How many use cases are there for Local Energy Markets?

By Scott Kessler

It’s exciting when you release a product and lots of different potential customers see lots of different ways to work with it.

That’s what happened when the LO3 Energy team gave our local energy marketplace (LEM) platform, Pando, it’s first major public sighting at European Utility Week in Paris earlier this month.

It was the first time Pando had hit the public forums and the response was, as we had expected, very positive – but what most stood out was the level of understanding people had for the potential of local energy management.

A large number of utilities and retailers we spoke to saw the potential without prompting, immediately identifying ways Pando could help them and their business right now.

During the conference we spoke to different companies about a wide variety of use cases and business models for LEMs, including:

Upgrading existing initiatives

One company has a number of ongoing smart city initiatives and is looking to integrate an LEM into this existing infrastructure. This would enable them to capitalize on previous investment by delivering new services and products and also gain increased visibility into building energy use.

Entering new markets

One company was looking to enter entirely new markets and regions with a splash. They felt that a LEM model could be a good way to differentiate their brand and make their mark in a crowded existing marketplace.

Increasing substation utilization

One company was looking at how they could capitalize on unused capacity by increasing utilization at a specific substation. The opportunity to use an LEM to integrate market pricing as a mechanism for incentivization could achieve this, and this is something that we are moving towards.

Integrating larger local producers

One company has been offering green products to customers for a while but not specifically from local generators. They are interested in how an LEM can add larger scale local generation onto their existing green portfolio and transparently define its supply and usage volumes.

Maintaining market position

Several companies are incumbents looking to stay ahead of the curve in their market. They felt using LEMs to develop self-aggregation communities has strong potential to unlock many new services to provide to existing customers in the future.

Evaluating new DERs

One company has received government funding to test out new models of DERs around local communities. We discussed with them how using a LEM could help them collect data on their usage that would be highly beneficial for evaluation purposes.

Improving customer engagement

One company felt that by creating a peer-to-community LEM they could improve on a current failing – a lack of customer engagement. They are keen to test how local energy is seen as a value proposition and establish it as a new way to acquire new customers.

And this is just scratching the surface of the potential benefits.

Overall, the event made it clear that many proactive utilities, particularly in Europe, are actively seeking the new opportunities and new business models that LEMs can offer.

And as more and more companies start to understand more about how LEMs are relevant to their business, new cases are being developed all the time.

A DEVELOPED MARKET

The other interesting take-out from the Paris event was the level of market development in Europe compared to the US.

There was a significant number of European utilities at the event, and it was clear that the rise of collective self-consumption communities and the amount of funding from Horizon 2020, the EU’s largest ever research and innovation project, has driven LEMs forward.

They know local energy markets are the future, and they don’t need to be sold on it.

Because of that, the general interest on implementing LEMs sooner rather than later is strong, and the level of maturity and understanding is much higher than we have seen so far in the US.

In Europe, as opposed to the US, there is a stronger separation between distribution utilities and retailers, due to the more advanced competitive markets, and that is something we expect to see rapidly evolving throughout the world.

Energy tech is developing rapidly, and this event is always a good indicator of the level of progress made in this space each year.

This year, we saw a wide range of exhibitors and speakers, and it is clear there is a large amount of innovation taking place right now, and an increasing number of innovators getting involved.

Now, with a commercial product on the market, we have some serious traction. We get the feeling 2020 is going to be a busy year. And that’s just the start…

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