"Quartierstrom" - field test of Switzerland's first local electricity market successfully completed

Walenstadt/Zurich (ots) - For one year, 37 households in Walenstadt have sold
solar power in a local blockchain-based electricity market. The participants
involved in this pioneering project, the first of its kind in the world, were
very positive about their experience. As expected, the system led to a
substantial increase in self-consumption and self-generated supply. The
participants played an active role in the electricity market but were reluctant
to pay more for locally produced power.

Switzerland's first local electricity market has successfully completed field
testing in January 2020. For one year, 37 households in Walenstadt traded
locally produced solar power within their own neighborhood. Participants could
directly buy and sell solar power within their neighborhood via a portal on
which the participants could set their own purchase and sales price limits for
solar power. The resulting transactions were processed automatically via a
blockchain. The local electricity supplier, Water and Electricity Works
Walenstadt (WEW), not only provided access to its distribution grid but also
purchased surplus solar power and supplied the community with "normal" power
when the supply of solar power was insufficient. This innovative project, which
is supported by the Swiss Federal Office of Energy (SFOE) as a flagship project,
aimed not only to verify technical feasibility in the field but also to study
user behavior.

Significantly higher consumption of local solar power

After a year in the field, project participants from research and industry give
a positive appraisal. Thanks to the local electricity market, the local
community the purchase of the of the locally produced solar power almost
doubled. The 37 households covered 33% of their electricity demand with solar
power produced in the neighborhood - twice as much as beforehand. These figures
might have been anticipated, but it was surprising how well the project was
received. The participating households played a very active role and perceived
the electricity market as green, local, and fair. "After initial skepticism,
even the energy industry has shown a great deal of interest and sees a lot of
potential in the development. We've managed to really provoke discussion," says
Christian Dürr, Managing Director of the Water and Electricity Works Walenstadt.
Verena Tiefenbeck, leader of the Bits to Energy Lab at ETH Zurich, also gives a
positive appraisal: "Quartierstrom was the first project of its kind in the
world, and we did pioneering work on many different fronts. We're especially
delighted that the technology operated effectively - apart from the usual
teething troubles." For the Swiss Federal Office of Energy, the application of
these new technologies was a particular area of interest. "The project allowed
us to study the extent to which blockchain and artificial intelligence might be
suitable for the direct marketing of electricity from decentralized energy
sources and what role the energy supplier plays in a bottom-up approach of this
kind. These findings should be helpful for the future development of the
electricity market," says Benoît Revaz, Director of the SFOE.

Almost no one wants to pay more

One new feature of the system was that participants could use a portal to set a
minimum sales price for their solar power and a maximum purchase price to buy
solar power from their neighbors. "The participants frequently adjusted the
price limits, especially at the beginning. But the price limit they set for
buying local solar power was rarely higher than for normal power from the grid,"
says Tiefenbeck. On average, the participants were willing to pay just under 19
centimes per kilowatt hour - less than the cost of mains power, which stands at
20.75 centimes. Fewer than 10% of offers were above this rate, despite the fact
that many people had declared their willingness to pay more for local solar
electricity in the surveys conducted beforehand. "This gap between attitude and
action is seen in behavioral research time and time again," says Tiefenbeck. The
researchers also attribute this to the fact that the participating households
knew that local solar power was subject to lower grid fees and that,
accordingly, the power suppliers were getting more for their power, even at
lower prices. For their part, the households with solar power systems also
sought to make a profit, asking for around 7 centimes per kilowatt hour. When
selling to the power plant they made only 4 centimes.

Automatic pricing is more effective

In order to compare different market models, the researchers deactivated the
feature allowing individual pricing for a period of one month and replaced it
with an automatic pricing system. When demand and production coincided, the
solar power was distributed locally. The price varied automatically depending on
whether the solar power was in relatively scarce supply or in surplus. With
individual pricing, on the other hand, a small proportion of the solar power
could not be sold because the price requirements of suppliers and consumers did
not match. In surveys, a little over half of households stated that they
preferred automatic pricing. "What was surprising was that participants who used
the portal frequently tended toward automatic pricing and vice versa," says
Tiefenbeck. "Based on our experiences, we don't consider individual pricing to
be decisive for a local electricity market in the future."

Effectively raising awareness

What does seem to be important, on the other hand, is that participants are able
to monitor production and consumption, as well as their purchases and sales, in
real time. This function was very popular with users and contributed to raising
awareness. Indeed, many participants said that they now use electrical
appliances more when the sun is shining. They saw the peak and off-peak tariff
system that still applies today as outdated when applied to renewable energies.
Christian Dürr: "The participants developed an understanding of the energy
market, thereby helping to balance supply and demand. This reduces the burden on
the infrastructure and puts surplus power to sensible use."

Reliable software but a need for hardware optimization

While the software proved highly reliable, the project team repeatedly struggled
with hardware failures. As there was no smart meter with an application
processor available on the market, the project team had to use devices
(Raspberry Pis) with self-developed modules instead. "These devices have an
error-prone, SD-card memory system," says Arne Meeuw, who developed the
blockchain system. For larger applications, projects like "Quartierstrom" would
require certified and stable smart meters with an integrated application
processor that could run different software tools.

The blockchain system, on the other hand, proved highly robust - although its
capacity was limited. Twenty-seven prosumers acted as validator nodes to approve
the transactions in the blockchain. These nodes represent the critical variable
when it comes to scaling. "The system could still handle about five more solar
installations," says Meeuw. The number of consumers could be increased further,
on the other hand, and the system would remain stable with up to 600 pure
consumers or other clients, such as batteries or flexible loads. "It would be
possible to scale the system up by building multiple blockchains for different
neighborhoods," says Meeuw. In turn, these could then exchange electricity
between themselves.

Low power consumption

Unlike public blockchains, such as those used for Bitcoin, the Quartierstrom
blockchain is private. Moreover, the approval of transactions does not rely on
elaborate computational processes. "The nodes reach an agreement on a proposed
energy trade," says Meeuw. This mechanism doesn't require a great deal of
computing power. The small computers that are used as smart meters and
blockchain nodes consumed around 3,300 kilowatt hours of energy over the
duration of the project. In terms of the volume of power traded in the local
market, this consumption amounted to around 4%.

Follow-up project in the pipeline

The pilot phase of the local electricity market as part of the SFOE flagship
project has now come to an end. However, a follow-up project has been launched
to ensure a seamless transition, albeit in modified form. The user portal has
been redesigned and streamlined slightly, and prices are now set automatically.
In the coming months, the hardware will gradually be replaced with
series-produced equipment, and there are also plans to develop the trading
platform into a marketable product. This aim is being pursued by the spin-off
"Exnaton", which was founded by members of the development team at ETH Zurich.
One option under development would allow participants to determine their
preferred suppliers of local solar power, rather than setting prices. In other
words, they could choose to buy electricity from their aunt's roof or from the
farmer who sells them their eggs. After all, "Quartierstrom" has also
demonstrated that emotion plays an even bigger role in a local market than
price.

Further information:

www.quartier-strom.ch: Background information, the latest news on the project,
and live data on electricity production and consumption, as well as
self-consumption and self-generated supply within the Quartierstrom community.

Photos and Diagrams

The pictures are available in high resolution on the "Quartierstrom" website:
https://quartier-strom.ch/index.php/en/media/

Project participants

The "Quartierstrom" project is supported by the Swiss Federal Office of Energy
(SFOE) as part of the "Pilot, demonstration and flagship projects" program. At
the heart of the project was a close collaboration between a broad-based
consortium of research and industry.

The "Quartierstrom" project - how does the local electricity market work?

The basic idea of the Quartierstrom project is for locally produced solar power
to be consumed locally. In this local electricity market, local residents buy
and sell solar power among themselves. The solar power is consumed in the
prosumers' own households first of all; only the surplus is traded within the
neighborhood. If the solar power systems produce more electricity than the
community is currently using, the Water and Electricity Works Walenstadt (WEW)
buys up this surplus power. Conversely, the power company supplies additional
power if local production is insufficient.

The buying and selling of solar power are managed directly between the
participants themselves via a portal on which the producers can set the minimum
price for their solar power. At the same time, the consumers define the maximum
price they are willing to pay for local power. The resulting transaction is
processed automatically via a blockchain. All participating households have a
mini computer installed with a built-in electricity meter and blockchain
software. Based on the individual price settings, these blockchain nodes then
place quarter-hourly bids for the purchase or sale of solar power and use an
auctioning mechanism to calculate whose bid is accepted at which price.

Pressekontakt:

medien@quartier-strom.ch
Sara Blaser
+41 (0)44 545 05 00
Sprachwerk GmbH
www.sprachwerk.ch

Contact for technical queries
kontakt@quartier-strom.ch
Verena Tiefenbeck
Bits to Energy Lab, ETH Zürich
Tel. +49 911 5302 96412

Additional content: https://www.presseportal.de/pm/141121/4513625
OTS: Quartierstrom

Original-Content von: Quartierstrom, übermittelt durch news aktuell