Power Ledger, an Australia-based startup, is combining two innovative technologies – blockchain and solar power – to transform global energy markets and ultimately power the world through renewables. The company’s blockchain-enabled technology promotes peer-to-peer (P2P) solar energy trading, allowing consumers to sell their excess electricity to other residential and commercial users. The software is currently in use in a number of countries including Japan, India, the US, and Australia. In 2017, just one year after it was founded, Power Ledger raised roughly US$26 million in one of Australia’s first successful initial coin offerings (ICO). Insider spoke with cofounder and chairman Dr. Jemma Green to understand more about how Power Ledger works and its hopes for a decentralized and democratized energy future.
Insider: Could you briefly explain how the Power Ledger technology works?
Green: In a sentence, Power Ledger technology harnesses the capacity of ordinary people and businesses to help the power grid.
The main value add of Power Ledger is that it seeks to solve the biggest problem in renewable energy at the moment. Plenty of countries and regions are finding that when they pack lots of solar and wind into the grid, life becomes difficult. Rather than get plentiful and cheaper electricity, together with carbon reduction and electricity security, exactly the opposite happens. They use up their carbon allowance or targets, their consumers pay more and they become insecure about their energy supplies.
At Power Ledger we believe that the way to solve this is not to keep doing more of what is already being done. So we and many others now believe that what’s going to solve this problem is changing the electrical system from a centralized one to a distributed one.
Insider: How can blockchain technology disrupt and improve the energy sector and push the case for renewables?
Green: At a macro level, using our technology, and given reducing prices of solar and increasing importance of batteries, blockchain technology facilitates an important development: creating a market where renewables can thrive.
What does that mean in practice? Power Ledger has developed an energy trading platform, which is based on the Ethereum blockchain and Power Ledger’s own consortium blockchain. Our software can help people track and trade energy, flexibility services and trade environmental commodities. This means ordinary solar rooftop owners can help the grid rather than just expecting it to be the other way around.
The platform can track, validate and provide an audit trail of every solar energy transaction in near-real time, allowing for greater transparency and increased automation. And ultimately a fully functioning market, rather than a glorified command economy type market.
The future of the energy industry will be liberalized, similar to what we’ve seen happen to the taxi and hotel industry with Uber, Ola and Airbnb – you no longer have to be a massive electricity company to commoditize energy. Blockchain allows independent and disparate participants to also organise together, trade electricity and trust in the network rather than a centralized party operating a network.
Insider: Why did you decide to launch an ICO to raise funds?
Green: We wanted a decentralized business model and we wanted to create a utility token that works throughout all applications and jurisdictions.
We landed on launching as a digital utility token or a currency to create a broader network, and we went into our Initial Coin Offering (ICO) thinking about how we could use the process to ensure people engaged with us, rather than just raising capital to fund the growth of our platform. We wanted to build a network of incentives and governance.
We had a sale in which anyone who wanted POWR (Power Ledger’s utility token coin) could buy in. This resulted in a ‘grassroots movement’ of small buyers who want to change their energy future and participate in our ecosystem, rather than just large crypto-traders.
Insider: What are the advantages of P2P trading for traditional energy retailers?
Green: Energy retailers increasingly are being asked to provide the kind of clean affordable power that without P2P they wouldn’t have access to. Many companies now want 100% green energy through either Virtual Power Plant arrangement or renewable energy certification. Either way, increasingly this is going to be calling on ordinary people with rooftop solar to spare.
Insider: Your model turns consumers from passive customers to active participants. Are they ready for this?
Green: In many cases the consumer is ahead of us. They are saying things like “I want to trade my surplus solar with my favorite retail brands and be paid in store vouchers and credits”. So are they ready for it? Certainly in some cases. But just like your granny is still trying to get her head around the iPad you bought her for Christmas, not everyone is on the same page. The future, as is often said, is not evenly distributed. Some retailers are better placed than others to embrace this new market and we are partnering with those retailers who are getting ready for the new electrical world.
Insider: You are currently engaged in a number of small projects and test cases. What is needed to advance to more widespread use?
Green: It’s becoming increasingly clear that updates to regulation is required to allow things to progress smoothly. This is already happening in large population jurisdictions like the US, Europe and India and we are making great progress with clients in these places leading to the development of distributed energy markets and the scale of our business.
Power Ledger has run scores of successful deployments with partners around the world, with renewable energy projects in nine countries used by more than 20 clients. These are crucial for building momentum for the mass scalability that Power Ledger’s P2P technology is designed to support.
As we demonstrate the ease and advantage of Power Ledger’s technology, we are also working to encourage the mass take-up of renewable energy technologies such as rooftop solar for businesses and households where and when its needed on the grid, avoiding the issues that can be caused by renewables being installed anywhere and everywhere.
Insider: Similarly how do you incentivize and motivate households to become engaged with P2P trading and ultimately produce and trade renewable energy?
Green: The simple answer is by creating a favourable trading environment not just for solar, but for storage of excess energy too. Time after time, when you look at the problems of the grid, they come down to not just the production of solar energy, but also the ability to dispatch it when it’s really needed.
This stems from the fact that electricity isn’t like most other goods. You can’t easily shove it in a warehouse when you’ve got too much of it and save it for a rainy day. It also requires technology to coordinate the assets, and provide clear price signals to encourage them to be invested in and sized appropriately to take advantage of the market opportunities. As people realize the value is in the storage we believe a very rapid transformation will start to happen.