Shell and Sumitomo invest in blockchain-based community energy platform
Shell Ventures and Sumitomo Corporation Group are making major investments in LO3 Energy to support the global development of its blockchain-based community energy networks. Shell Ventures is the corporate venture capital arm of Royal Dutch Shell plc.
LO3 Energy, based in Brooklyn, New York, is building a blockchain-based platform to enable decentralized business models and innovative technologies related to energy, cleantech and utility systems. The U.S. company, which was the first to enable peer-to-peer energy sharing, has developed a transactive energy platform to overcome the challenge of integrating distributed energy resources (DERs) into supply networks.
The system promises to democratize the energy industry, allowing people to both consume and produce electricity at their home and business. LO3 already has investments from Braemar Energy Ventures, Centrica, and Siemens.
“The investment from Shell and Sumitomo represents a landmark moment for LO3 Energy as we begin to scale our blockchain-based energy networks around the world,” said LO3 Energy CEO Lawrence Orsini.
“Energy is going through a revolution with renewable distributed energy resources increasingly picking up market share – but to integrate them efficiently we need to re-invent our energy networks.
“These investments will help us accelerate the roll-out of less carbon-intensive microgrids, which help all stakeholders benefit through distributed, decentralized and decarbonized local energy transactions and demand response energy management on a building-by-building level.”
Kirk Coburn, investment director of Shell Ventures said: “As we move into a less carbonized future, Shell aims to invest in innovative companies that will help enable the energy transition. LO3 Energy fits right in that space.”
The way energy is produced and consumed is changing from the traditional model of large-scale power stations with long-distance transmission to one where more is produced at the ‘grid edge’ by distributed resources (DERs).
There is now an opportunity to develop a circular economy around energy, connecting these resources together in local energy markets to produce both financial and environmental benefits for all stakeholders involved.
LO3 Energy’s transactive energy platform was pioneered with the Brooklyn Microgrid and the company now runs projects with partners around the world, in the UK, Colombia, Japan, Australia, and the U.S.A.
Users set preferences on a dedicated mobile app, choosing how and when to use the local energy resources available to them and allowing them to select the specific sources they purchase it from.
The actual electrons flow through the normal grid transmission network, but the private, permissioned blockchain manages the definition of the energy source and the contract agreement to pay for it.
This enables a wide range of business use cases, including peer-to-peer energy trading, energy hedging for businesses, virtual power plants, dynamic electric vehicle charging and demand response.
Japanese-based Sumitomo Corporation, a Fortune Global 500 company, is one of the world’s top scale sōgō shōsha companies with a history of driving innovation through strategic investments in breakthrough research and technologies.
“Under drastic change and innovation in the power sector, especially rapid penetration of decentralized renewable energy, we have the intention to expand our business in the new field created by LO3 Energy,” said Norihiko Nonaka, Sumitomo’s executive officer.
“We will work together and support LO3 Energy’s further growth, which can realize a clean, environmentally sound community.”
Orsini added: “Transactive energy is the key to unlocking the full potential of a cleaner, more distributed and more flexible grid. It also gives more choices to our consumers, allowing them to take a more active role in its energy choices.”
“LO3 has developed and deployed its blockchain-based transactive energy platform across multiple markets, and we are delighted to partner with our new investors to further scale this platform globally.