Periodic Reporting for period 2 - PARITY (Pro-sumer AwaRe, Transactive Markets for Valorization of Distributed flexibilITY enabled by Smart Energy Contracts) Reporting period: 2021-04-01 to 2022-03-31 Summary of the context and overall objectives of the project The PARITY project addresses the “structural inertia” of Distribution Grids (DGs) by delivering a transactive flexibility framework that will increase durability and efficiency of the electrical grid, while simultaneously enabling the adoption of more Renewable Energy Sources (RES), through enhanced real time control of Distributed Energy Resources (DER) flexibility combined with novel Active Network Management functionalities. PARITY will deliver a local flexibility management platform through the seamless integration of Internet of Things (IoT) and Blockchain technologies. By delivering a smart-contract enabled market platform based on blockchain technology, PARITY will facilitate the efficient deployment of local micro-transactions and reward flexibility in a cost-reflective and symmetric manner, through price signals of higher spatio-temporal granularity based on real-time grid operational conditions. Moreover, by deploying advanced IoT technology, PARITY will offer distributed intelligence (DER profiling) and self-learning/self-organization capabilities (automated real-time distributed control), orchestrated by cost reflective flexibility market signals generated by the blockchain Local Flexibility Market platform (LFM platform). Within PARITY, DER will form dynamic clusters that essentially comprise self-organized networks of active DER nodes, engaging in real-time aggregated & P2P energy/flexibility transactions. The PARITY project aims to enable the set-up and operation of local flexibility markets at the distribution network level via the use of the following technology solutions: (1) A smart contract enabled, blockchain-based LFM platform, (2) IoT enabled DER Flexibility management tools - both in a peer-to-peer distributed fashion, but also through a centralized aggregator, and (3) Smart Grid monitoring and management tools for the Distribution System Operator. Additional objectives of the project are the investigation of market coupling mechanisms, the definition of LFM actors and the associate business models, the development of innovative retail energy commercial arrangements and contracts, and policy reform recommendations to shape the regulatory frameworks that will enable LFM creation in a financially sustainable manner. Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far During the first 30 months of the PARITY project, the PARITY system components have been developed and are close to their final versions after adding functionalities and making improvements to the initial versions delivered in the previous year. In particular, in addition to the updated versions of the Blockchain platform, the Oracle and off-chain components of the local energy/flexibility market platform, the tools implemented for flexibility management have been presented along with initial results that demonstrate the feasibility of the proposed approaches. Flexibility forecasting and management at building/prosumer level, as well as the management of aggregated flexibility through the Aggregator Toolset to enable participation to external markets or cover the needs of the Distribution System Operator, have been implemented. On grid level, the toolset for the Distribution System Operator that provides Smart Grid Monitoring and Active Network Management functionalities, based on the traffic light concept, has been developed and can be accessed through a web-based user interface. In addition, the D-STATCOM device has been assembled and is ready to be deployed at one of the pilots in Spain. Initial results have been reported on the integration among the components and data exchange, which is in progress. These activities have been performed according to the specifications of the tools, the business and use cases, and the system architecture that were defined during the first 18 months. The procurement and installations of the equipment at the pilot sites have been performed, as well as the commissioning through internal workshops. Another important point is the activities for informing and engaging the pilot users, which have been started at the pilot sites and provided initial feedback. The pre-validation of the developed solutions in controlled environments revealed the feasibility of the implemented approaches, their performance and the potential benefits. Further tests in small-scale deployments at pilot sites helped to perform fine-tuning and to resolve any possibly identified issues.In terms of communication and dissemination, activities and achievements have been communicated via the social media channels of the project and the other communication channels that have been established, as described in the detailed communication and dissemination plan. PARITY partners have participated in several conferences and workshops/events in order to disseminate the achievements of the project. Thirteen (13) scientific publications have been produced so far in total. Furthermore, PARITY project provided contributions to the working groups and task forces of the BRIDGE initiative in several ways, such as in data management and process flows, user groups and user engagement, and other.Regarding exploitation activities and market development, the project exploitation and business innovation plan was realized, including the individual exploitation plans per partner. In addition, the involved partners finalized the emerging trends description, and provided a market adoption roadmap for the PARITY offerings. Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far) PARITY aims to go beyond state of the art on multiple aspects. Firstly, a smart contract-enabled energy and flexibility market platform has been designed, allowing both peer-to-peer energy trading among prosumers within the Local Energy Market, and flexibility trading by involving the DSO and the Aggregator actors and supported by the PARITY system architecture. A key point is the automated validation of energy/flexibility scheduling which is facilitated through the monitoring capabilities of the Oracle component and the defined representation of Service Level Agreements. Another important aspect is the automated discovery and provision of flexibility through the use of the IoT platform and models, such as the human-centric Power-to-Heat model and Electric Vehicle load and flexibility forecasting model. Moreover, Smart Grid Monitoring and Active Network Management functionalities have been developed within the DSO toolset, and along with the DER dispatch module and STATCOM device will contribute to improved grid stability. With regard to expected potential impact, added value will be provided by the PARITY platform to prosumers, local aggregators and DSOs, enhancing the PARITY unique selling propositions. R&D results of the project have been reported in scientific publications and through participation in workshops and events.