The future of energy has never looked so exciting, with technology advances in the past few years set to revolutionise the way we transact with energy. Up until recently, the utility grid has been pretty much a one-way street. We buy electricity from a utility and it comes from the grid.
But the rooftop solar PV revolution that is taking off globally has thrown the traditional utility business model on its head!
The current model for rooftop PV systems is to feed the excess electricity into the grid. The prosumer, as they are called, would then be compensated by the utility company for the excess energy to be used elsewhere.
However, the kWh feed-in tariff rate would most of the time be less than the energy consumption rate. Hardly fair we hear you say?
A new model is required for these so-called virtual power stations. A model that will disrupt the utility industry and provide a level playing field for all stakeholders. That’s where the Australian company Power Ledger comes into play.
Power Ledger Overview
Power Ledger is the brainchild of a team of energy professionals, sustainability leaders, disruptors, developers and innovators. They are passionate about disrupting the current utility model and hastening the clean energy transition, while benefiting prosumers, consumers and distributors.
What is Their Solution and What Makes it So Unique?
They have developed a blockchain cryptocurrency energy trading platform, which allows for decentralized selling and buying of renewable energy. Well, if that sounds like a mouthful to you then that’s normal.
Let’s take it a step back though for those of you that are new to blockchain technology and cryptocurrencies.
Blockchain technology is the backbone of cryptocurrencies and a hot topic globally.
A blockchain in its basic form is a digital distributed ledger that keeps updating continuously, providing digital records of who owns what. This ledger is encrypted and self-replicated, synchronised by the internet and visible to anyone that is part of that blockchain network.
The distributed ledger is continuously updated so that every ledger in the network is the same, giving each member the ability to prove who owns what at any given time.
Blockchain technology is set to disrupt many industries globally.
Power Ledger’s solution to provide an energy trading platform for producers and consumers of clean energy is based on blockchain technology.
At some point in the future, feed-in tariffs will be phased out. Yet with Power Ledger’s energy trading platform, owners of rooftop PV systems will be able to sell excess energy to their neighbours.
This will allow communities to sell and buy renewable energy generated without the need of a middleman.
The company was founded in May 2016 and already has achieved some significant milestones in its short history.
Following the development and trail of Australia’s first energy trading blockchain network, Power Ledger went international. They rolled out their peer to peer blockchain-based energy trading platform across a distribution network in New Zealand.
In early 2017, they then developed and rolled out an energy management system that allowed the transparent distribution of clean energy to tenants in multi-unit apartments. More recently, they moved into the space of providing a transaction-based service for public charging of electric vehicles.
In order to secure investment, the startup held its ICO with a different twist through an alternative mode of financing by selling its custom developed token known as POWR. The startup secured 34 million Australian dollars of funding through this method, in what has proven to be one of Australia’s first successful instances of raising funds in this manner.
The Power Ledger Ecosystem
The Power Ledger ecosystem is based on a dual-token system operating on two blockchain layers with two digital tokens, or coins, called POWR and Sparkz. Both of these tokens play an important role in the transaction and trading of energy.
How to Get POWR and Sparkz?
The POWR token is the fuel of the Power Ledger ecosystem and keeps the backend buzzing away. It allows access to the Power Ledger platform, creates security for participants, and incentivizes usage and renewable energy power generation.
The POWR token can be bought on public token exchange platform.
POWR can later be exchanged into Sparkz via smart contracts on internal Power Ledger Token Exchange platform.
Sparkz are created on escrow of POWR tokens and are destroyed on redemption of POWR tokens. For example, $100 worth of POWR can be exchanged into $100 worth os Sparkz.
Sparkz are the tokenised representation of the value of energy traded. Sparkz are pegged to the lowest denomination of currency in each trading jurisdiction (E.g. 1 Sparkz = 1 Australian cent).
With Sparkz in their “wallets,” users (aka Application Hosts) can now enter the closed-loop trading ecosystem to start buying and selling energy.
Are you with us?
Good. Let’s move forward.
There are three types of users on Power Ledger platform: Application Hosts, Consumers and Prosumers.
Prosumer is a term made by a combination of the words ‘consumer’ and ‘producer’. A prosumer can be a person who owns a solar array on a rooftop to produce and sell the excess energy. He can also buy additional power from anyone else in the microgrid if he needs to do so.
Consumers are users like you and me who want to buy energy from their neighbours in the microgrid. These transactions are made in Sparkz.
Consumers who wish to buy Sparkz to trade with prosumers are directed to Application Hosts (who have a pool of Sparkz as they traded POWR tokens for them). For example, for $10 consumers can get 1000 Sparkz.
Think of Application Hosts as a Currency Exchange booth in an International Airport terminal.
How to Buy Energy?
After a consumer has pre-purchased Sparkz from an Application Host using local currency, they can start buying energy from their neighbours.
For example, if 1kWh of energy costs 10 Sparkz, it means that the consumer pays 10 cents worth of Sparkz for every kWh.
These tokens are applied to prosumers’ digital wallets within the platform.
When prosumers want to cash out, they are also directed to Application Hosts and get $10 in exchange for 1000 Sparkz.
Anyone who wants to buy electricity on the Power Ledger platform can also use their POWR tokens directly.
In case you got confused why Sparkz are used, let’s quickly recap:
As a consumer, you can buy Sparkz for cash and later exchange them for every kWh of energy you’ve used.
If you want to trade (buy and sell) Sparkz on the Power Ledger platform with consumers and prosumers (as an Application Host), you’ll need to obtain enough POWR tokens on public exchange platforms, and then enter the Power Ledger environment.
Power Ledger also retains a small transaction fee for all electricity traded on the platform, which are then used to buy its own POWR tokens to reward “green” users on the platform.
Benefits of Power Ledger
The company claims that the benefits of the Power Ledger platform are numerous. These include the following:
- Improved economics in clean energy
- Fixes the split-incentive problem with multi-tenanted properties
- Increase the value and utilisation of renewable energy assets
- Provides easier access to renewable energy
- Improves the efficiency of electricity distribution by decreasing wastage
- Provides a platform for community-led renewable generation.
Power Ledger Competitors
If something is set to revolutionise an industry then you can bet your bottom dollar that it won’t be long before others jump on the bandwagon!
So who are their competitors?
Blockchain technology companies specialising in energy are starting to pop up all over the place and these three companies are a few worth mentioning.
Conjoule is a German startup that is being funded by Japanese utility giant Tokyo Electric Power Company. They have invested $3.5 million into the startup. Conjoule is developing a peer to peer energy trading platform using blockchain technology.
Greeneum is a US startup that is also developing a peer to peer trading platform that supports clean energy. Through the use of blockchain technology they create green tokens that act as Smart Contracts. These tokens allow individuals to trade carbon certificates and contribute towards sustainable solutions. They are already running pilot projects in the US, Europe, Cyprus and Africa.
Drift is a Seattle-based startup. Drift is also developing a peer to peer energy trading platform using the blockchain distributed ledger technology and AI. Their platform will give customers a choice on whether they want to buy zero carbon energy or lowest cost energy with no contract required.
Blockchain technology is set to revolutionise the busy energy market as we know it and prove to be a major tool in the fight against global warming, not to mention hasten the transition to clean energy.
It will open the doors to further investment into renewable energy plus make it easier for electricity consumers to buy clean energy that is more affordable.
Power Ledger is one of these startups that is taking on the challenge of developing a peer to peer energy trading platform, with others following in their footsteps.
And it’s proudly Australian!
If you want to see how much solar or battery storage could save you over the next 5 years, then take our solar saving calculator quiz below!
Or talk to an Instyle Solar expert about the best solutions for home energy storage or PV panels.
Otherwise, head back to the solar blog to find even more great educational content.