Poweledger’s Fintech Solution for Energy Wastage
The solution to reducing Australia’s energy bills could be less regulation not more.
Energy Prices have skyrocketed in Australia recently. Many renewables are considered to unreliable or expensive to provide low price stability. The government is deciding how its energy mix should be constructed, and there are new concerns as to whether Energy Giants are using their market power to increase prices. Regulation and a return to cheap fossil fuels seem imminent, but a new company, PowerLedger is disrupting consensus. What if Peer-to-Peer trading of self-supply could gift energy markets more efficiency and competition. All through the power of financial technology, all through the power of blockchain.
Potential is massive, as a higher Renewable energy mix is required for the world to better sustain itself and it is estimated that $7.8tn will be invested in renewable energy by 2040. Yet the Australian Government has chosen to reduce their investment in Renewables in favour of a dirtier and seemingly more reliable reliable network. Critically, much of this investment is happening at the source, with people are opting themselves to buy solar panels. Governments have been focusing on developing existing infrastructure to allow companies to enable people to more easily buy and sell excess solar production. With more efficient networks enabling better prices and reliability for everyone. PowerLedger wants to tap into this developing network and offer a aggregated, energy exchange platform, where people can trade their energy like shares on a stockmarket.
If it is difficult to put solar panels on my roof, perhaps there are trees covering my roofspace or my roof is oddly shaped, my neighbours may have a comparative advantage in solar production over me. If you have a house on a hill that faces the right direction during peak electricity usage you may also have a comparative advantage. Being able to trade that comparative advantage is not possible currently. Solar Rebates are based on the Retailer’s energy requirement. If Origin Energy has low demand your overproduction is worth less. Under a new communal energy trading model, I can receive green, clean energy from multiple sources, and fund the expansion past my neighbours personal useage. Even if you don’t have enough initial capital for a solar investment, your neighbours might, and you can ‘rent’ your energy instead. Energy bills may be severely decreased by a service like this and it has the potential to enable organisations to produce their own solar farms given enough communal demand for energy on the platform.
Scalability is key. For developing countries to reduce their poverty rate, improve health, increase productivity, enhance competitiveness and promote economic growth, it’s crucial to have access to affordable and reliable energy. This product can be scaled and distributed internationally. Liquidity is then provided cross platform, as users across the world are able to exchange platform. The main hindrance is government acceptance and infrastructure. For any country to be able to operate, large scale networks that can both provide and redistribute the energy is required. This may be a massive opportunity cost for acceptance. So, before the product is implemented, it must interact in natural markets and compete against retailers. This seems like a incredibly difficult task for the small, young, inexperienced firm and acts as significant risk for the true scalability of the product.
Still, PowerLedger seems truly disruptive. The world’s current electrification rate is currently at 84% and hundreds of millions of people have attained modern energy access over the last two decades through distribution networks, especially in China and India. They are increasing solar production the most in the world, and this rate of growth will further accelerate as more of the world is connected. Further, the average electricity usage has doubled in 8 years in this region, so prospects could even be considered an emerging market. The Power Ledger Ecosystem supports a growing number of energy trading applications and users, with more traction transaction and energy becomes cheaper not more expensive.
Power Ledger empowers users to sell energy in a trustless environment using blockchain technology. It gives power to the people who lose most due to falling network utilisation, when they are least able to influence their exposure to rising network costs. A more competitive market with fairer exchange may be on its way. Prices are representative of the cost of energy and adjust appropriately, not due to market power or barriers to entry. Additionally, Powerledger can fix a multi-incentive system dilemma with; by massively increasing the network utilisation, the value of network assets will rise. A dynamic trading ecosystems can be formed, with an autonomous distributed trading market that has low-cost and virtually instantaneous market reconciliation and settlements. Once comparative advantage can be traded, new business opportunities become available, and a new Energy system unlike anything we have ever seen before is possible.
Powerledger will either work or it wont, but if it is adopted it will be a revolutionary service that redefines the industry. Over $34 Million AUD was raised in capital to start the project, obviously some people believe that future to be a reality.