New Business Model

BRPL introduces blockchain for solar power trading

In November 2019, BSES Rajdhani Power Limited (BRPL) became the first Indian discom to launch a blockchain-based platform for peer-to-peer trading of solar power. It has partnered with Australia-based global blockchain platform, Power Ledger. Over the past few years, the renewable energy space, especially solar, has seen a multitude of disruptions. The entry of blockchain technology for solar power transactions marks yet another business model transformation. Interestingly, this follows a period where most discoms have opposed the idea of expansion of rooftop solar in a bid to retain their high-paying residential and industrial customers. In such an environment, BRPL has emerged as an example of an agile discom that must move with times and embrace new business models like blockchain for solar trading, which may well be defined as the next big thing for renewable energy.

BRPL has successfully carried out a feasibility study to understand the nature of transactions that can be enabled through blockchain. A pilot project will soon be rolled out in an existing gated community of solar consumers in Dwarka, Delhi, which generates around 5-6 MW of solar power. The idea of using blockchain for peer-to-peer transactions is to use the excess solar energy produced by the plant for powering neighbouring buildings, instead of feeding it back to the grid. The project will commence once regulatory approvals are put in place.

Problem solving

Blockchain technology is akin to an online ledger with information and data stored that is accessible to everyone in the network. It is a decentralised register that uses peer knowledge to ensure that no data can be changed or corrupted by any other node in the system. The prime benefit of using blockchain technology is the transparency and sharing of data by controlling the way it can be manipulated. Cryptocurrencies such as bitcoin use blockchain for transactions and verification of money transfers. The application of the technology has now been extended to various other spheres including energy trading.

Enabling rooftop solar has always been a point of contention for discoms for several reasons, despite guidelines from the Ministry of New and Renewable Energy and fiscal incentive schemes. One of the reasons is the load observed on the grid due to feeding of excess power back into the system. This is also often cited as the reason for poor implementation of net-metering that enables power transaction out of and into the grid.

BRPL’s pilot scheme is targeted at solving this issue by helping neighbouring communities absorb the excess power produced by solar power generators in the area. On the one hand, it provides clean and green energy to consumers, while on the other, the generator may make a better profit on it than feeding it back into the grid. Moreover, the real-time transactions will ensure that there is no backlog or cyclical payment issue as is observed with discoms. Meanwhile, peer-to-peer solar energy trading enables consumers who have the will to use solar power but not the wherewithal to set up a rooftop solar plant to buy it from generators at prices lower than that on the grid. Such business models provide an option to consumers for power procurement, an aspect that has been missing from the Indian power sector.

Benefitting discoms

BRPL’s move may be seen as a game changer for the segment, considering the consistent opposition to rooftop solar and net metering by discoms. The success of the feasibility study may be enough for other discoms to see it as a potential business model that they could get on board with. When the pilot project succeeds and paves the way for large-scale adoption of the model for a bigger area of consumers with a greater number of generators, the workings, best practices and other nuances will be available for them to follow.

Peer-to-peer trading of solar power in the vicinity by consumers connected to the same distribution transformer will enable the optimal utilisation of its capacity. This will help increase the transformer efficiency and of the discom by extension, while also providing better power quality to consumers. Besides, the discom will have access to cost-effective power procurement during times of peak demand for enhanced load management.

If the Indian power sector moves towards time-of-day (ToD) pricing, discoms with such alternative energy procurement arrangements will be in a better position to make bigger margins than those trading at the exchanges. Such discoms can procure excess solar power from generators at competitive prices and offer it to other consumers through their blockchain platforms at prices not as high as ToD during peak hours.

Further, when consumers procure power via the blockchain platform, discoms will not have to purchase solar energy from the grid and increase their revenue through transaction and wheeling charges. BRPL needs no hardware or technological equipment to sign up with Power Ledger. Since the platform is a transactional layer that uses data from smart meters in real time to enable power trading between peers, capital costs and investments are limited. The only thing required for the discom is access to power generated through rooftop solar plants and a network of consumers registered on the platform.

Global experience

While in India it is the first such initiative by a discom, globally, there are several such examples in the power sector that suggest the possible emergence of blockchain as a technology for power trading. In October 2018, Estonia’s WePower announced the success of its project that aimed at converting sale and purchase of power through the grid into a blockchain-based transaction, in conjunction with the transmission operator, Elering. The Estonian grid is completely digitalised and has 100 per cent smart meter coverage along with a data sharing platform called Estfeed, providing the ideal infrastructure for the implementation of power trading through peer-to-peer transactions. This was the first ever blockchain project to be rolled out across a nationwide grid. The blockchain platform was provided by Ethereum.

Utilities such as E.ON in Germany and Tokyo Electric Power Company in Japan are exploring applications of blockchain technology for the power sector, primarily aimed at improving transactions and minimising data pilferage along the way. Since utilities also own power generation plants, access to power becomes easier for them than for third-party solution providers.

Challenges and outlook

The use of blockchain technology by the power sector is at a nascent stage where only pilot projects, albeit successful, have been seen so far. Besides Estonia, no other country has attempted launching power trading at the national level so far. Even for the Estonian project, on-ground results are yet to be analysed for any fine points that may prove to be detrimental to the technology. Meanwhile, capital and operational costs of blockchain-based energy trading are not yet available. Whether these costs may support scalability or not still remains to be seen.

For a country like India, where most discoms are state-owned and usually entangled in a complex web of regulatory hurdles, adoption of a technology as new and complicated as blockchain may not happen unless there is ample proof of concept. Also, comprehensive regulatory guidelines and approvals for large-scale roll-out of the technology will be needed. Most important, however, is the complete digitalisation of the grid and the move to smart meters for the area to be covered by peer-to-peer transactions. Meanwhile, a change in the mindset to allow greater rooftop solar installations will be needed to enable a larger transaction and consumption of clean energy.

With its collaboration with Power Ledger and its pilot project, BRPL has initiated a new technology trend in the rooftop solar and power trading space in India. The results of the pilot in a gated community with 5-7 MW of capacity may have significant  consequences given the kind of scale that India has to offer to the business model. Now, whether it can be scaled up in a cost-effective manner to ensure more discom profits and consumer savings is yet to be determined.

By Ashay Abbhi


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