GRID+ — ICO Review
“Customers are given nearly frictionless access to the wholesale energy markets”
Token : GRID
ICO : October 30th 2017
Total : 13 / 25
* Please note that the first part of the below study (section 1 related to business opportunity) is enough to get the high level understanding of the project and capture the potential of GRID+.
GRID+ wants to use the Ethereum blockchain to invoice customers in real time for their electricity consumption and thus lower the electricity cost which is inflated by the retailer’s margins. GRID+’s vision goes beyond the real time invoicing. Indeed, they want to enable in a near future customers to choose between energy sources in real time. The project is backed by the well-known venture and blockchain studio Consensys.
- Relevant business opportunity
- Team has already a record in the energy business
- Consensys venture
- No business partner in the energy sector
- Hardware development needed
- Uncertainty about customers’ adoption
- Token value is linked to the electricity market price
- Roadmap (end of test phase in Q3 2018)
1Business opportunity: 3/5
The opportunity for disruption is definitely there, however the operational side of the project seems too ambitious.
In the current energy market, 4 core businesses coexist : Production, Transmission, Distribution and Retailers. When the 3 first are offering technological services, the latter is only buying electricity from the wholesale market and selling it to customers with a margin. GRID+ uses the difference between industrial electricity and the domestic price to highlight how high this margin is.
Moreover, the future of the electricity power system will be decentralized. Most of the energy giants share the vision of a combination of decentralized energy resources (wind turbines, solar panels) and locally owned storage batteries. GRID+ wants to seize these new opportunities for buying optimization.
GRID+ value proposition is in twofold:
GRID+ will act like as a retailer operating with a billing system based on the Ethereum blockchain. GRID+ will develop:
- hardware to connect to the Ethereum blockchain and to all the smart power systems of the user home (smart meter, Nest, Tesla powerwall)
- software to automatically handle the payment through the blockchain.
In the longer term, GRID+ wants to optimize the distribution system by introducing notions of geography, topology, network connection into the pricing algorithm of the software. In addition, the market dynamics will be enhanced through consumption arbitrages between energy sources, local markets and storage.
Accessing the wholesale marketplace will also enable GRID+ to make optimization between the daily and the future markets which retailers are currently not incentivized to do.
These optimizations are likely to be welcome by the Generation, Transmission and Distribution businesses which are experiencing severe issues due to the complexification of the energy providers landscape. These issues are detailed in the WP.
The roadmap to operate these two aspects is pretty ambitious. In Q3 2018, GRID+ plans to develop and produce its hardware in small quantities and to enroll 5K+ customers. By Q3 2019, they plan to reach 100K-200K customers and to launch the industrial production of the hardware.
For now the hardware and the software are not finalized and no market has clearly been selected for the short-term phase.
Opinion : The disruption of the energy market by the blockchain is definitely an opportunity however it has to be mitigated by the important entry barriers (legislation, heavy market player) thus a slow expansion is expected.For Grid+, the end user adoption is a key point and a challenge due to the hardware integration and it is not developed in the WP.
GRID+ technology is based on a hardware which enables none savvy users to buy tokens on the blockchain and a software which will optimize the user energy consumption by making arbitrages on different energy supply channels. It will also use smart contracts for payment and fee vault on the Raiden Network.
On the software part most of the WP describes the potential optimizations which can be made by choosing alternative source of supply or accessing the directly the wholesales marketplace and choosing between the daily or the forward market. However the pricing algorithm was not finished in July and no technical details are shared in the WP, it seems that it will only be implemented in the longer term.
GRID+ will operate with a two-token model, BOLT and GRID. BOLT token will be the exchange unit, redeemable by GRID+ customers for $1worth of energy from GRID+ and backed by USD deposits. The GRID token will allow Grid+customers to purchase electricity at wholesale price. In particular, each GRID token may be redeemed by a customer for 500 kWh of electricity from GRID+ at the wholesale price.
All transfers will occurred on the Raiden Network which is an off-chain Network project (ICO 18th of October).
Opinion : Even if the whitepaper is pretty complete (64 pages), the lack of technical description of the software is negatively impacting the level of confidence in the project. Since the GRID token provides access to the wholesale market, its value is linked to the difference between wholesale and domestic market price.
GRID+ is part of the Consensys venture founded and managed by Joseph Lupin.
Joseph Lupin has been involved in the Ethereum project and developed several key Ethereum based projects.
The GRID+ project is led by 7 team members, most of them are techies (Crypto, UI and Energy) however there is no “crypto star”. The team seems to be scattered as members live in NY, SF, Romania and Spain.
Opinion : Team is made of techies who knows the energy sector and the project is backed by Consensys which is reassuring. However we think that not having a partnership with a big industry player is a deal breaker for such a project since client acquisition seems very difficult without a strong partner.
4ICO details: 2.5/5
Pre-sale (over) : $50.2m — 43,818,779.74 GRID tokens
Sale (October 30th) : $52.9m — 46,036,775.86 GRID tokens
Team shares : $60m — GRID 69m
External owners shares : $60m— GRID 69m
Customer acquisition : $103m — GRID 90m
Total max. valuation : $345m— GRID 300m
Opinion : Total valuation is important yet not de-correlated with the project ambition. As explained in section 2 the valuation of the token is linked to the electricity market price which can be a deal breaker for investors.
5Community and communication: 3/5
The project has gained some visibility in specialized litterature (Crypto, energy sector). However we can’t say it has generated a buzz.
Slack : 1600 members
Twitter : 1450 followers
Short Term : Negative
Long term : Neutral/Negative
Eventually GRID+ aims to not only replace the usual trusted third party but also to disrupt a market hold until now by institutional players. Even if the added value of the blockchain on such a market is undeniable we doubt about the operational plan and the roadmap established by the team which is crucial for the success of the project.
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