Shell Oil is continuing its exploration of blockchain with yet another investment in the technology first made popular by bitcoin.
The fifth-largest oil and gas company in the world, valued at $262 billion, is investing an undisclosed amount in LO3, a New York startup using a modified version of the ethereum blockchain to make it easier for individuals to buy and sell locally produced energy using the existing network of power cables.
While the bitcoin blockchain lets users track the flow of value without the need of banks to audit the system, LO3’s platform, called Exergy, is designed to track the flow of energy as it is added to a shared, local energy network, giving the neighbors who purchase the energy absolute certainty it really came from a windmill, a solar panel or a gerbil running on a treadmill.
If successful, LO3 and its competitors in the nascent “transactive energy” market, could change the role of traditional electricity transmission and distribution companies like Con Edison in the United States and Western Power Distribution in England from mere installers of underground cables, to managers of more efficient, distributed local energy grids.
“We see that it’s society’s ambition to live in a lower-carbon environment,” says Shell Ventures investment director Kirk Coburn. “LO3 is a platform that enables that.”
The investment announced today is part of a larger bridge investment round also joined by Sumitomo Corporation Group based in Japan. Details of the investment are not being disclosed, though Coburn says he’ll be joining LO3 as a board observer as part of the round and could come on as a full board member pending possible future investments.
Earlier plans to raise capital by selling tokens to be used on the platform via an initial coin offering (ICO) have been put on hold. However, the tokens, called XRG, are still expected to play a crucial role in the platform when it goes live in 2020. The tokens will be used to incentivize use of the platform and will be required to access the distributed energy grid. Shell has the option to convert its investment into XRG tokens at the time of launch. Another token, called anergy, is being designed to let consumers sell data about their energy usage to third-party companies at a later date.