UrbanChain describes itself as a safe and transparent energy market for renewables. Guy Clapperton talks to the founder and CEO Dr. Somayeh Taheri to find out how it works.
It’s almost trite to introduce an article with a reference to the increasing cost of electricity. It’s real, it’s costing people their livelihoods and there seems to be no alternative but to try to find ways of paying the increased costs. In cash-strapped areas like the public or third sector this is a harsh but inevitable reality.
Except when there is an alternative.
Individuals can install solar photovoltaic (PV) panels on their roofs if they are home owners, farmers with spare land can install wind turbines and in each case they can sell the power back to the grid. The issue is that they’re still tied to the big suppliers in terms of pricing.
Again, except where there is an alternative. This is where UrbanChain steps forward, effectively a brokerage/platform between customers and aggregated suppliers of sustainable power outside the traditional sources.
CEO and founder Dr. Somayeh Taheri explained the concept: “We believe energy is not a luxury product, it’s necessary and should be affordable to all.” No disagreement is possible there of course, so how does it work? “We are creating a system that streamlines selling and buying power between the source and the end user.”
Some people suggest this all sounds a bit too good to be true but Dr. Taheri points to documented evidence that customers are seeing a 50% reduction in their energy costs. “And generators are seeing a minimum 25% uplift on their invoices.”
She started the company – from an idea in 2016 to beginning to trade as an exchange in 2022 – after noticing intermittency in renewable energy and understanding that it was perceived as a risk, therefore edged onto the margins.
The pattern of sales when power was intermittent – say a solar company or individual with the right equipment was selling power but inevitably could only generate when the sun was shining – and the option was therefore to sell this power to the wholesalers when it was available. This, believes Dr. Taheri, ended up allowing the giant wholesalers to become a monopoly by default, meaning gas companies ended up setting the price for everybody.
“We decouple renewables from the gas market,” she explains. “We create an alternative market. We understand the consumption shape of the end user, say an office block working 9-5, peak consumption hours 11-2, and we cherrypick from different generation types and sizes to sell the power to the customer.”
Sustainable patterns of power
It’s this cherrypicked, aggregated pattern that makes the system work continuously rather than only when the sun shines or the wind blows. A business or local authority might be powering itself inexpensively from an aggregator and at one point their source might be 10% solar, 10% wind, 60% biomass and 20% from some other source; when the sun stops shining the proportion sourced from wind might go up or perhaps biomass.
The important elements are that it is sustainable and the end user doesn’t have any service interruption. “If you think about having a series of small batteries, this is like having about 20 of them to smooth the shape of your supply; if you had two big batteries it would be different,” says Dr. Taheri.
Crucially, without going to the gas market to transact the sale and purchase of the power, there is no barrier between the seller and the buyer so they set the cost through an open auction. “They have an eye on the gas market but the aim is to get a stable market with a good price.” This takes account of the customer’s ability to pay rather than just the wholesale price. UrbanChain also works by extending contracts so that customers and sellers can plan for longer and pay a more even cost than they otherwise might.
For the moment the idea applies only to fairly substantial groups for the economies to work. “At the moment we’d need about 200-250 households to create a one gigawatt volume. A household is very small but has unpredictable power consumption so individually they can cause imbalances in demand.”
This is changing as the excess power available increases; in one instance a local authority in the West Midlands trialling ten households to see how the scheme might work. For companies, housing associations and council housing stock, it’s a lot clearer cut because the numbers add up earlier.
International connections
Also it doesn’t have to be a single-country deal. Once a company has paid for interconnection costs there is no reason a business in, say, Spain, shouldn’t sell to the UK, making it even more scalable and sustainable. This is where the UrbanChain approach should do well; although it is covered by multiple licenses as if it were a supplier to make its trade legal and verifiable, it’s actually the platform rather than the seller or buyer so it can match sellers and buyers according to their needs.
The long term success of the idea will depend on the market continuing to move in the direction it appears to have taken already. “We are all turning into ‘prosumers’ now,” says Dr. Taheri. “And we’re going to see more of that. Households with solar PV, crowdfunding, farms with wind.”
So far that’s held good and there’s no reason to suspect it will stop.
For more information visit: urbanchain.co.uk
