Privacy Preserving Coordination Rails for Municipal Energy Communities

Transcript

Okay, hi. Hello everyone. My name is Denis Araujo. I'm here to talk about privacy preserving coordination rails for municipal energy communities. So just a little background about me. I'm the CTO of the Nova Blockchain Lab back in Portugal. I did my background is in computer science. I did I finished with a master thesis on Solidity smart contract security. I then worked five years as a smart contract developer and now I'm doing a PhD on peer-to-peer energy markets.

So I think everyone has this intuitive idea that agreed operator generates electricity which then flows into each one of our homes right? And if we have a solar panel in our home and we produce excess electricity, there's this misconception that that energy is going to go back to the grid operator, right? This is not true for two reasons. First of all, you lose energy by traveling long distances and the second one is that you need to spend the the energy the moment you generate it.

So what happens is the energy goes to your closest neighbor who's using that energy at that moment. However, the financial transactions of this energy still flow through centralized through the grid operator. And so we received the project, a European project where we wanted to decentralize the financial settlement of these energy transactions. This project is called Communitas and it's it's organized by so it's done by 18 different partners from eight different countries and the goal is to explore and empower small communities.

Um, with this, we implemented um a layer three on top of Arbitrum Sepolia to implement a market um that was able to settle these financial transactions for energy. We Most of the research we found uses actually permission transactions, and this is mostly due to the fact that from just a few years back, we actually achieved uh um some big um advance in scalability, and before that we could not get uh below one cent transactions, stable below one cent transactions. So this market would not be possible to run um in in the previous in the old infrastructure.

Um, right now at this moment, we have 48 households from uh Denmark, Spain, and Italy running um by an automated bot we operate, injecting real load consumption and generation of energy into this market. And it's been running for eight months, and we've so far uh settled 9.2 megawatts of energy. Um, for the market itself, we use a uniform uh price auction, which is a little bit different than the normal double auction that um it's more it's more famous. Uh, first of all, uh it's got one clearing price per hour, which matches the usual uh market of um energy, right? Cuz if you trade energy

within one hour, you usually pay the same price um by whatever energy you're trading. Uh, then also buyers don't need to guess the price. So it's one price for everyone trading within that hour. So there's no game theory behind uh what you want to bid because you can bid the maximum amount uh for the price. And um cuz you'll always pay the clearing price. There's also no front running on this market, and um it's much cheaper to execute on chain, and you can also execute You can sort it off chain and verify it on chain. So you also get another another layer of gas savings on top of that.

Um, we, when we implemented this project and this so far we've been talking about uh it's already implemented. Um, we assumed that pseudo random addresses were enough privacy for these pilots to run. However, with further research we've found a study that was able to link with just 14 days of meter data, uh 83% of um the house meters to their house addresses. Um, and also there's a couple of other studies that shows that we just um amount of energy you're using. You can even you can see if your house is being occupied, if you're home or not, if you have your TV on and even the TV channel

you're watching just from the amount of energy you're consuming. Um, so basically our proposed my proposal is to create two layers of privacy on top of our current running market. Uh the first one we call it the layer the identity and linkability where we will um provide SD JWT credential for every participant. This is also incentivized because the European Union is set to have this wallet as a standard for every country from 2013 on, 2030 on.

Um, so every citizen will already have a wallet compatible with the standard. Uh we will emit this this credential to everyone. Uh um every citizen will then add a semaphore V4 commitment to the Merkle tree in our smart contract which will allow every hour to create a ZK proof that allows him to bid um without tracing his previous bids or identity. Uh then also the settlement will be done through fresh stealth addresses because hiding the person who's buying the energy is not enough. We also need to hide the person who's generating and selling the energy.

Um, on the other side so far uh, the selling of energy is done by, so the DSO reports to an operator that we run. And the our operator simply injects this information on chain. Um, there's no way of actually verifying that the DSO actually produced these uh, readings or the smart meters. It's our operator's own word. And so we also want to do use uh, ZKTLS to prove that it was in fact the DSO that and that provided the the readings of the meters.

Uh, but this is only for the case of Denmark and Spain. Uh, for the case of Italy, they the the DSO already signs at the source, so we just need to do the DAS attestation on the smart contract to accept that reading. Um, this is basically um, the whole thing that I plan to build on top of the market we have so far. So this is basically what what I just explained. And uh, I just want to finish with the fact that this is not just um, a a a blueprint for energy markets, but a print for um, for a lot of municipal services that

have the same shape and structure. And we're just using real load data from the energy markets on these pilots to prove that this works, to prove that it's financially efficient. Um, and just provide a blueprint for many other municipal services that could benefit from this. That's it. Thank you. >> Thank you. All right. We've got about 1 minute for questions. Does anybody have a question that they would like to ask? Quickly raise your hand. I'll maybe have time for one or two quick questions. You know, those days we used to trade gold and silver. Now we trade energy and crypto and all that. Who knows what we're going to trade in the future?

Maybe genetic data, DNA. Yeah, so it's exciting what we can do in the world. Yes, you have a question? >> Uh my question is basically uh most of the time like grids or things like that, it's like some kind of uh they have like old school business practices and they are a bit reluctant to changes and and they take a lot of time to adapt to new technologies. So uh did you face any challenge or how does it work like bringing blockchain which is new into like old grid systems like that?

>> Um okay, so it's it it this was actually sponsored by a grid operator, this project, but it was still very hard to get them to because they they still need to adjust the bills for the pilots after we settle on our market. They still have to do that. So yeah, I think >> All right. That's all the time we have. Let's give our speaker another big big