“As the economy decarbonises and coal generation continues to be retired, wind and solar will increasingly enter the market – but their intermittent generation has created a need for new ways to store and manage energy,” he 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.”

The study is yet to be done, but initial estimates suggest that each dairy farm could, on average, support around 80kW of solar an 25kWh of battery storage, making a 16MW micro-grid from the dairy farms alone – one of Australia’s biggest.

Households are also expected to have solar and storage, as well as smart devices to help manage their usage, and an “internet of things” based marketplace.

The 200 or so dairy farms will be able participate at no upfront cost through loans provided by the Sustainable Melbourne Fund, and repaid through council rates. Other partners include local network operator Ausnet, Dairy Australia and Siemens.

The use of peer-to-peer trading in a micro-grid is a new but welcome development in Australia, where restrictions have limited the ability of consumers to sell excess output from the rooftop solar, or other behind the meter installations, to neighbours.

It normally has to be sold back to the retailer, who then on-sells it to other users at a significantly higher price. However, the use of blockchain technology enables clear visibility over the details of such transactions, and big utilities now understand that virtual micro-grids are an inevitability.

ARENA CEO Ivor Frischknecht said the feasibility study would be the first trial of a blockchain-based virtual microgrid in Australia.