Ma'ale Gilboa is hosting a pilot by an Israeli-Austrian startup, chaired by the former Austrian chancellor Christian Kern.
Former Austrian Chancellor Christian Kern, who left office in December 2017, is currently visiting Ma'ale Gilboa, in northern Israel, a religiously observant kibbutz. Kern previously visited Israel as a guest of Prime Minister Benjamin Netanyahu, but his current visit is very different. A month ago, he was appointed chairperson of Austrian-Israel startup FSIGHT. His new job entails spending one week each month in Israel in order to supervise FSIGHT's pilot on the kibbutz. Large Israeli and European energy companies are participating in the pilot.
FSIGHT, founded in 2015, currently has 18 employees. It is developing a software platform for smart management of distributed energy grids. The company has raised €7 million since it was founded, and is currently raising €25 million more in a round led by European infrastructure investment fund SPB Beteilgungsverwaltung.
FSIGHT was founded by Amos Lasker, who was CEO of Israel Electric Corporation (IEC) (TASE: ELEC.B22) in 2007-2011, and Eveline Steinberger-Kern, Christian Kern's wife. Steinberger-Kern had a vision, shared by her husband, of developing a comprehensive end-to-end system for smart management of the future energy sector. Israel's energy sector is not particularly advanced, but Steinberger-Kern decided that she wanted Israeli technology, with its global reputation, to realize her vision, and joined forces with Lasker in founding FSIGHT. They decided to locate the pilot in a kibbutz. The owners of FSIGHT are energy investment company Amrav Investments, owned by Lasker and Ram Belinkov; Israeli energy company Triple-M Power Plants; and Austrian energy company The Blue Minds Company (TBMC), owned by Steinberger-Kern, who holds most of the shares in FSIGHT.
Storing energy and selling it to the neighbors
The pilot is testing the platform's ability to manage effectively, reliably, and accurately the consumption and sale of energy in a sector composed of industrial enterprises, residential buildings, and agricultural concerns, such as a kibbutz. Christian Kern told "Globe," "The energy market changes quickly. It will also change in Israel, but the change in Europe and the US is faster. In the future, in addition to buying electricity from the central grid, the consumer will also sell to it. This empowers small consumers and private individuals with solar panels on the roof."
The pilot is for three years. Current participants include Austrian energy companies Verbund and Andritz; Israeli energy companies RD Energy, Dalia, and Wien Energie; Turkish energy company EnerjiSA; and Hungarian company NKM. Each of these companies pays thousands of euros a year for the right to participate in the pilot and market the platform after it is completed.
The electricity sector is currently built from the top down. Electricity is generated in large power stations and is transmitted to consumers. In recent years, however, it was realized that the future energy sector will be decentralized. Consumers will no longer be dependent on large producers; we will all be both producers and consumers. Every household, enterprise, and business will generate electricity from solar panels. If a surplus is accumulated, it will be stored in batteries for future use or sale. When there is a shortage, electricity will be purchased from the central grid or from another small producer.
Before becoming Chancellor of Austria, Christian Kern was a director at Verbund, the largest electric company in Austria, and became CEO of Austrian federal railway company OBB in 2010. He dealt extensively with the energy sector in both positions, and formed a vision for the future, which he now shares with many of the prominent concerns in the energy and electricity sector.
Kern says, "It's very logical to manage electricity consumption so that you sell when it's expensive and buy when it's cheap. Artificial intelligence and deep learning can be applied in the energy sector in a very interesting way in this context." FSIGHT's platform is one example of using such technologies for a smart platform in management of a distributed electric grid. "We have a brilliant team, many of whom worked at Better Place. They achieved a lot in predicting electricity prices, and based on that, are trying to establish a peer-to-peer energy trading systems in the pilot," Kern explains.
FSIGHT CEO Emek Sadot worked in Shai Agassi's Better Place. Until the company's notorious crash, he was a senior manager for batteries, charging systems for electric cars, and smart electricity grids. He says that adoption of a decentralized energy system is only a matter of time. "I always compare it to electric bicycles. Once the product works and the public buys it, things will never be the same. The same thing is about to happen in the electricity sector. Once there is a battery that is economically worthwhile, I'll install it in my home; I won't wait for anyone's approval," he says.
"Every household wants two things: it consumes electricity and it wants to save money. It doesn't matter whether it's a commercial concern, a factor, or a private home. FSIGHT does optimization inside the house, so that the customer can use the cheapest electricity. If the price of electricity rises, the system will accumulate electricity in your battery, and if there's a surplus, it will sell it to your neighbor."
Electricity prices set to fall 20% in the future
These models are already being applied at various levels in Australia, California, and Germany. In Israel, a policy was set in late 2017 allowing factories, residential neighborhoods, military bases, and small businesses to produce electricity independently using natural gas. At the same time, implementation of distributed electricity production does not exist in practice, due among other things to technological difficulties delaying the option of producing electricity on a small scale, storing it in batteries, and managing its sale and purchase from innumerable different sources. Despite these difficulties, the Ministry of National Infrastructure, Energy, and Water Resources and IEC senior executives, like the rest of the world, all agree that production of electricity will be decentralized in the foreseeable future. There is disagreement about how to decentralize the energy sector, such as whether electricity in such a sector will be priced by a central agency or by market forces.
FSIGHT's platform was designed for use in a future electricity sector that does not exist yet. Its implementation in most countries depends on technological and regulatory developments. Kern is aware of the obstacles, but he believes that technology is advancing at a rapid pace, and that the problems will be solved soon. He says, "I'm rather optimistic, because two years ago, the price of a one-kilowatt per hour battery was €2,000; now it has already reached €250. Furthermore, in the batteries sector in Germany and China, the volume of batteries is rising, and this will improve more in the next 10 years. The ability of end-consumers to buy and sell energy will cause a significant drop in the price of electricity. If we take into account what we're doing for our European customers, there will be a 20% drop in prices."
The company's products are already being sold in Austria, Australia, Turkey, Hungary, France, and Israel, where the system is used mainly to optimize consumption. FSIGHT's end-to-end management platform is also being applied in the kibbutz pilot. Another pilot in cooperation with US energy company Solaria is scheduled to begin now in California with a grant from the Israel-United States Binational Industrial Research and Development Foundation (BIRD-F).
Management and optimization of electricity consumption: How does it work?
The platform developed by FSIGHT is designed to optimize electricity consumption in a distributed electric grid. Sadot says, "If households are able to manage this efficiently it will also help the national system, because it will lighten the burden on the central grid." In order to do this automatically, he explains, the system operates on three levels: "The first part is forecasting. For every household, we predict when it will consume electricity and how much, when it will produce electricity and how much, and the price of electricity at any given time" using an artificial intelligence algorithm on the information in every grid.
"The second part, based on the first, is that the system makes automatic decisions about what to do with the energy: it makes sure that at any given time, we get electricity at the lowest price." The system does this through a regular choice between buying energy and self-production and storing the energy.
"In the third layer, there is a trading system. Blockchain also comes in here. We did proof of concept (POC) with two Etherium-based technologies. One is called Tobalaba - a system built by an association called Energy Web Foun, is specially adapted to energy, but it belongs to IBM, which makes it more widely available."
The establishment of blockchain among startups working in the decentralized energy sector is fairly common. Power Ledger, one of the leading companies in the field, operates in Australia, where implementation of the distributed electric grid is most advanced. The company develops an energy trading platform based on blockchain technology, and held an initial coin offering (ICO) to raise money for developing the platform.
In contrast to Power Ledger, FSIGHT develops an end-to-end solution, and uses blockchain only for decentralized trading. FSIGHT does not plan to hold in ICO. At the same time, the decision to use blockchain technology is likely to excite some people and deter others who are fed up with the trend. Seeking to sooth anxieties, Sadot says, "We regard blockchain as a technology that can serve us in distributed trading from many endpoints, not as a goal."
He adds that in the pilot, two blockchain technologies will be evaluated for the purpose of establishing a trading system, together with a third possibility that is not based on blockchain. In the end, the company's pilot will select the technology that proves to be the best.
Published by Globes, Israel business news - en.globes.co.il - on January 24, 2019