A project is currently underway in Western Australia that aims to assess how cities can use blockchain technology and data analytics to deliver integrated energy and water systems that offer improved efficiency and sustainability, while relieving demand on the grid.

The $8.4 million project will use Power Ledger’s locally-developed blockchain ledger to integrate distributed energy and water systems in Fremantle, WA, over a two year trial period.

The Federal Government is providing $2.57 million in grant funding to the RENeW Project, which comes as part of the government’s inaugural Smart Cities and Suburbs Program, which recognises innovative projects that improve the liveability, productivity and sustainability of cities and towns across Australia.

The project is also being supported by the Australian Energy Market Operator (AEMO), Western Power and the CRC for Low Carbon Living, and has a variety of other project partners, including Curtin University, Murdoch University, LandCorp, CSIRO and Data61.

The residential area being used for the trial is a 1.5 hectare site called the Knutsford Precinct, containing around 100 dwellings, with the hope to roll it out to the entire 23 hectare site.

Distributed systems in the project include a large solar photovoltaic (PV) plant, distributed rooftop solar, a large precinct-sized battery, an electric vehicle charging station, and precinct water treatment and rainwater capture systems.

Power Ledger will provide the transactional layer for both utility services of electricity and water, as well as facilitate the community-owned battery, allowing residents to buy, sell and trade excess energy.

The Perth-based startup first launched its commercial peer-to-peer energy trading platform at the White Gum Valley housing development in Fremantle in 2016.

James Eggleston, Senior Analyst at Power Ledger

Changing the technology landscape

James Eggleston, Senior Analyst at Power Ledger, said that the Power Ledger platform utilises distributed ledger technology, also referred to as blockchain, to facilitate and record transactions.

Blockchain technology enables the existence of cryptocurrency and uses software algorithms to record any digital interaction reliably, securely and anonymously.

“Basically, what we’ll be doing, in very real terms, is providing all the meter reading, invoicing and settlement services throughout that network,” Mr Eggleston said.

Power Ledger’s platform will be used to track the output and input of any energy and water that is consumed or produced in the system.

“We use existing meters, which is the sensor that provides a reading of whether there is an inflow or an outflow. What the Power Ledger software does is live inside those meters. What the Power Ledger software can do is very rapidly update a ledger, a distributed ledger, for what’s passing through that sensor,” Mr Eggleston said.

“It sounds pretty plain, the role that it plays, but I guess what I’ll point out is that at the moment if I owe you $20 and you send me your bank account details, and I send you that $20, it can take days for that $20 to get to you.

“What blockchain does is it enables us to settle those transactions in real time. Our platform has trust built into it, so that you don’t need any of the high-friction services that slow down transactions in order to verify trust and to maintain security.”

The project will also explore the water energy nexus, a concept that refers to the relationship between the water used for energy production and the energy consumed to extract, purify, deliver, heat/cool, treat and dispose of water.

“So how can we use surpluses of electricity to treat water on-site? Not necessarily for drinking, it can be for grey water, for other uses, such as water in common areas and things like that, and verges. That’s really the call that we answered in the project,” Mr Eggleston said.

Reducing network demand

Mr Eggleston said that the advent of renewable technologies is creating opportunities for smaller scale, more widespread adoption of local generation and demand management.

“So 20 or 30 years ago, if you wanted to provide energy to your city, the best way to do that would be to co-locate some kind of big generator, like a coal-fired power station, and then boom that energy over large distances, over transmission lines, to where it needs to go. But given the idea now that you don’t have to have a big centralised generator, you can have lots of
smaller scale generators distributed through the network,” Mr Eggleston said.

One in four Australian households now has solar PV, which, when combined with a form of energy storage, creates a behind-the-meter energy system, enabling on-site power generation for use in residential and commercial buildings.

Behind-the-meter electricity can also be harvested from power storage owners and sold back into the grid when there is a shortfall in supply, providing peak load support for the grid more cost effectively.

The scenario is similar to homeowners and car owners making rooms and vehicles available on Airbnb or Uber, and Australia’s rapidly growing distributed solar and battery storage resources have a key role to play in helping the National Energy Market get through times of peak demand – as well as through the transition to renewables.

Mr Eggleston said that the Knutsford Precinct trial is part of the move towards a decentralised energy network.

“With respect to this particular development, rather than have a massive load coming onto the electrical network, what we’re able to do, through solar and battery technology, is reduce the burden of those new developments onto the grid. Which means the grid won’t necessarily need to be upgraded to the full extent that it would have, had we gone for business as usual.”

Demand management is able to balance and absorb both the anticipated and unexpected fluctuations in renewable generation and improve Australia’s energy security, while avoiding building costly infrastructure that may only be needed on a handful of days a year.

Addressing the water shortage

Behind-the-meter devices have yet to be adopted in the water industry, where the main focus is on increasing the efficiency of the system to cope with decreasing water levels.

Mr Eggleston said that historical records show that Perth’s supply of drinking water has been rapidly decreasing over time without being replenished.

“In Perth, 50 per cent of the drinking water is now desalinated water from the ocean. Without those desalinators we would have a catastrophic water shortage.”

The results of the Knutsford Precinct trial will offer valuable insights into alternative water systems and data that can be used to experiment with more efficient ways of delivering water on-site.

“What we’re doing is looking at measuring water and really understanding where it’s going, how can we better use it and co-locate it to its source of consumption in order to basically preserve this precious resource for everybody, and use it in a way that is more mindful of its true value,” Mr Eggleston explained.

The water and energy systems have been designed to work harmoniously together – almost like their own ecosystem. For example, if there’s excess on-site energy generation, it can be used at the water treatment systems then and there rather than waiting until the evening, when the energy is more expensive.

Disrupting the sector

Mr Eggleston said that with any innovation comes challenges, particularly with something that hasn’t been done before.

“Sometimes things that are technically possible don’t really necessarily fit into the regulations of the day. So these types of innovations, not only will they require technical optimisation, which we’re more than capable of delivering, but it’ll also require business innovation or regulatory innovation as well to support these new platforms.”

Power Ledger aims to reimagine the electricity network more as a bi-directional transactional network rather than a one-way flow.

Mr Eggleston said that blockchain technology has the potential to transform energy and water provision in the future, and the insights gained from the Knutsford Precinct trial could create a model that can be used not just in Fremantle, but across the country.

“Put it this way, at the moment a lot of houses across Australia have the electricity meters that contain cogs in them. What happens is electricity goes into your house and it spins this little meter. Then that meter ultimately has a person from the utility visit it and physically read it, and then that figure is used for billing. Really that is not a modern way of dealing with electricity consumption, or utilities and services.”

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