Peer-to-peer (P2P) energy exchange company UrbanChain has teamed up with demand side management company GridDuck and West Suffolk Council for an innovative energy trading project at Milden Hall Industrial Park.
Initially, West Suffolk approached Local energy Market (LEM) as a way to manage grid constraints, targeting European research and development funding. But as Peter Chisnall, energy adviser at West Suffolk Council explained, there is “many a slip between the cup and the lip” and when the funding had come through the constraint problem had been managed.
“So we looked around for another area that we had, and there was one where we'd already been involved with some businesses and we actually funded some photovoltaic panels on their roofs and we were thinking that P2P exchange would be excellent in this location, because we know they've got some renewable generation there, we knew that some of them wouldn't be using all that generation and it just goes back to the grid and goes in the general mix for everyone to use.”
What has grown out of this initial interest in P2P exchange is a 50-business strong project that is looking to combine UrbanChain’s P2P exchange technology and GridDuck’s demand side management software.
“We are going to bring 50 businesses into the P2P market and 15 of those businesses are going to have GridDuck facilities for demand side management as well,” UrbanChain’s CEO Somayeh Taheri explained. “We are going to use hyper local generators – those using the solar panels that are installed on the industrial park – to enable P2P exchange. At the same time, we are aware that the renewable generation, the excess capacity from solar panels, is not going to cover the demand of the industrial park, therefore we are introducing more volume from UrbanChain's portfolio.”
The project will be open to all the companies on the industrial park, whether or not they have solar panels installed already. “If they've got PV panels on their roof already that's great. If they haven't we might be able to offer them some, but yeah, that's not prescriptive that they have to have it,” added Chisnall. “We just want people who want to join in and participate really.”
Utilising the fixed behaviour of industrial customers
There are a number of key advantages for companies taking part in the project, continued Dr. Taheri, with both P2P exchange and demand side management overlapping and presenting an opportunity that hasn’t been widely explored before.
“On average, the rate that businesses pay, if they have a broker and if they are switching frequently, is around £140/160 per megawatt hour,” she continued. “The P2P market is going to offer them £100/110 per megawatt hour, which is quite a huge saving for them.
“At the same time, their solar panel is not going to be traded at the system price, which is an average of £35 per megawatt hour in normal market conditions, the volume is going to be set at a fixed price to be sold to their neighbour for around £65-70 per megawatt hour. So a huge uplift on their earnings and their margin on the solar panels at the same time, meaning a huge saving on their bills.”
For the companies involved in the project that are taking part in the demand side management aspect there are two key savings. Number one is that GridDuck can work to identify appliances that can be switched off for a period of time and manage that automatically, cutting electricity consumption.
“The other thing – and maybe more importantly where we can work closely and integrate with UrbanChain – is let's say you have solar panels on your roof, and you want to self-consume as much as you can, and how much you self-consume may also depend on what price you're going to get,” explained Gregor Hoefter, CEO at GridDuck.
“So you might say I'm going to charge my hot water tank with the extra sun or I might send it to my neighbour for a couple of extra pennies, and that optimisation can be done in an instant. We have a software interface so we can look at the prices and have a logic where these decisions are made automatically.”
There are several advantages to running an innovative project like this one in an industrial space as opposed to a domestic one. The volume of energy demand is higher, the energy consumption behaviour is more predictable and most of the consumers will have half hourly meters, easing the gathering of data.
Next steps for creating Local Energy Markets (LEM)
Going forward, the group has commissioned a local charity to put together a body of research on the companies within the industrial park, which range from “one man bands” to 100-200 people organisations. When this data has been collected, both UrbanChain and GridDuck can use it to put together a body of analysis that can be taken to the companies on site and encourage them to get involved.
While engagement with companies has been hampered somewhat by the COVID-19 pandemic, that barrier should ease going forwards. Taheri added that from a P2P market perspective, the duration left of companies’ fixed energy contracts could present another barrier, however that is something they should be able to work with suppliers to overcome.
Once up and running, the project is set to last for two years, at which point the group will generate a case study. Following this, UrbanChain and GridDuck are keen to prove the replicability of the system, helping to create local energy markets by extending the service to other industrial and commercial consumers, domestic and public consumers and connecting them with hyper local, local, regional and national generators to be matched with local consumers.
UrbanChain and GridDuck have already begun embarking on a second project in the Welsh county of Blaenau Gwent. Working in partnership with local companies Baldock Energy and Afallen, the pair are looking to develop a P2P market at another industrial park. In the county, there are 25 industrial parks contributing 50% of the areas’ total energy demand, a significant amount that presents a huge opportunity for P2P trading options.
“Instead of you waiting to install renewable assets to become carbon neutral, we can create a P2P market with the original generators, between the generators and the industrial park, making the industrial parks carbon neutral instantly and save energy on their bills,” said Dr.Taheri. “And then you can invest those money into installing new renewable assets.”