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RESEARCH PRODUCT

Transparency in transactive energy at distribution level

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A recent report from the German Energy Agency analyzes the possible introduction of the blockchain technology in energy transactions in power distribution. The issue deserves attention since the extensive digitalization of business models puts new challenges to utilities in the power sector. The German decision makers in the energy field claim that blockchain appears as a close perspective and, at the same time, the Gartner hypecycle puts this technology at the peak of inflated expectations in 2016. Diffuse perception however provides hints for further investigation on the topic. This paper provides insight into the problem of peer-to-peer energy exchange from a technical perspective, providing evidence about an impossible guarantee for the so-called ‘transparency’ in energy transactions. A generic customer that buys energy from his neighbor that produces clean energy cannot have any guarantee about the origin of the energy he consumes, since it depends from the voltage distribution across the network. This assumption is even more realistic when different generation sources are distributed in the power distribution network, providing also voltage regulation services. It will be proved through some easy examples that, differently from other digital business models, such as Airbnb and Uber, the physical asset here plays a crucial role that cannot so easily be neglected.