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Sparking the Renewable Energy Revolution with Blockchain

Energy is the most important commodity in the world — it keeps everyone alive and powers the global economy.

It’s an absolutely monster industry with almost unlimited demand, because people require their home and businesses to be heated, their transportation to run, and electronic devices to work.

Until we hit a post-scarcity future, this demand will only increase due to population growth combined with increasing affluence and aspirations of those living in rapidly developing nations.

At the same time, there’s an awareness that energy consumption is fundamentally damaging to the planet. Governments are under pressure to find alternative sources to oil, coal and gas, and this is driving a revolution in renewable energy. It’s fair to say it won’t be too long before these new technologies eclipse the old, inefficient and dirty power sources.

Some interesting facts (and even more here):

  • installation costs for renewables have plummeted (and will continue to do so) with wind turbines falling 30% and solar panels 80% since 2009;
  • by 2020 the cost for renewable energy will be less than the current power price;
  • over $3 trillion in wind and solar investments will be made over the next 3 years;
  • 70% of Denmark’s energy is expected to come from renewable sources by 2022.

The shifting tide in the generation of power is only part of the story.

Real disruption is also beginning to occur in the way energy is delivered and consumed. Recent advances in batteries mean households can store electricity for back-up or load shifting. This gives people greater flexibility to buy and store electricity when rates are low, and consume it as needed. Peer-to-peer digital platforms that cut out the middleman and directly connect green energy producers to those who want it are starting to emerge. When combined with the increasing installation of smart meters, this means consumers are able to take control of their energy usage and reduce their bills.

It’s within this context that blockchain technology can be leveraged to further enhance these new dynamics. ** I’m assuming familiarity with the catch-all term blockchain — but if you need a primer, I suggest starting here and here)**

So what exactly can blockchain bring to the party?

By storing every interaction as immutable blocks, data about identities, contracts, pricing, transactions and payments can be captured forever.

There are plenty of fledgling projects laying the foundations for utilizing blockchain within the energy industry, but only a handful of players who have actually established themselves. The rest of this article will compare these early movers, who are all making use of the Ethereum blockchain and the ERC-20 token model.

Most of these projects are fundamentally peer-to-peer marketplaces, allowing a distributed network of individuals and entities to trade excess energy between one another at lower costs than previously possible.

Restart Energy is an established producer of solar cells, and follows a slightly different model. They have launched a blockchain platform in order to operate as an energy franchise sales company, with an objective to onboard energy producers who then sell directly to consumers through the platform.

WePower is a crowdfunding/financing platform for renewable energy projects, which gives participants the opportunity to raise capital by selling future energy production.

MARKETCAP

Power Ledger is the clear leader in the marketcap and has more value than all the other projects combined —as of early Nov 2018: $62M compared to $49M.

**👉CLICK HERE for interactive version of chart**

RETURN ON INVESTMENT

Power Ledger is also leading the way in terms of ROI, but considering that the majority of these projects launched in the prolonged bear market of 2018, it’s no surprise that there are some heavy losses. Bittwatt and Suncontract do however buck the trend, and have made early investors reasonable gains.

**👉CLICK HERE for interactive version of chart**

If we focus on only the last 6 months, even Power Ledger is a losing investment, although not as much as others in the field. Interestingly, MWAT has performed a bit better over 6 months than since its inception.

**👉CLICK HERE for interactive version of chart**

VOLUME

Volume over the last 6 months has again been dominated by Power Ledger, with some very large spikes evident, although in the last days WePower has also spiked significantly. The others have struggled to attract anything near this volume. Bittwatt, MWAT and Grid+ have really struggled recently on this front.

**👉CLICK HERE for interactive version of chart**

ONCHAIN DATA

The Number of Holders (as of early Nov. 2018) for these projects is displayed below. Despite having the highest value by some margin, the number of holders of Power Ledger is actually less than MWAT, Electrify.Asia and WePower. The others have small amounts of holders. Bear in mind, that this only accounts for individual addresses, and we cannot say for sure how many people are holding their tokens on exchanges.

The Centralization of Holders is also revealing. The top 20 addresses own around half of the supply for MWAT (47%) and SunContract (51%). The distribution of Power Ledger is not so even, as the top 20 own 83% of supply, but Grid+ and Bittwatt are even worse, with top 20 owning 87% and 90% respectively!

Looking at Onchain Activity, it’s clear Power Ledger is in the lead, followed by WePower. For all of these tokens, activity (defined as the amount of active sending addresses) has been declining, as currently onchain activity is correlated heavily with volume. Once the platforms start to mature, their tokens should see greater use, but with only small focussed trials going on for these projects, and certainly more hodlers than actual users, the activity rate is not high.

VLADIMIR CLUB

The ‘Vladimir Club’ is a quite interesting metric that shows how much it costs to own 1% of 1% of the supply. Power Ledger is significantly more expensive than the rest to join, but for less than $1000 you could own 0.0001% of Bittwatt or MWAT, or even Electrify.Asia and SunContract.

Outlook

As noted, peer-to-peer energy trading is the use case that is gaining most traction. This is made possible by the programmatical logic of smart contracts that can automatically trigger transactions. However, there are many other usecases:

  • payment mechanism for charging electric vehicle batteries;
  • enable electric vehicles (and other devices) to send stored energy back to the grid to balance demand;
  • allow consumers to change suppliers in real time to take advantage of fluctuating rates;
  • diagnose and remedy disruption in supply;
  • make energy commodity transactions unchallengeable and transparent.

It’s important to remember that there are no guarantees that blockchain solutions will play a significant role in the energy industry. There are still plenty of hurdles preventing them gaining further momentum, most notably around adoption and usability. The scalability of Ethereum also needs to be demonstrated, as latency issues are well-documented.

Moreover, mature alternative technologies are difficult to beat, and reduce the economic rationale for blockchain solutions. For example, mobile payments are widely used for electricity offers in Africa and centralized databases work fine for managing the charging of electric vehicles. In these contexts, new blockchain solutions don’t necessarily solve significant pain points.

Nonetheless, considering how young both these industries are, and the exciting possibilities that are emerging as the technologies are blended together, it’s worth keeping an eye on the companies mentioned here, as the potential for growth is significant.

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Price Charts from https://www.cryptocurrencychart.com/

Onchain data from https://bloxy.info/ & https://trivial.co/

FURTHER READING

https://www.ey.com/en_gl/digital/blockchain-s-potential-win-for-the-energy-sector

https://www.ey.com/en_gl/power-utilities/how-blockchain-technology-is-transforming-the-distributed-energy

https://www.toptal.com/insights/innovation/a-new-frontier-blockchain-energy-solutions

http://www.emerton.co/app/uploads/2017/06/Emerton-Energy-Market-Insights-on-Blockchain-in-the-Energy-sector.pdf

https://www.youtube.com/watch?v=XjDpSFy5-CM

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