Blockchain technology for Microgrids

Blockchain technology

At its core, blockchain technology is a way to transfer any kind of data or information in a fast, tracked, and secure way without the need for an intermediary institution. Initially developed to allow peers to directly exchange digital currency faster and at lower cost, blockchain is now yielding a variety of promising new solutions beyond financial services.

The blockchain technology has attracted public interest as it provides an effective instrument to satisfy the needs of people to cooperate horizontally with each other in economic and social spheres like energy microgrids.

Blockchain technology is an innovative method of storing and validating data that permits direct transactions between energy producers and consumers.

Transactions are trackable and tamper-proof on distributed systems without the need for centralized monitoring. Thanks to a cryptographic process and distributed storage, the possibility of manipulation is virtually eliminated. In addition, authentication processes guarantee the confidentiality of user data.

As an example, the cryptocurrency Bitcoin uses the blockchain process in the financial world.

Virtual cryptocurrencies are currently enabling successful peer-to-peer interaction of large quantity of people without any mediators or coordination and hierarchy inside the network.

Blockchain advantages

These decentralized peer-to-peer structures can be approached as a new paradigm that has potential to change traditional forms of governance and management.

  • Program algorithms operating in such peer-to-peer networks are able to perform the role of executive management
  • The blockchain itself provides a secure and reliable instrument for recording transactions in a distributed public network and creating variable distributed applications to solve certain tasks of interaction within such networks


Siemens recognized the advantages in the blockchain technology. Since November 2016, the multi national started collaborating with the New York startup LO3 Energy in the field of innovative microgrids using blockchain.

The goal of the collaboration is to jointly develop microgrids that enable local energy trading based on a blockchain technology platform. Siemens is involving its next47 unit, which was established in October 2016 as part of an ecosystem for partnerships with startups to take a leading role in the evolving decentralized energy system market.

LO3 Energy

As a startup, LO3 Energy is currently supported by Siemens Digital Grid and next47, in developing a solution for a blockchain-based microgrid in the New York borough of Brooklyn – the first of its kind in the world and a starting point for developing other joint microgrid projects in US and other countries.

We are convinced that our microgrid control and automation solutions, in combination with the blockchain technology of our partner LO3 Energy, will provide additional value for our customers whether on the utilities side or on the prosumer side,” said Ralf Christian, CEO of Siemens’ Energy Management Division.

In the world of finance, blockchain technology is rapidly advancing across many sectors, but in the energy market, things are comparatively different. With the microgrid solution LO3 Energy will demonstrate what blockchain can do in the trans active energy world.

Blockchain technology adoption

blockchain technology

The combination of a microgrid control solution and blockchain technology will make it possible for a provider of photovoltaic systems on the roofs of buildings in Brooklyn to feed its excess electricity back into the existing local grid and receive payments from the purchasers

Flex Microgrids

To increase the efficiency of the overall systems, the platform not only manages generated and stored energy, but also handles the consumers’ flexibility options.

In addition, the combination of TransActive Grid technology from LO3 Energy and microgrid control solutions from Siemens will simplify the temporary standalone operation of heterogeneous microgrids – for example, following a natural disaster – and optimize the use of existing resources within the grid infrastructure.

New Energy Strategy New York

The Brooklyn projectsupports New York State’s new energy strategy, “Reforming the Energy Vision” (REV). With the help of this strategy, the state’s power supply industry is to be reorganized to increase grid efficiency, minimize the power supply system’s susceptibility to environmental disasters, and improve this system’s carbon footprint.

Based on experience with the pilot project in Brooklyn, Siemens and LO3 Energy intend to implement additional blockchain-based microgrid and Smart City projects to test out various other business models and gain insights about the replicability of solutions on other regions of the world.


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