Shell Ventures and Sumitomo have made an investment in LO3, a start-up developing blockchain applications for the energy sector.
In 2016, Brooklyn, N.Y.-based LO3 became one of the first companies in the United States to build a power project that uses blockchain technology. The Brooklyn Microgrid project aggregates about half a dozen rooftop solar panels and allows neighbors to buy and sell solar power among themselves using blockchain technology.
Blockchain technology is a shared, transparent and secure ledger of transactions that does not require an intermediary. The technology is increasingly being explored for a variety of used in industry.
In June, U.S. renewable energy developer Clearway Energy Group signed an agreement with Power Ledger to develop a blockchain platform for trading renewable energy credits. In addition, utilities from New York to Nevada are exploring the use of blockchain.
In the Brooklyn project, LO3’s technology is designed to allow users to choose how and when to use local energy resources via a mobile app. The electric power would flow through the grid, as usual, but blockchain would manage the definition of the energy source and the contract agreement to pay for it.
On a larger scale, LO3 is working to commercialize blockchain-based community energy networks. The company says the Exergy blockchain it is developing aims to address the need in the energy market for standardized data that can make power grids more efficient. LO3 says its transactive energy platform is designed “to overcome the challenge of integrating distributed energy resources (DERs) into supply networks.”
LO3 is working internally and with third parties to create “Exergy standardized data” that can be accessed from other devices and meters and flow onto the Exergy network. To automate that process and have it operate without external input, LO3 is creating an XRG Token that would grant access to the network and provide an incentive mechanism by rewarding devices or apps that produce valuable data.
LO3 says its platform will enable peer-to-peer energy trading, energy hedging for businesses, virtual power plants, dynamic electric vehicle charging, and demand response.
The capital injection from Shell and Sumitomo “is not tied to specific projects, but is general funding for the company,” William Collins, co-founder and chief strategy officer at LO3, said via email. “We are, of course, discussing project opportunities with both Shell and Sumitomo,” he added.
Shell has made other investments in blockchain technology. The oil giant began using the blockchain-based Vakt oil trading platform in 2018. Shell also uses the Applied Blockchain platform to trade derivatives and the Komgo commodities trading platform.
“As we move into a less carbonized future, Shell aims to invest in innovative companies that will help enable the energy transition. LO3 Energy fits right in that space,” Kirk Coburn, investment director at Shell Ventures, said in a statement.
