Early next month, Green Mountain Power in Vermont plans to begin offering customers a peer-to-peer platform for trading environmental attributes.
The pilot program will be hosted on LO3 Energy’s platform, which uses blockchain technology, a form of digital ledger. Blockchain technology is used in cryptocurrencies such as Bitcoin, but it is also making inroads in a variety of industries because of its potential for securely recording and executing transaction at low costs.
LO3, based in Brooklyn, N.Y., and Portland, Ore., was one of the first companies in the United States to build a power project that uses blockchain technology. The Brooklyn Microgrid project aggregates rooftop solar panels so neighbors can trade and track their solar output.
In a filing to the board of the Vermont Public Service Department, Green Mountain Power said blockchain technology is well suited for verifying the chain of custody of renewable energy attributes and ensuring that those attributes are not double counted.
Green Mountain Power also sees the potential to extend the use of the peer-to-peer marketplace being established by the pilot program in the future as a backbone for other types of energy transactions like services from technologies such energy storage systems, electric vehicle chargers, and thermostatically controlled loads.
Green Mountain Power is also looking at the potential for the digital marketplace to serve as a platform on which companies could offset carbon dioxide emissions from corporate transportation or manufacturing, not just electricity consumption.
Green Mountain Power plans to launch its digital marketplace for Vermont Green Attributes (VGAs) on Dec. 3. VGAs are the environmental attributes associated with local renewable energy. Each VGA is equal to one renewable kilowatt hour.
The marketplace aims to connect local energy producers, such as rooftop solar owners, with Vermont businesses that want to purchase renewable attributes. In the filing, the utility said it had heard “anecdotally from some businesses that current REC [renewable energy credit] options are not appealing for various reasons, including the inflexibility of entering long-term agreements, the potential hassle of locating and working with trusted brokers, and the question of location/origin related to the RECs.”
The pilot would run for 18 months and be available to a maximum of 50 commercial customers. The initial pool of sellers of VGAs would be come from existing net metered customers and be capped at 200. The exact size and composition of the seller pool would be aligned with the projected aggregate demand from the commercial customer set. Green Mountain Power anticipates about 500 MWh of VGAs will be transacted in the marketplace per year.
After participants enroll in the pilot program, they will be able to set their bidding preferences. Buyers will have the option to cover a specific percentage of their actual energy consumption with local renewable attributes. When a participant’s preferences are set, the platform will conduct an auction that will settle once a day for local renewable attributes created the previous day.
Green Mountain Power said the nearly real-time settlement of the digital marketplace is a key difference from conventional REC sales, which typically happen with a six-month lag, and has the potential to make the digital marketplace a valuable incentive for developers seeking sources of revenues to support their projects.
Sales on the pilot platform will occur automatically with settlement handled at the end of each month as credits and debits on Green Mountain Power customers’ bills. Green Mountain Power will also set up a screening tool to monitor daily transactions and correct invalid transactions, if necessary. The utility has proposed to collect a 5% transaction fee on the monthly transactions, assessed on the seller, to help cover the costs of creating and hosting the marketplace.
If the aggregate local renewable generation from sellers does not meet the demand for VGAs, Green Mountain Power would supply the difference with a combination of local renewable attributes from its CowPower renewable energy program that have not been sold into the New England REC market or already retired in Vermont and attributes from four 100-kW local wind turbines the company owns that are not being sold currently. If the supply from local solar generation exceeds demand, Green Mountain Power intends to roll those attributes over to a later settlement period.
In the filing, Green Mountain Power called the costs of the pilot program “modest” and estimated the first-year cost for setting up the program at $32,556 with the program estimated to produce a net benefit of about $6,700 in the following seven years.
Green Mountain Power, in the filing, said it “looks forward to reviewing the findings from this Pilot to determine whether it offers a foundation from which to explore additional procurement of grid services from customers with a similar equitable and efficient distribution of value and cost.”
Public power and blockchain
Several public power utilities are exploring blockchain technology.
A Sacramento Municipal Utility District project that is being funded in part through an award from the American Public Power Association’s Demonstration of Energy & Efficiency Development program will utilize blockchain-enabled tokens as part of an effort to encourage EV owners to charge their vehicles at workplaces when local renewables peak during the day.
In 2018, the Burlington Electric Department in Vermont won a grant from the DEED program to use blockchain technology to facilitate the integration and distribution of energy from multiple sources in real time. Omega Grid is also involved in this DEED-funded project.
Meanwhile, another California public power utility, Silicon Valley Power, and Power Ledger have successfully completed the first stage of a program to test the use of blockchain technology for tracking and monetizing carbon dioxide reduction credits for electric vehicle charging and now plan to proceed to the second phase of the project.
Last September, Silicon Valley Power used Power Ledger’s blockchain-backed platform to track and manage Low Carbon Fuel Standard (LCFS) credits at the Tasman Drive parking garage in Santa Clara, Calif., which has a 370 kW solar system and 49 electric vehicle charging stations.