Have you seen the comic above as well?

We all talk about electric cars as the way to combat climate change, but if they run on electricity created from fossil fuels, will they help? How can we make sure only to recharge them with renewable energy?

Can we transform renewable electricity to other forms of energy (also known as Power-To-X), in order to store and use the green energy, for instance, as fuel in the heavy transport sector?

In this article you will find a description of a system, that can match the production of renewable electricity with consumption on an hourly basis. For instance, you can choose what kind of electricity (renewable or not) you are charging your electric car with.

Project Origin aims to create a prototype of a public permissioned distributed ledger, where every individual can validate the Guarantee of Origin for their electricity transparently on the internet.

In 2020 we will run a 6-month trial period in Denmark to test and provide insight into the technology. Any citizen or organization in Denmark will be able to participate in this trial period.

The ledger in this project will track the electricity on an hourly level, substantially increasing the granularity available, enabling future tracking across different energy carriers from Electricity to Hydrogen to Biomethane, and heat and cooling, across various consumer sectors.

To better understand Project Origin, let’s get a basic understanding of the electricity grid.

Renewable energy

Denmark recently adopted a climate law to cut emissions by 70% by 2030, so there is a clear ambition to reduce carbon emissions. According to Bloomberg New Energy Outlook 2019, we have reached the tipping-point where the levelized costs of new renewable sources are cheaper than new fossil fuel based sources. By 2030, new renewable sources are expected to be cheaper than existing fossil fueled power plants. This is great news, as meeting the 2030 climate ambition requires a marked upscale in renewable energy. There is, however, a new issue with these renewable energy sources.

Electricity fluctuations

Renewable energy sources harness the power from our environment, but this has a downside. We no longer choose when to produce energy, as we can in traditional fossil fueled facilities. Now we must use the energy available at the time of production, which depends more on the weather forecast than anything else. This creates several new issues that must be solved.

To better understand these issues, let’s look at the graph below. The graph shows consumption and renewable production of electricity from September 14th to September 23rd in the Danish electricity grid. The red area is the total hourly consumption of electricity.

Danes are clearly creatures of habit, using almost the same amount of electricity every day. During the weekend the curve is similar, but a bit lower. There is a sizeable base-load of 3.000 MWh.

The yellow spikes are photovoltaic/solar energy production, and the blue and green spikes are our offshore and onshore wind-turbine production. These three graphs are stacked, so it shows the total renewable production. There is no apparent correlation between the renewable production and our consumption.

On September 15th, from 2 till 3 o’clock in the morning, Denmark set a national record of producing 156% of the total consumption from renewable sources. On September 22nd at midnight, only 3,7% of the consumption was created from renewable sources, highlighting the issues of how much production can fluctuate.

During some peaks of renewable production, wind-turbines may be turned off. This is called wind-curtailment. Wind-curtailment happens when Denmark is not able to use or export all the electricity. At the same time, fossil fueled plants are, however, still running, as they have a longer ramp-up and -down time.

Fluctuations in the renewable production is one of the big issues with renewable energy. To get to a point where all energy comes from renewable sources, technologies like interconnectors, demand-response, storage, and transformation all have a role to play.

Interconnectors

Interconnectors are power lines connected to other countries. They enable electricity trade. This is important, because with a larger geographical area available, fluctuation becomes less and the production overall more stable. In other words, as the energy productions are correlated with wind systems, it becomes more important to expand the grid across several wind systems.

Demand-response

In respect to demand-response, the idea for consumers is to throttle their use of electricity, depending on the availability, and, more importantly, what consumption can be turned off, to accommodate production fluctuation. For instance, if your local district heating is based on electric heat-pumps, they could turn off for some time without affecting the end users. Alternatively, all freezers in an area could lower their temperatures before an expected peak in consumption, so that they could turn off during the peak. This, and many more demand-response measures, could be important ways to lower demand in peak periods, which is equivalent of increasing production in relation to balancing the electricity grid.

The cost of urbanization, and built-outs of distribution grids can in theory also be lowered, as the peak hours are normally a dimensioning criteria, pointing to a socio-economic benefit peak-shaving, and shifting some consumption to be a function of both green production and grid capacity hours.

A relevant question is: should demand-response only be optimized according to price, or should it also be dependent on the amount of available renewable electricity?

Storage and transformation

Energy Storage and transformation are two sides of the same coin. When electricity is stored in batteries, the energy is stored in chemical processes. In a lithium-ion battery, which most phones are equipped with, ions move around to store the energy. Energy can be stored in many ways. In Norway, for instance, it is common practice to pump water to a reservoir, and then later use it to produce electricity. Another possibility could be to create hydrogen or other Power-to-X products.

Ammonia could be created using Power-to-X, and is being explored as a possible marine fuel. Jet-fuel can also be synthetized from renewable electricity and, as a by-product, a sizeable amount of e-diesel is created, which can be used in agriculture and heavy machinery.

But there are some drawbacks. Batteries are very efficient, but expensive, have small energetic content, and require a lot of space and natural resources.

Reservoirs can be considered a sort of “battery”. But these reservoirs require countries to have access to natural locations fit for this purpose.

When the renewable electricity production peaks, we currently shut down wind turbines to cut off excess supply (also known as wind curtailment) Instead of letting this energy go to waste, we could use Power-to-X facilities to transform the electricity into something else. Finally, Power-to-X is currently expensive and has inherent losses in the conversion processes. The conversion efficiency becomes less of a factor because the overall integrated system efficiency increases.

Again, the question arises: should we optimize the grid respective to price only or from a green perspective? Do we want to allow fossil fuels to be burned to create electro-fuels for cars?

How can we ensure only renewable energy is stored?

How can we make sure an electric vehicle runs on renewable energy?

How can we prove that electro-fuels are created from renewable energy?

Guarantees of Origin

The EU has a system of Guarantees of Origin (GO) for electricity, which is described in the EU directive for renewable energy (RED). This is a short overview of how it works:

Every month, the owner of a facility gets issued a number of certificates for the renewable electricity they have generated within the previous month. The size of each certificate is 1 MWh. If there is a remainder for a month, it is carried over to the next month, and can be a part of next month’s certificates.

These certificates are then bought by Electricity supplier companies wanting to prove that they sold a share of renewable electricity production. On a yearly basis, the company creates a statement that proves they have cancelled/retired a quantity of GOs equal to their total usage of electricity for that year.

Correlation in wrist-watch time by the hour, to customers market settlement, is not part of the current scheme, only that it is aggregated within the same year. Any certificate can be moved across domains in all of Europe, due to market coupling, as if Europe was one large copper-plate.

Ledger of Origins

Why

Project Origin arose from considering a solution on how to ensure that only electricity from renewable sources should be used to create electro-fuels, which are renewable liquid and gaseous fuels for the transport sector.

The EU RED II (Renewable Energy Directive 2) in article 27 only specifies "Electricity that has been taken from the grid may be counted as fully renewable, provided that it is produced exclusively from renewable sources and the renewable properties and other appropriate criteria have been demonstrated" There is no clear definition on what type of simultaneity is required. Must the electricity be produced within the same year, month or hour?

In Denmark we have the DataHub which currently holds all data from the electricity grid. The Danish transmission system operator Energinet, who owns and operates the DataHub, is also the current issuing body of GOs in Denmark. The DataHub puts Denmark at an advantage when creating this project since gathering validated measurements is often an issue.

The goal of Project Origin is to provide a way for a final customer to prove the origin of their electricity consumption on an hourly basis. Project Origin is a system that can stand alone or work together with the existing European platforms, providing a more granular resolution for the GOs in Denmark, termed Granular Guaranties of Origin GGO.

How

Project Origin is based on a blockchain-like solution using a permissioned distributed ledger. The permissioned part basically means that someone is in control of the ledger; this should be the issuing bodies of GGOs for the participating countries.

A distributed ledger could be thought of as books, we each have our own copy of the book and all transactions are written into all the copies of the book. As every book becomes its own copy, it is impossible to change something afterwards without anyone noticing.

Measurements from all electricity meters will be publicly published in an anonymous form to the ledger. These public measurements are used as the basis for all GGOs created on the ledger. The measurements will be in market resolution, which currently is every hour – but the technology supports higher resolution as well. The GGOs will be based on these measurements, and have the same resolution. The GGOs will be issued by the issuing bodies (in Denmark it is the DataHub) who use authoritative master data from energy market systems to link grid node, coordinates, etc. to the GGO.

Since all meter data is on the ledger, these GGOs can be matched and exhausted on each point of usage. The ledger has proof of where a GGO originated, how it was traded, and where it was exhausted.

When an electricity producer opts-in on Project Origin, they also accept that they will no longer be able to get certificates on the existing European GO platforms. Since Energinet is the issuing body on both platforms, Energinet would be able to ensure that double-counting doesn’t happen. It might be possibly in the future to issue a GO based on a series of GGO’s if they owner wishes, since the necessary documentation is available, but going from GO to GGO will not, due to the lack of documentation, be possible.

GGOs can be issued for all electricity types, so buyers will be able to choose what GGOs they want to buy: solar, wind, nuclear, coal etc. Project Origin can also be extended to supply GGOs for other things in the future, like gas or heat.

What

We can't prove the actual flow of electrons on the grid, but Project Origin can provide a more granular way to guarantee the origin.

Project Origin is a platform and framework, which will facilitate GGOs and how users can trade and use them. The platform will be open for external actors for service integration. A service could, for instance, be an exchange where companies and individuals can sell and buy GGOs or a service to integrate GGO’s with www.EFET.org’s power purchase agreements (PPA’s). It could also be a community sharing all GGOs internally before selling or buying GGOs externally. All of this will be up to the market participators, and how they choose to adopt, and use the platform.

Since the origin can now be guaranteed with GGO’s, electro-fuels from renewable energy can be created with proven documentation. This can currently only be done using renewable sources connected directly to the facility, or using the energy mix, lowering profitability of the Power-to-X facilities.

If GGOs for the electro-fuels are created on a similar ledger, the system will be able to reference the electricity GGOs. This could enable an airline flying on electro-fuels to prove the origin of renewable fuel to their customers, opening new possibilities for the aviation industry.

Another issue is pumped-hydro, the use of water reservoirs to store renewable energy, which is prohibited in the current text in RED II:

"Electricity produced in pumped storage units from water that has previously been pumped uphill should not be considered to be renewable electricity."

The logic behind this constraint, is that the current system cannot guarantee the origin of the electricity used to pump the water uphill. Project Origin on the contrary, would enable such guarantees with the ledger, which could greatly enhance nations’ ability to store renewable energy. This will also benefit Denmark, since renewable energy could be sent from Denmark to Norway via interconnectors when there is a large supply, to pump water into reservoirs, which could in turn be used to generate renewable energy, that could be sent back to Denmark when the supply here is low.

Electricity stored in batteries will also be able to guarantee their origin, and can also be counted as being renewable electricity when released back into the grid, something we currently can't guarantee.

Similar, an electric car being charged will be able to guarantee the origin of the electricity used to charge them by the hour and, if the buyer wishes, be declared fully renewable.

The thought is, that this creates a larger demand for renewable electricity, both in terms of production and storage, which in turn will create a larger market. This could result in higher prices for renewable energy or even new energy products. The higher prices will increase the profitability of renewable energy, which will again lead to more investments in production devices and fulfill the European goal of an independent energy supply.

The Vision

The vision of Project Origin is to enable the final consumer to choose to buy green energy based on GGOs for all the electricity they use. This could result in more expensive renewable electricity when the supply is low, which could initiate a market driven response to high prices and thus balance the grid. At the same time increasing the actual share of renewable electricty in the grid by the hour. Enabling anyone to choose the GGOs they want to use.

Another benefit is, that since all the data, which the system is based on, is public knowledge on the ledger itself, anyone will be able to conduct an audit on the ledger and see how the GGOs are used. This would make the entire system robust to fraud, misconduct and transparent for all participating parties.

The EU commission with RED II communicates a wish for a higher a granularity on GOs. This project is a technical proof-of-concept showing how this could be done, with respects to RED II, existing regulations and European electricity market design.

Be a part of it

In 2020 we will run a 6-month trial period in Denmark to test and provide insight into the technology. Any citizen or organization in Denmark will be able to participate in this trial period.

The goal for Project Origin is to create a common framework and platform for the entire EU, it’s associated countries as well as for other countries. Project Origin is an open source project where everyone is welcome to participate, or use it for their own purposes.

If You are interested, you may find an extended technical explanation on GitHub or follow us on the hashtag #LedgerOfOrigin.

Should you have good ideas, perspectives or perhaps questions, you are welcome to contact me: Martin Schmidt on LinkedIn or send an e-mail to mcs@energinet.dk.