4. Development of the Business Model

4.1 Value Proposition and Business Model Canvas

The business model canvas describes the business model proposition and key activities of the Mircrogrid. This business model is focused on P2P Contracting between private consumers and EMS operators, which can be seen as the measurement site operator (MSB) in the energy economy. In the framework given for the hackathon, the EMS operator uses the Matlab model to compute the optimal operation plan. By using smart contracts, the customer has a flexible electricity rate which enables him to profit from low prices. In the target scenario, the EMS operator would compile an individual load schedule, which would not only be based on standardized load profiles but on the individual consumption data of each customer as well. This data would be generated through Smart Meter (iMsys), which are aimed to be placed in the marked over the next few years.

To build up the business model, a value proposition canvas was conducted at first. The value proposition canvas aims to outline the customer benefit, which would be generated by the business model respectively the needs that would be pleased. Basically the possible success of the business model is based on anreasonable Value Proposition Canvas. Therefore it is important, that the Gain Creators and Pain Relievers are based on existing Gains and Pains and are not made-up of nothing. The Value Proposition Canvas is depicted below.

Step 1: Value Proposition Canvas
Step 2: Business Model Canvas
Value Proposition Canvas

The items of the sector "Products & Services" aim to fulfill the needs of the potential customer in the sector "Customer Job(s)". The Gain Creators however, are specific, technological solutions which describe the way the products and services are implemented to obtain additional benefits for the target customer which are supposed to make the products more competitive on the market. The same applies to the Pain Relievers but, in contrast to the Gain Creators, they address already existing problems. Gain Creators on the contrary, have the potential to create new values for the customer, which the purchaser is not even aware of.

Illustration of the Business Model Canvas

Subsequent, the contents of the Business Model Canvas are explained in detail.

Key Partner:

The key partners are mainly energy suppliers, which produce the energy for the Microgrid. Its key resources are the flexible production of (sustainable) energy. Another key partner is the Server Farm Hoster who provides the computational power needed to run the accounting system. Therefore its key resource is the computational power. The third key partner is the Software company which develops and supports the applications that will be developed for the client. Its key resource is intellectual support and the continuous supply with updates.

Key Activities:

The key activities of the EMS Operator are Energy Monitoring, closing Smart Contracts, and operating the private blockchain. These activities are required for the successful operation of this business model.

Key Resources:

The key resource of the EMS operator is data processing to manage operation plans of the microgrid. Another important key resource is the customer relations. Only if the customer has no problems with the service of the EMS operator he will accept this "new" kind of contract.

Value Proposition:

The value propositions for the customer are mainly: The transparency of energy production, a flexible pay scale, the consumption of local and sustainable energy and prestige that the customer will receive from using a high end technology. The main difference between a local energy provider will be the transparency of the transactions being made within the blockchain.

Customer Relationships:

The customer relations are based on a close contact between the EMS operator and customer to understand his needs and be available for technical support. The aim is that the customer can effortlessly receive a quality service for a good price. The support will be carried out mostly online.

Channels:

The distribution channels include online Sales and E- Commerce. The process will be monitored 24 hours to support the customer at every time.

Customer Segments:

The product of the business model is mainly the service of energy management which uses new technology to provide flexible tariffs. Therefore this is a diversified "product" and located in a niche market on short- and mid range, because the technology used is new and upcoming. The customer will be able to receive a local, private, sustainable and technology-oriented product. On long-term, the business model aims at the whole market of energy supply.

Cost Structure:

Main costs will be focused on hiring the server capacity for the blockchain. Moreover the license cost for the software is also an important factor.

Revenue Streams:

The main revenues will be acquired from the transaction costs, which results from every smart contract that was closed. Moreover, agency costs for bringing costumers to the energy suppliers could be a business model, because both, the EMS operator and the supplier, would benefit from new customers.

4.2 Modelling of the Business Model in SGAM

To accomplish the depiction, the trial version of the modeling program "Enterprise Architect" developed by SparxSystems was used. The modeling follows the guideline "Arbeitsgrundlagen Marktkommunikation" Vers. 1.1 published by the BDEW (Federal Association of the Energy and Watereconomy).

The Smart Grid Architecture Model (SGAM) is used to display Business Models, designed for the use in Smart Grids. The fragmentation into 5 different layers, similar to the OSI-Model which is used for network protocols, is supposed to support the identification of participating and affected actors in the energy economy. The unified modelling language (UML) is used for the illustration of the actors and the procedures which are implemented in the layers. Additionally, the SGAM helps the user and the involved actors to understand their role in the business model. Following the Business Use Case “Energytrading in a P2P-Network” will be explained on the basis of the Layers “Business Layer”, “Function Layer” and “Component Layer”. Eventually, with the aid of these illustrations, the business model will be implemented into a physical test model, which will be explained in Chapter 5 and 6.

Illustration of the 5-Layer in the SGAM.

4.3 Business Layer

The connections between the different actors, which are linked to the Business Use Case, are displayed in the Business Layer (BL) of the SGAM. Additionally, the business interests of the actors are depicted. The High Level Use Case, which is invoked by the Business Use Case represents the connection between the Business Layer and the Function Layer. The Business Use Case is the start point to define the processes on the lower layers.

Use Case Diagram (BL)

Use Case Diagram of the Business Layer

Use Case Name

P2P-Contracting

Use Case Description

The load can close a Smart Contract directly with the energy supplier. The EMS Operator therefore provides the infrastructure and theoretically the consumption data to run the contracts.

Market Actor

EMS Operator (MSB)

Energy Supplier (EIV)

Objective

Direct interaction between Supplier and Load on the basis of Smart Contracts to achieve flexible expenses.

Location

Grid field

Objects

Market entity, Measuring entity, Power Plant, Meter, Register (Meter), Gateway, Register (Gateway)

Sequence Diagram (BL)

Sequence Diagram

Interaction

Description

Draw up and conclude Smart Contract

The EMS Operator provides the platform to run the Smart Contracts. To run a Smart Contract, the customer only has to sign in on the platform and chose a contract, provided by the EMS Operator.

Register and participate as miner

Since the evaluation process to confirm the rightfulness of the transaction in the blockchain is carried out through "proof of work", it is scheduled to provide the customer to participate in the mining process, which was previously described as a "Gain" in the value proposition. Therefore the EMS Operator will only provide the basic computational power to execute the Smart Contracts properly. In conclusion, the costs for the evaluation process can be reduced dependent on the stake of participating private miner.

Answer

Only necessary if the interaction is not properly concluded by the BA Load.

4.2 Function Layer

The Function Layer (FL) displays the actions which have to be carried out to accomplish the predefined Business Use Case. Additionally the involved actors are personated.

Use Case Diagram (FL)

(High level) Use Case Name

Close 15 min contracts every 24 hours

Use Case Description

The determination of the current energy cost dynamically changes in 15 min intervals, depending on the price offers of the energy suppliers. Successive the Smart Contracts are executed with varying affiliates.

Market Actor

EMS Operator

Energy Supplier

Objective

Continuous adjustment of the involved affiliates in the Smart Contract, based on the generated data from the EMS Operator and the Input Data from the Energy Suppliers.

Location

Grid field

Objects

Market entity, Measuring entity, Meter, Register (Meter)

(Primary) Use Case Name

To calculate 24 hours data every 15 min...

Use Case Description

To predict the amount of energy consumption, the EMS has to observe standardized consumption data, based on historical data and reference groups, as well as the individual consumption profile, generated through smart meter. The data given for the hackathon was calculated in a Matlab model of a Microgrid as mentioned on the slide before.

Data

Amount of Energy needed, Energy cost per kWh and generation type, Amount of Energy offered

(Primary) Use Case Name

Accounting through DLG

Use Case Description

The contract data and the accounting data of the consumer are stored in the private blockchain network of the platform owner.

Data

Personal reference data.

(Primary) Use Case Name

To activate and execute smart contract.

Use Case Description

The contracts are supposed to be executed automatically in the target scenario, based on the load input and on the price and energy amount offer of the affiliates. The two invoked primary use cases are represented in the target sequence diagram.

Data

Amount of Energy needed, Energy cost per kWh and generation type, Amount of Energy offered

Sequence Diagram (FL)

The first Sequence Diagram displays the interaction of the included Actors the way it is supposed to run eventually. The second Sequence Diagram therefore shows the way the High Level Use Case was implemented in the test network, which is explained in depth in the next chapter.

Target Sequence Diagram
Implemented Sequence Diagram
The target Sequence Diagram

Interaction

Description

Data Monitoring

Data acquisition through reading out the Register (Meter). Therefore a Gateway has to be installed at the Meter to generate the data in the needed 15 min resolution. The generated data will help the EMS Operator to predict the profile of the load individually and more precisely over time.

Paste expenditure

The predicted expenditure will be covered in 15 min blocks to achieve a more sensitive cost tracing.

Publish price offer

The Energy Suppliers transmit their price table, divided in the same 15 min blocks as the expenditure.

Debit withdrawal

After the price comparison is conducted in the Smart Contract, which is displayed in the Activity Diagram, the clearing will be executed. Consequently a continuous currency flow is generated.

Credit sum to wallet

The credit for the individual load which was covered by the Energy Supplier is automatically transmitted.

The actual implemented Sequence Diagram

Interaction

Description

Charge prepaid account

Unlike in the target scenario, the Smart Contract does not have direct access to the wallet of the Customer. Therefore a prepaid accound was implemented within the contract, which has to be charged by the customer.

Publish price offer

The prices are calculated by the Matlab Model of the microgrid as discussed in the previous chapter. Within the scope of the Hackaton, they were manually entered into the contract.

Check price

Within the scope of the Hackaton, there was no price comparison method implemented in the Smart Contract. Hence the comparison was carried out manually.

Past expenditure

Same procedure as in "Check price".

Charge off prepaid account

Dependend on the given price and expanditure, the prepaid konto is charged off.

Credit sum to wallet

The transaction of the payment is executed by the Smart Contract.

Activity Diagram (FL)

In addition to the Sequence Diagram, the Activity Diagram displays which internal processes have to be performed and which interactions are caused thereby. The Activity Diagram in the first tab displays the logic which is supposed to be implemented into the Smart Contract (SmC) eventually. The methods which are executed by the SmC, implemented during the hackathon, are shown in the second tab.

Target Activity Diagram
Implemented Activity Diagram
The targeted Activity Diagram
The implemented Activity Diagram

The main difference between the two flow charts is, that in the implemented SmC in the second tab, the input signals are all carried out manually. Therefore the SmC is only executing commands and is not performing any comparison methods.

4.3 Component Layer

The Component Layer (CL) displays the objects on the Field & Process level. The Microgrid displayed in the Use Case Diagram is complementary to the Microgrid of the Reutlingen University which was explained before.

Use Case Diagram (CL)

Use Case Diagram of the treated scenario

In the scope of the Hackathon, Raspberry Pis Model 3 B where used to implement the controller. The Microgrid has to be carried out as Grid-Connected Microgrid, since the generation power is dependent on the fluctuating generation profile of the PV-System. If the Microgrid would include a larger amount of meteorological- and day time independent producer like the CHP-Unit or the Battery-System, it would be conceivable to consider it as Off-Grid Microgrid.

4.4 Positioning of the Business Model in the Market Communication

In the picture below, which is taken from the BDEW document mentioned at the beginning of chapter 4.2, the positioning of the business model in "P2P Contracting" in the communication model of the energy economy by the BDEW is highlighted, to provide a better understanding of the involved actors and objects which were mentioned in the explanations of the Use Cases in the Business and Function Layer.