender procedure, the supply, or both simultaneously.
Management of readings | Aggregation of consumptions
Profile analysis | Coverage strategies | Pre-negotiations & Supplier selection
Analysis of the specifications | Competition
Analysis and discussion of offers | Assistance in negotiations and signing of multi-site contracts
Pooling the tender procedure and competing suppliers allows the sharing of costs related to competition and gains in renegotiating existing contracts, as long as the same supplier is asked to satisfy several or all individual contracts. Pooling the procedure is thus a consumption aggregation and a request for aggregated pricing to obtain a price applicable to all individual contracts. This pooling is particularly interesting when facing suppliers that do not position themselves below an annual minimum quantity: such suppliers would not respond to small consumers who would ask them for a quote for their consumption alone.
The pooling of the supply, which can be sought and achieved whether or not the procedure is also pooled, consists in substituting a few common supply contracts for individual supply contracts, i.e. signed by the same legal entity. The pooling of supply is therefore a purchasing aggregation.
In the most advanced case, the members of the group create a purchasing centre which signs the global supply contract: such an entity replaces the different individual contracts.
Pooling the procedure and pooling the supply are therefore two distinct but complementary notions. In some cases, consumers create a common structure that requests a single quote (= pooling of the procedure), towards which they transfer all their contracts (= pooling of the supply). In such a case, this structure carries out the functions of a purchasing centre.
In both cases of pooling, nothing prevents partially aggregating individual consumers: consumption sites can be grouped (or aggregated) into subsets, provided they have similar or opposite characteristics. Their characteristics thus reinforce, by aggregation, the scale effect in the first case, or the smoothing effect in the second.
The synergies, which result in savings on the overall or individual bill, do not intrinsically result from pooling, but in reality from the way in which individual contracts are aggregated (what are the subsets?). It might even be that by aggregating all contracts (so there are no subsets), we deprive ourselves of certain synergies.
As part of the pooling of your natural gas purchases, Zelya Energy assists you with:
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The levels and indexing of purchase prices for biomethane injected into natural gas distribution or transport networks are set by the decree of November 23, 2011.
In a similar way to the obligation to buy electricity produced from renewable energies and injected into the electricity network, these rates are calculated taking into account the nature of the installation (non-hazardous storage or not) and from:
The tariff and the premiums are indexed twice:
The coefficients K and L depend on INSEE indices, representative of labor cost and sectoral production prices:
Zelya Energy accompanies you to