U.S. Blockchain Firm May Help Aussie Dairy Farmers Sell Energy

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By Murray Griffin

Australian dairy farmers could soon be trading energy, thanks to a U.S. blockchain company.

It’s a long way from New York, where energy technology company LO3 Energy Inc. is headquartered, to Australia’s southeastern Gippsland region, which produces about 22 percent of the country’s milk. If all goes to plan, LO3 will help up to 200 dairy farmers, more than 100 local households, and about 20 commercial and industrial businesses engage in peer-to-peer buying and selling of energy.

This regional marketplace of connected energy users will form a virtual microgrid with trades managed and recorded through a distributed ledger based on LO3’s blockchain-based Exergy platform.

The project would help shift one of the country’s primary agricultural regions toward renewables and would be the first trial of a blockchain-based virtual microgrid in Australia, said Ivor Frischknecht, chief executive of the Australian Renewable Energy Agency.

By using cryptography to keep exchanges secure, blockchain provides a decentralized database, or digital ledger, of transactions that everyone on the network can see, according to a World Economic Forum definition. This network is essentially a chain of computers and all must approve an exchange before it can be verified and recorded.

As more businesses and households install renewable energy systems, “there is an emerging opportunity to optimize these systems through orchestration,” Frischknecht said.

App for That

Dairy farming is an energy-intensive process and rising electricity prices have prompted farmers to look at renewable energy options, Ian Olmstead, program manager for manufacture, innovation, and sustainability with Dairy Australia, an organization dedicated to assisting the dairy industry.

The idea grew out of an effort by that orgnaization to help its member farmers become more sustainable and cut their energy costs while diversifying their income stream, LO3’s Australia director, Belinda Kinkead, told Bloomberg Environment.

Participants will use a smartphone app to set their energy parameters and pricing preferences and will be paid by the local electricity network provider, AusNet Services Ltd., for reducing energy use at times of extreme peak demand, easing pressure on the grid.

The project offers the opportunity to get the most value from either solar photovoltaic systems or battery storage, or smart technologies that allow remote control of energy-using equipment. It also could help AusNet better manage the integration of renewable energy systems into the grid and delay expensive network upgrades.

As Australia moves toward a lower carbon economy and retires more coal-fired power plants, more wind and solar projects will enter the market, but their intermittent generation will require new ways to store and manage energy, Lawrence Orsini, LO3’s founder and chief executive, said.

“This microgrid will showcase solutions for this, including battery storage, to make greater use of solar energy and demand response in which consumers will be paid for choosing to conserve energy at peak times,” Orsini said.

For many dairy farmers, however, the process may not make sense because energy demand is high for the morning and evening milkings while there’s little activity in the middle of the day—when solar systems generate the most energy.

Peer-to-peer trading could change those dynamics, because farmers could sell excess energy to other microgrid participants during the day, Orsini said.

Funding for Feasibility Study

The first step toward implementation will be a feasibility study, which will be carried out with the assistance of a A$370,000 ($279,000) grant from the Australian Renewable Energy Agency, announced April 27.

Network business AusNet will provide another A$100,000 ($75,000) because of the project’s potential to reduce network costs and help improve the reliability of its network as more renewable energy systems are integrated into the grid.

The Sustainable Melbourne Fund, which has helped arrange financing for the purchase of clean energy systems since 2002, will provide loans to farmers at no upfront cost so that they can buy equipment to participate. That could include equipment such as solar photovoltaics, storage batteries, and refrigeration systems fitted with smart technologies.

For households, a separate Victoria state government home retrofit initiative will subsidize their installation of the relevant technology.

The pilot microgrid could be up and running in 2019, enabling farmers and other participants to trade renewable energy until the cows come home.

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