The problem of smart energy is distributed intermittent generation laid across unmanageable power use and a fixed distribution grid. Central operators will never be able to keep pace with controlling new technologies that generate, store, and use power. Privacy demands that central operators not track and predict every activity in our homes and buildings. In economic terms, this is a knowledge problem
Markets are a proven means to balance supply and demand without central control. In 1992, Huberman & Clearwater demonstrated that a market in data center cooling better optimized allocation and reduced energy use than the best control strategies. The technique they used in data center at XEROX PARC was to add an agent to each server and have each agent bid for cooling.
The best place to manage the changing technology mix for power and changing demands on systems is locally, in a microgrid. Within a microgrid, each system can bid to buy or sell power over time, aligning demand with supply, smoothing load, and managing storage—each microgrid can be operated by a micromarket. Each system and application can be represented by a market agent. Each market agent represents the needs of its system and the preferences of tis owner. Smart energy is an emergent behavior of the IoT market.
Every microgrid can participate as a node in a containing grid. Each microgrid shares only its aggregate market position with the containing grid. Microgrids gain resilience through buying and selling power to and from their peers. This model is fractal, as the term microgrid can refer to the city, the neighborhood, the street, the building, or even to systems within a building.
Microgrid markets are markets based on time of delivery. Power is a resource whose value is determined by time of delivery. The information models for resource markets are already defined in OASIS. WS-Calendar defines a semantic model for M2M schedule negotiation services. EMIX (Energy Market Information Exchange) defines semantics for describing time-based products. (Energy Interoperation) defines eight services, each with just a few methods—the building blocks to construct markets in transactive energy.
Building markets is not enough without a means to create identities, to register contracts, and to settle transactions. The largest power markets, dealing with long-running purchases of centrally managed power, use traditional banking. Several projects are using expensive centrally authorized blockchain methods to operate microgrid-to-microgrid exchanges (see Brooklyn Microgrid Project, or the company Grid Singularity)
But to actually operate a microgrid, to balance power in real time, requires thousands of small transactions. To operate off-grid, or after grid failure, requires cryptocurrency that does not rely on permission from a server in the cloud. It must be local, and permissionless, and free. At the edges, transactive energy requires technology like the tangle-based IoTa. Individual transactions will be for a half cent or less. Systems must be able to establish identity and record contracts.
The Energy Mashup Lab is an open source project to create the software infrastructure for smart energy. The first step is to complete definition of the Common Transactive Services of smart energy. We are updating reference implementations of software to wrap a physical system and abstract its operation into power services. System developers will then be able to choose from the transactive agent personalities to match how their system acquires or disposes of power. All software will be available for download under an Apache 2.0 License.
Working, interoperable sets of code will be periodically donated to the various IoT framework consortia. For example, the AllSeen Alliance will want to modify code to support its own message formats and security profiles. Specific implementations will include ledger integration, i.e., IoTa or other cryptocurrency. Eventually, working profiles will move to microcode, and from microcode to ASICs. A system or application that supports a given framework and ledger will be able to discover the local micromarket, and self-integrate into the local microgrid.