Interview with Dr. Jemma Green, co-founder and chairman of Power Ledger

You’re based in Perth Australia and have been with Power Ledger for a little over 2 years now. Can you break down what is Power Ledger and your involvement with the project?

Sure, I’m one of the co-founders and chairman of the company. Power Ledger is a technology company that enables distributed electricity markets using the blockchain. Our platform can be used to enable the trading of electricity as well as the settlement and payment between buyers and sellers. It’s also used as a way to fund energy assets — how the assets are funded and how they are operated.

As for “energy assets” and P2P energy trading, does that essentially mean you would not have to rely upon a central party to control your energy supply and would have less dependency on them?

You might have a household with solar panels or a battery that can sell its surplus to their neighbors, or there could be large solar farms that want to sell to many smaller customers instead of presently selling to one larger wholesale market participant. The platform can also be for carbon credits and certificates.

For example, we’re doing a project in California using electric vehicles to encourage them to charge during the day from solar-based electricity and they’d receive a carbon credit for doing that as opposed to charging at night, which may well be from fossil fuel-based electricity.

Electricity or energy can come from many different sources. Our technology works particularly well with renewables, but it can also be used for more traditional energy assets too.

In terms of how you arrived into the space. When did you come across Bitcoin and blockchain?

In January of 2016, a former colleague of mine introduced me to two blockchain developers. I actually thought it was a bit whacko at first, but I asked if there were any applications for the electricity sector because I was doing a PhD looking at disruption in electricity markets. I was at the point in my PhD where I was designing a solar and battery system for an apartment building and condo, and I was trying to find a software that would allocate units of electricity to each apartment where if you weren’t home to consume that allocation, you could trade it with your neighbors.

I couldn’t find anything that did that, so when I had this meeting with these blockchain guys, I started looking into these applications for electricity and I saw that it could do exactly what I had intended for the apartment building. I introduced them to Dave Martin who worked in electricity networks utility management and electricity markets for over 20 years. Dave had seen a problem in that part of the electricity sector where because of distributed renewables, the grid — the poles and wires — was being used less, and when I introduced him to the blockchain developers he started to see that this could enable a more transactive grid, maintaining utilization of the network and therefore its relevance.

He got really excited and said “I want to set up a company, do you want to join me?” and I said absolutely. So we explored that idea and I think on the 22nd of May 2016, about 4 months after that introduction, we set up Power Ledger. With those two ideas in mind — P2P trading across networks and P2P trading with buildings — we developed those products and deployed them in a number of different instances.

It was a serendipitous bit of circumstances that let me to learning more about the blockchain and setting up Power Ledger.

When I think of power grids and the way that they’re set up, ‘all roads lead to Rome’ come to mine in that all wires lead to electrical companies. As for how that’s structured, it seems less efficient than simply taking your energy and transacting it among a community.

One of the roadblocks in reaching that point is getting a green light to transact with your neighbors and begin exchanging energy with them. What hurdles do you have to deal with for Power Ledger to obtain that approval?

I think the main one is just acceptance and comprehension of what the blockchain does and how it works. When you’re dealing with utilities, they have operations that have remained relatively unchanged for over a century.

Getting their heads around what blockchain is in turns of not only a transaction record keeping system, but also that crypto is a payment system is quite a lot for people to digest. It’s not a quick conversation when you’re dealing with a big organization, there’s a lots of different conversations to be had to get people comfortable.

The first deployment we did of P2P trading was in Auckland, NZ with Vector, and the second one we’ve done was on the east coast of Australia with Origin Energy. And we have that we’re currently working on in Thailand. I think that while the energy companies don’t necessarily move that fast, they recognize that the market is changing very quickly.

So as for the level of interest and literacy they’ve got around alternative technologies, there’s certainly a willingness and openness to look at them. And we’re finding that the conversations we’re having now with projects are going much faster than when we set up the company, so I think the marketplace is getting more sophisticated.

For the person that’s coming into the space right now and wants to be able to exchange energy, own energy, and get involved in asset germination events: if I was living in an apartment building, how would I go about taking any surplus energy I had and start monetizing that?

Well in an apartment building you can do that right away in terms of trading your surplus with your neighbors. We have a number of programs in Fremantle or in Perth that are in a suburb called WGV that are doing that.

In terms of asset germination, we’ll be launching that product in 2018. Asset germination is a way of funding energy assets using the blockchain. We’re very excited about that and have a number of projects that we’re doing due diligence on right now, so I think it will be available to POWR token holders in the very near future.

Diving a little more into asset germination… so that’s more of a fundraising process to give POWR token holders a stake in these new assets and these new disruptive technologies for the energy sector?

It will allow them to fund the assets and for them to be able to assist the asset in operating optimally using the blockchain. I can’t say more than that because we’re not ready to talk about it in detail, but we are very excited about it.

In the past couple of months there’s been a bit of a contraction you could say in the markets as a whole. Usually that’s a great opportunity for companies to put their hard hats on and get to work. How has Power Ledger’s team been dealing with the bear market for the past 6, 7 months?

We know that the market is very volatile, and for us this is a marathon, not a sprint. If we were day trading the crypto markets that would be a different story, but our mission is around the democratization of power. We think that electricity is a basic human right, and that’s what’s really driving us in the work that we’re doing with deploying the technology and bringing more utility to the power token so there’s fundamental value behind it’s price, not just speculative value.

That’s what’s really going to change the whole market. We are in a speculative bubble and you can see that reflected by the price volatility. And it’s not that dissimilar from what we saw with the tech stock bubble and boom over the millenium.

In the beginning a lot of value was ascribed to companies based upon what they could possibly do and then over time there was expectation of delivery and a differentiation in the price of those companies. I think that a similar thing is happening in the crypto market — people are becoming more discerning and there’s now more of an expectation of delivery as opposed to just ideas that haven’t been thought through.

In terms of what else Power ledger doing — it’s not just P2P energy trading — there are a couple other items on your roadmap, and there are a couple other ways that the platform is intended to be used when it is deployed at scale, correct?

Yes — electric vehicle charging, carbon credits associated with the generation of renewables or tracking carbon emissions from traditional energy assets, and looking at how to fund energy assets as well. There’s a lot of different components of the electricity market and we’ve developed products to respond to problems that we’ve noticed in the market or pain points for incumbent players.

As for competitors in P2P energy trading. For starters, if you have competitors then you probably know that you’re in a good market — you can look around and can say that ok, somebody else has the same idea — are other companies trying to do the same thing as Power Ledger or at least a similar aspect of electrical trading?

There’s quite a lot. I mean, it’s fair to say they’ve been popping up like mushrooms. I think there must be 10 or 15 other players out there, some of them are focused on one area like carbon, others are particularly focused on disrupting a particular strategy, such as disrupting retailers — we want to partner with retailers by contrast — and there are some that are focused on funding the energy assets as well.

There’s a very diverse landscape of different players out there, and we welcome them all to the extent that they’re good actors and they don’t spread misinformation. I think it’s helpful to have them out there because we are creating a new marketplace and it’s important that their efforts are expedited to ensure that we are able to transition to a low cost and low carbon resilient energy future.

I did see on Power Ledger’s website, that you’re looking at a PoS mechanism for your consensus?

Yeah, so we’ve been looking at a hybrid that involves some PoS and PoW to deal with the scaling issues and to get the balance right in terms of security and I think it’s something that a lot of companies are looking at right now. So we are exploring a number of different blockchains that can help us with getting the scale that we need while also maintaining the security of our record keeping and payment system.

Switching over to some of the areas that you’re targeting for your pilots. One area that I think most can agree where Power Ledger will be most useful are these 3rd world countries, areas that don’t have an established power grid right now. How have you been watching those pilots, how have they been performing, and do you have any other targets set for the future?

So I think that the developing world as it currently stands is likely to repeat the mistakes of the developed world. And that means that they’re going to have electricity that’s unaffordable for most and a system that would be really catastrophic from a climate perspective. I think there is an entropy where you’ve got existing systems with incumbent players that you see in developed countries, whereas in the developing world there’s more willingness to look at alternative systems because they’re not fighting against an incumbent system.

So I think it could well be that the developing world doesn’t repeat the mistakes that we’ve made in developed cities and countries, and it is for that reason that we’re very focused on projects in Africa, we also have projects in Thailand right now, and I think that the rate of uptick is likely to exceed that of developed countries because of those reasons.

In terms of what you’ve been looking at in the space in general, is there anything that’s catching your eye recently in the news or any interesting projects?

I think the carbon markets is an area that is quite interesting. In terms of blockchain companies, most of them are more early days and nascent than the electricity markets, and electricity is fairly developed, whereas carbon markets, you know there’s a lot of potential to look at how the tokens or crypto can be used to create market incentives to solve climate change and mitigate carbon emissions and help countries transition from high carbon companies. I’m writing a piece for Forbes right now that will come out in the next week or so that will profile what’s happening in that space and the potential for blockchain to help, so I think that’s quite exciting.

Governance is another issue that I think about quite a lot. You have smart contracts, but ultimately you’re going to have humans involved at a certain point. And you want less humans involved than the current manual system of governing organizations and countries for that matter, but you do need that human intervention. And I think that’s very interesting, looking at what role do humans play still in the smart contract world and how can you ensure the integrity of an organization or system and how smart contracts will be replicated with paper contracts as well so that courts can actually read and interpret them clearly too. So there’s quite a lot that’s yet to be worked out in these areas and I think that’s quite exciting.

Other than that, what’s happening in the regulatory space, in countries like the US and their position on tokens as securities — I think it’s quite interesting because it will drive another wave of innovation in crypto to respond to that, and we may not even end up with blockchains that look like they do today as a result of some of these large countries adopting very strong positions. Countries may exclude themselves from the market and we’re already seeing bits of that happening like the Toronto Stock exchange in Canada is becoming the hub for listing whereas it might’ve otherwise been the Nasdaq or NYSE because of how the SEC is choosing to approach blockchain and crypto.

So I think that the data security movement as well is something that has made consumers far more aware of what’s happening with their data and become much more interest in technologies that allow them to control it. We’ve seen in Singapore that 1.5 million health records were compromised in the past couple of weeks, and here in Australia we’re actually moving to a digital health record system that a number of Australians are opting out of because of concerns with that. So I think that data integrity and data security and data control are trends that are going to really shape how the technology unfolds.

Finally, in terms of adoption — we’ve seen a lot happening in terms of using things like airdrops, and that’s more for growing communities, but I think we’re going to start seeing market participants in blockchain and crypto using some of their treasury to create airdrops to encourage people to act as nodes on the network or mine data into the network or develop applications onto the network. We’ve seen companies doing that till now — Ethereum has been very effective at creating that whole network effect, but I think we’ll see far more sophisticated airdrop and market incentives to speed up the rate of adoption.

A conversation going around crypto twitter is this idea of usability and how decentralized projects must have a great UX to drive greater adoption. Even with autonomy and freedom, if there isn’t a streamlined onboarding process, it’s more likely that people are going to stick with centralized projects that have control of their data, but are (1) easy to use, (2) all of their friends are on it, and (3) the risk of a data breach isn’t really taken into consideration. I think the projects that are going to stick around are the ones that are able to find that happy medium.

That’s a great comment about the friction in organizations, understanding crypto and adopting it. The less friction that can be had in the user experience with the platform, the technology, and de-risking these products will have a huge impact on market adoption.

I think in the past 6 months we’ve seen a lot of greed take hold in the ICO service providers. You can see that reflected in the burgeoning cost — the prices of services are going up hundreds of percentage points — and it’s almost that you need to do a capital raise before you need to do an ICO.

And the listing cost for exchanges is burgeoning. It can take millions and millions of dollars to get on good exchanges, so you either need to be raising serious amounts of capital or spending a lot of it to get listed on the exchanges.

This kind of golden era where you can just make truckloads of money from doing an ICO I think is changing, and that will probably cause a lot more innovation around decentralized exchanges providing more liquidity, and centralized exchanges are still going to charge a lot of money.

It’s also worth noting we’ve reduced friction in our model because our end user won’t interact with POWR or crypto. Our two token structure means they trade energy using Sparkz, which act like phone minutes or credits, but for energy.