One of the most interesting blockchain related but not blockchain based projects in energy generation and distribution is FSIGHT. It is a software platform for smart management of distributed energy grids, that applies AI to energy distribution. Among its founders is Christian Kern, formerly Federal Chancellor of Austria and Head of the largest Austrian electric company, he is now FSIGHT Chairman of the Board. Digital Asset Live Editor-in-Chief talked to him about opportunities and challenges for distributed ledger technologies in the global energy sector.
Q1: I must admit it is the first time I am interviewing such a high ranking government official who left the corridors of power to join an AI project. What has attracted you in FSIGHT in particular, and AI in general?
A1: Climate Change is a forceful driver which is transforming all segments of business – energy, mobility, housing, retail and a lot more. We can remedy a lot of the negative consequences if we use Artifical Intelligence to better manage our natural resources. The current paradigm shift in the energy market is offering exciting opportunities for new technology players. We see a radical drop of renewable generation costs and battery prices, increased electric vehicle adoption and increased market price volatility. FSIGHT is providing Artificial Intelligence based innovative technologies for the renewable and distributed energy markets. Blockchain could be another facilitator for the “Energiewende”.
Q2: What can you tell about the target audience of FSIGHT, and what new opportunities will they get here? Please compare with the current practice.
A2: FSIGHT provides an artificial intelligence solution for the new age of energy, with growing number of micro grids, large volumes of renewables and peer-to-peer energy communities. Energy AI is the core platform FSIGHT is building, which is a network of autonomous agents that optimize energy flow behind & in front of the meter in distributed grids.
Our target audience includes incumbent energy players like utilities and grid operators and newly emerging participants such as prosumers and energy communities. The software can profile and optimize single households or industrial sites, connect them to local energy communities with peer-to-peer trading, or act as an aggregator into a virtual power plant.
FSIGHT can demonstrate energy cost savings of 25% by applying intelligent algorithms deciding when to best consume, store or trade electricity. The software significantly improves the economics of PV and battery installations by optimizing self-consumption and on the other hand taking advantage of high price fluctuations in the markets by trading electricity with peers or in the spot market.
Q3: FSIGHT is kibutz bazed. How exactly does it function there?
A3: The Maale Gilboa Kibbutz is our real-life energy community project in Israel where we implement our Energy AI technology and test new business cases. With over 250 residential and commercial customers, large PV and wind installations and flexibility through batteries and smart home appliances we can show already today how the future of distributed energy markets will look like in the near future.
We are constantly implementing and testing new business cases and hardware installations at Maale Gilboa with reputable international partners like Uniper, Verbund, Andritz Hydro and Dalia, just to name a few. We offer our partners a “sandbox” for energy innovation, which many energy companies are eagerly looking for but are hardly finding.
Q4: Besides your experience in the government, you served as a director of Verbund, the largest electric company in Austria. How do you envision DLTs in production and distribution of electric power?
A4: Intransparency regarding the provenance of electricity sources makes it difficult for the consumer to make an educated consumption choice, hence often hinders companies adding value to electricity provided by low carbon-intense energy technologies. Meaning, DLTs could help to better market a homogenous product such as electricity. The same is true for Renewable Energy Certificates (RECs) and other regulatory frameworks such as Emission Trading Systems (ETSs) or the financing of renewable energy projects.
Q5: The global energy industry adopts blockchain on a massive scale now. Quite a few blockchain based projects engage in energy, both in distribution, such as Powerledger, and in tokenization, eg Ziyen, as well as consortia, eg VAKT. How do you see the FSIGHT place in the global ecosystem of blockchain in energy?
A5: It is true that there has been a lot of buzz for blockchain in energy, which is one of the reasons why we are closely following the developments. We have run several POCs integrating blockchain technology but we so far decided to run our core services without blockchain technology. Meaning, the solutions that we are already providing are working fine without DLT. We have the in-house competences and we will not slip the chance to utilize DLT, as soon as we see clear added value to our products & services. If I had to choose between one of the two sides you outlined, I would tend for the distribution.
Q6: What impedes the adoption of blockchain by the energy companies?
A6: Energy companies are confronted with a complex transitional phase which they have never seen before.
These companies are typically not known for their agility or progressive actions as they are carrying a lot of responsibility and are bound by their legacy systems.
First and foremost, new solutions should be supportive in handling the growing level of complexity and not making it worse.
So far, DLTs in the energy industry are mainly applied for use cases that are just emerging, meaning a lot of trial and error some companies can not afford.
Overall, the adoption of blockchain by energy companies may be impeded by regulatory hurdles, industry infancy and prevailing legacy systems.
Q7: What would be your advice to an energy company who intends to employ blockchain in their operations?
Think twice. For some use cases it may make sense, for some it does not. Start looking at your current challenges and thoroughly evaluate if DLTs are helping you to overcome them and not the other way around.
Q8: Let’s get back to the time when you were a Chancellor of Austria. With the knowledge in DLTs, what would you recommend to adopt to national governments in Europe?
A8: This seems to be a rather sensible issue still. DLTs with regard to Blockchain and in particular with cryptocurrencies caused a lot of confusion due to misinterpretation and one-sided media coverage.
It is true that there are justified concerns when for example governments try to utilize cryptocurrencies (Venezuelan Petro, Estonian Estcoin etc.). Also, they have – as Christine Lagarde (ECB) has put it recently – the potential to shake the system.
However, Blockchain technology also brings along numerous positive aspects from a public perspective such as improved counterfeit protection.
Technological innovation is important and necessary, but it solely enhanced the toolset we already possess, more important is the how we wield them.
The key challenge is to develop a better understanding of the potential of the technology beyond cryptocurrencies.
In order to do so, I recommend bundling existing research competences to better understand DLTs and to engage with industry associations to study and learn about the potentials and threats of the technology. Government policies have to be based on a detailed analysis and not on mere assumptions.