Energy Coins and Blockchains Role In Energy Grids

Energy Coins and Blockchains Role In Energy Grids

There has been a multitude of academic research and simulations which collectively conclude that blockchains integration with smart metering has massive potential for energy cost savings, some figures saying that a 5 to 15% decrease across the board is possible with this smart metering technology. Given that the number of energy blockchain projects is seemingly endless only the most notable will be discussed. This leads me to the conclusion that one startup to date seems way ahead of the others. Before we get into this I want to remind you that this video is based on my personal opinion and is in no way considered investment advice.

Blockchain Based Decentralized Management of Demand Response Programs in Smart Energy Grids outlines the problem with actual math and code behind a simulation-based solution. Energy usage fluctuates constantly in energy grids, on a daily and seasonal basis. When you get up in the morning and come home from work, the energy grid requires a rapid shift from low to high demand. Nuclear power plants can’t fluctuate to meet this demand, coal plants have limited control, and gas turbines could be used for peak load periods but that is not at all cost-effective. Currently, distribution system operators or DSO’s incentivize industrial facilities to generate their own power during peak load periods with on-site diesel generators or decrease energy usage during this period. So, what's the problem with this?

Dependency on a DSO causes reliability issues and minimal privacy. Small-scale renewable energy prosumers are left out of the picture. The cost-effectiveness of renewables has been closing the gap between that of nonrenewables and its integration is hindered by a poor system connecting them to an energy grid. Homes with solar panels have to store that energy with batteries anyway, so why not have that energy discharged to the grid at peak load times in a system that pays for that energy. Every inefficiency that I just mentioned SCREAMS smart contract, smart contracts used in conjunction with smart metering devices could fix every one of these problems. Consensus is what makes a coin mandatory in this ecosystem, which an inevitable feature of the blockchain. This paper uses a hypothetical transaction stake as their consensus mechanism. Proof of work is counterproductive in this application given the amount of energy it consumes. Proof of stake is the recommended consensus mechanism in this paper, which inevitably requires an altcoin.

Current Projects

Energy coins include but are not limited to NRGcoin, Energo, Genercoin, KWHcoin, Wepower, and MWATT. We are only going to talk about the better ones of this bunch and that starts with Restart energy which is based out of an already established multi-million dollar company but I don't think their blockchain initiative is very serious. One reason is that their team is composed of 14 people, and only one is a developer. Their nearly 100-page white paper is also full of repetition in a series of typical blockchain buzzwords. They make statements like “30% more efficient with our smart metering devices” which is just unrealistic, and CNN and CNBC covered them, it's just everything that I try to stay away from. Restart Energy might be a great project, but I could not find enough information that indicates the coin will grow as rapidly as the company.

Energo is based on a similar concept and I can't rule them out as a bad project. My only complaint is lack of information, for example, they show team with no information other than first names. The details of this project are too vague to take it very seriously.

We-power is the most popular of these coins and it’s for good reason. Simply put they have a solid plan and team. Their tokenization initiative is great for making starting renewable energy companies accessible with lower initial investment. The primary benefits of tokenizing energy are trust and transparency and wepower could potentially do this but they have yet to complete a pilot program, which is set for July 2018.

NRGcoin

NRGcoin is the clear winner in my opinion. So what makes NRGcoin different? Well, there's no fluff, no social media, no marketing, no ico, just academic research and implementations. NRGcoin makes the other guys look like they're trying to find the cure to cancer with baking soda and vinegar. Unlike other cryptocurrencies, there was a number of research papers pertaining to its use. One of these is based off a demo where a mini-neighborhood used smart metering in a smart contract based reward system. This is the proof of concept necessary for upscaling its use, and they did just that. More on that in a bit, first I’ll explain how the NRG ecosystem works.

It starts with the use of IOT based gateway devices which measure the input and output current of a home. Excess energy stored in that home from solar panels or other renewables communicates to a smart contract and outputs energy to the grid via the gateway device during periods of increased demand. Smart metering allows the smart contract to mint coins for that energy prosumer, based on the level of demand on the network at a given time. This smart contract calculation for minting happens every 15 minutes and over time the amount of NRGcoins minted will decrease, maintaining its value. Not only does this smart contract-based system replace DSO’s, but it greatly increases their capabilities. The only scalable way to incentivize small-scale energy prosumers is with contract executing code.

NRGcoin could only be spent on green energy and at all times one coin should be consistent with the value of one KWH. The immutability of smart contracts will never prevent you from getting inadequate payment for energy contributions and eventually this could lead to a completely independent network of renewable energy users. Now here’s the catch, it’s been almost 8 months since their last event and there is no more NRGcoin specific news, so what happened? I couldn’t figure this out until I learned a little more about Mr. Mihaylov. He is pretty much the face of NRGcoin and is the senior research engineer at Enervalis. On his website, he states “I am continuing the development and realization of a concept I introduced in my earlier research: NRGcoin” and then he elaborates further. Enervalis is a company now collaborating with NRGcoin which aims to make the transition to renewables more cost-efficient. From what I gather about Enervalis, their smartpowersuite makes up their whole initiative, and the foundation for the smartpowersuite is NRG’s network. Smart microgrids, smart buildings, smart EV charging and smart settlements are just other use cases for what NRGcoin offers.

Companies Involved

Enervalis is working with this extensive web of other energy companies and I'm going to briefly show some of them just to demonstrate how large this initiative is.

ABB is an industry giant focusing on energy and infrastructure and has a publicly tradable stock.

Elia has Belgium's energy transmission system legally monopolized.

BAM is a Dutch construction company with projects all over the world
Stedin is a smart metering company that tracks in and out energy on smart meters. They believe with an increasing use of renewables demand response could be best addressed best with smart metering. What are they missing? It’s the lack of an auto-executing economic reward ecosystem for energy surplus.

Renovates is a smart home renovation company with a focus on increasing renewable energy usage.

EEBUS is a company for energy based smart devices.

This is just the tip of the iceberg as far as companies involved goes. This industry is huge and rapidly evolving. Many more companies are trying to get a piece of the pie, but I did not have the time to go further than this.

Multiple articles make mention to Enervalis and their role in the collaboration, but little is said about NRGcoin or how the software works. I don’t understand why the use of blockchain and cryptocurrency is not advertised, but following diligent research, it is clear that the smart grid ecosystem of Enervalis offers a superior set of features thanks to smart contract implementation.

Eemnes Energie is a company that utilizes government subsidies to affordably use renewables in smart homes. They have completed pilot programs and are constantly recruiting new customers. They are using Enervalis software for their smart metering projects. This is a small mention to the company but the statement itself is huge. The purpose of smart metering in this network is for a better solution to demand response. Software is the distinguishing feature between smart metering technologies and blockchain is the active ingredient of this recipe that makes NRG’s network best for demand response. This sheds light on how you could be using blockchain without realizing it, and this sort of thing will only be more prominent with time.

A very recent startup pitch was the first piece of content where NRGcoin is explained in conjunction with Enervalis. The only major difference compared to his first pitch was the mention of Enervales and the current limitation; smart contracts cannot process measurements, they need a coin on the blockchain and the issue is that everything would be public and not GDPR compliant. For this reason, computations must currently be done off-chain in a semi-centralized manner. This limitation could be addressed with Enigmas exact software (check out my last review for details). He also mentions that 4 pilots have been completed successfully in Europe! I am so happy to see blockchain being used in a practical manner, and I am so confused as to why no-one is talking about this. Every project that gets publicity nowadays prioritizes marketing instead of development. I guess Enervalis and NRGcoin don’t care about attention, they just care about results.

Conclusion

That just about concludes this video, I can’t wait to see were Enervales and NRGcoin go in the future because right now when comparing them to other startups, they are on track to blow everyone else out of the water. I don’t think potential stops with demand response. No-one I found has made mention of this but I think prosumer power factor correction could be also metered on the grid. Right now powerplants constantly charge and discharge capacitors to compensate for an overly inductive load on the grid. If homes were better incentivized to use capacitive loads, that could save massive amounts of energy that is currently wasted.

As per investments, NRGcoin is not publicly tradable yet. I just wanted to show that the best projects out there are not always found on coinmarketcap, and in general are really hard to find. I hope altcoin analysis can enforce this concept, not only to protect investors and reputation of cryptocurrency but to support the best projects, especially when the net effect on society is extremely positive. If you guys have any questions or resources for more information please leave a comment. Thank you for watching and be sure to follow us on all our social media channels.