I have recently started having some MEM students work with a company called Powerledger.io , a company based in Australia that has built an interesting platform for peer to peer energy trading using blockchain technology.
One may ask why such an innovation is even needed in a world where electric energy is quite abundant and often very affordable? One may also ask, who is the beneficiary and what is the value proposition for such a system?
Let’s start with one of the megatrends in the power distribution industry and that is a trend towards distributed energy. This is a world where many of us morph from energy consumers to energy prosumers (producer/consumers blended). I may have some solar panels on my roof that my local utility is willing to pay only 0.07/KWHR for the energy they produce, while a friend of mine in a nearby state would be interested in buying that clean energy at a higher price, perhaps 0.15/KWHR as that gives him a discount against his utility’s prices. At the moment the system is mostly monopolistic with only your local utility allowed to purchase your generated power under the terms of your local net metering regulations. In a peer to peer trading world, the utility may not be so happy that there are competitive buyers and providers of clean energy over the network, however the prosumers would be ecstatic to learn that their energy can almost literally be auctioned off to the highest bidder.
The value of using blockchain technology for the transaction processing is self evident. We need a currency that is transparent and secure and real time and can capture the transactions with a full sense of transparency.
There are many interesting aspects to this kind of transaction in the future: there is a regulatory aspect, a technical aspect and of course the economic aspect. While this technology and platform is in its infancy, there is much opportunity for those young engineering managers who are interested in ground floor opportunities and leading edge at the same time. While there are other “competitors with similar or ancillary offerings (Suncontract, Grid+, Solarcoin), Powerledger has a complete end to end platform solution complete with token ready to go. In fact, there are several trials in the US already underway. Our MEM students are on the leading edge of this fascinating new technology and the business implications that result. The value proposition becomes clear: on a peer to peer basis, energy trading can achieve economies of scale and avoid the dramatic price fluctuations that exist over the antiquated and often ill balanced mostly one way grid of today. Similar to the cab industry when they faced a peer to peer network (UBER) that competed with the old style monopoly, time will tell whether or not peer to peer energy trading will be as valuable to the users or as destructive to the incumbents as UBER.
About the author: Mark Werwath, Clinical associate professor, Director of Master of engineering management program, Co-Director of Farley center for entrepreneurship and innovation, McCormick school of engineering and applied science, Northwestern University