Shoppers would be able to buy electricity and natural gas for their homes in the same way they purchase minutes for their mobile phones if two fascinating blockchain projects succeed.
The companies behind two initial cryptocurrency offerings (ICOs) are aiming to commoditize utility service. Power Ledger and Restart Energy are both building Ethereum-based platforms designed for retailing electricity and other forms of energy.
Romanian-based Restart even aims to sell franchises that will enable entrepreneurs to market electricity in the same way some vendors peddle mobile phone minutes. Restart franchises would sell the RED MWAT ERC20 (Ethereum) token directly to the public.
Proposed Cryptocurrency would contain a Megawatt of electricity
Each MWAT or MegaWatt token will represent a specific amount of energy. The term megawatt means one million watts of electricity, but there is no indication, the token will be worth that much.
Restart even calls this the virtual storage of energy. The initials “virtual charge” of the MWAT Token would be 0.11-kilowatt hours of electricity. The hope is to create the equivalent the airtime for mobile phones that is sold the public. Interestingly enough the tokens are supposed to accumulate energy from producers so they might gain in value over time.
The tokens would be traded on the Red-Platform which will serve as a peer-to-peer (P2P) marketplace for electricity and natural gas. The platform will serve as a clearinghouse and wholesale market for electricity.
Restart RED Franchisees would resell energy from the platform and make passive income from their networks’ energy consumption. A long-term possibility would be that a retailer would sell the electricity generated by the solar panels on its roof, or a fuel cell outback through a Red Network.
Welcome to Energy Democracy
A big advantage of this system is that customers would be able to buy electricity or natural gas directly from producers just as they buy airtime directly from wireless producers. A fascinating possibility is that there might one day be a rack of electricity cards needs to the phone cards at the grocery store.
Shoppers would pick up the electricity and natural gas service they need when they buy their milk and vegetables. In America, phone service is now sold at such diverse locations as dollar stores, Walmart, supermarkets, and even some convenience stores.
Restart even claims this would lead to Energy Democracy, a situation in which everybody will become his or her own energy producer and distributor. Restart has some experience in the market; it is the fastest growing energy company in Romania, with 30,000 paying customers and $20 million in revenues in 2017.
Restart is working with more than 3,000 franchises and 45 partners; including the Orange Telecom dealer EurgoGMS, Interbroker, GRS, and AMVV. in Romania. That means unlike, some ICO products it has physical infrastructure and a real-world distribution system.
Power Ledger Aims to Retail Electricity
Restart’s Australian competitor Power Ledger aims to sell electricity through a P2P platform and “neo-retailers.” The neo-retailers will sell electricity directly to the public much like Retsart’s franchises.
A difference is that Power Ledger will harvest electricity from microgrids and the larger grid. Power Ledger’s POWR Token would be used for grid management and the crowd-funding of renewable assets. Others will be for the peer to peer trading and marketing of energy from microgrids.
The hope at Power Ledger is that residential and commercial customers would finance the creation of next-generation electricity infrastructure through the blockchain. Tests on the system have been done in Australian. An interesting use of Power Ledger will be to provide juice for electric vehicles.
Like Resale, Power Ledger plans to offer Wholesale Market Settlements for electricity. It also plans to branch into areas like carbon trading, transmission exchange, and distributed market management. That means it will sell electricity to both utilities and directly to customers. Everybody would buy their electricity through the same the decentralized platform.
Are Electricity Based Cryptocurrencies Viable?
Such energy-based cryptocurrencies might be viable. The POWR Token had a coin price of $1.69 (0.00171383 ETH or €1.40) on 4 January 2018, according to Coin Market Cap
That gave POWR a Market Capitalization of $603.693 million (613.884 ETH or €500.39 million) and a Market Volume of $95.511 million (97,124 ETH or €79.17 million) on 4 January 2018. Those numbers were based on a circulating supply of 358.194 million and a Total Supply of one billion.
So Mr. Market thinks that there is some value to the concept of an energy-based cryptocurrency. No values for Red MWAT are available because its presale is not scheduled to start until January 15, 2018. Although Power Ledger’s performance indicates it might be coming at the right time.
Will Tesla Enter the Retail Electricity Market?
Tesla Energy is already selling battery packs for home and commercial use. It even has a product called PowerWall designed for home use. Tesla also took over another money-losing Elon Musk project called SolarCity.
SolarCity manufactured solar panels and sold them to homeowners. It collapsed in 2017, and had to be absorbed by Tesla. That raises serious questions about the viability of the retail electricity market. Part of SolarCity’s business plan was to have homeowners sell electricity back to the grid, something that electric utilities hated and tried to throttle.
That raises serious doubts about the retail electricity market, but it does point to another product that Tesla might market. The company might one day sell electricity in batteries or rechargeable batteries sold through retailers.
A business model for this would be the way propane gas is retailed through stores in the United States. Many businesses sell propane in cylinders that are used on barbecues and stoves. When the cylinder is empty, the customer takes to the store and refills it or exchanges it for a full one.
A fascinating possibility would be a lithium-ion battery pack that customers would bring to a store. It would be recharged or exchanged for a full one at the store. That would be an intriguing competitor for Restart or Power Ledger.
Many Companies Entering Retail Energy Market
Tesla Energy has a lot of potential competition in this market, Business Insider reported that up to 10 companies are planning to compete with it in home batteries alone. There are also some smaller companies and retailers in the market including Powerful Living.
A longer-term menace is Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B); which owns the battery maker Duracell and a portfolio of energy companies. Berkshire is already retailing electricity in the form of Duracell batteries, and it is a major player in renewable energy.
Berkshire Energy has invested more than $6 billion solar power projects including two of the biggest in the United States. One of Berkshire’s projects is the Topaz Solar Farm in Central California, which cost $2.4 billion and can supply 550 megawatts of electricity. Berkshire has not entered the utility battery market but it is a logical next step.
Will Energy-based Cryptocurrencies become a Value Investment?
It looks as if the future of electricity marketing will take the form of retail. One wonders if this is a viable industry, and if energy-based cryptocurrencies will one day become a value investment.
One person who seems to think so is Venezuelan President Nicholas Maduro. Reuters reported that his government is planning an oil-based cryptocurrency called the Petro. The purpose of the Petro would be to replace Venezuela’s worthless fiat currency the Bolivar.
The marriage of cryptocurrency and energy might create a fascinating new class of investments. Only time will tell if these tokens will have any real value.