Grid+ Hopes To Light Up The World Via Blockchain

Blockchain, FinTech, ICO News, Innovation, Investing | September 20, 2017 By:

Grid+ is an energy sharing network that empowers energy consumers to become their own “utility” by selling surplus solar or battery power to those who need it. The company has already sold 45 million tokens in its pre-sale, and will hold its public sale on October 30. The company declined to state how much money the pre-sale raised. However, published reports indicate the pre-sale garnered more than $40 million USD.

The company hopes to leverage the proliferation of solar arrays (and batteries in the near future) that has turned energy customers into potential energy sellers. A Grid+ user can sell their surplus energy on the network for profit. In the same way, consumers on the network can buy this surplus energy for a much lower cost than centralized utilities. Electric grids currently depend on centralized generation, and distribution through retailers, or utilities. Grid+ claims these retailers typically mark up energy 100% above wholesale costs to cover their administration and marketing costs, and bad debts.

Grid+ digitizes and automates the work the retailers do. They have already built and successfully tested Version 1 of their smart agent hardware device that uses blockchain and AI capabilities to determine the most cost-effective purchasing decisions for powering homes. Grid+ is a division of Brooklyn-based ConsenSys.

Karl Kreder, Co-founder of Grid+, talked with Block Tribune about the venture.

BLOCK TRIBUNE:  Walk me through how this would work for consumers

KARL KREDER:  Consumers in our market (Texas to start) are able to switch their house to our utility for service. After customers sign up on our website, we ship them an Agent device and switch their power to our utility at a specified date/time. Periodically (probably every month, but up to the customer), the customer pre-pays for energy with a credit card, which gets deposited in the form of cryptocurrency (a stable-coin issued by us) to their Agent device.

Once their service begins, the Agent begins querying our API for a bill every 15 minutes. This bill is based on the market price and the usage (we get customers’ usage data from the regional Independent Systems Operator — ERCOT in Texas). The Agent pays this bill over a state channel which it has set up automatically. We’re planning on using uRaiden (a micropayments system).

BLOCK TRIBUNE: What is a realistic range of return for residential users on their investment?

KARL KREDER:  There is minimal investment for a consumer to become a Grid+ customer and adopt blockchain technology.  The anticipated outlay is around $50 as well as a refundable deposit based on estimated monthly usage. This cost should be recouped by most customers in less than 2 months, especially in Texas.  In terms of return on investment on a renewable technology such as solar or batteries, this depends on technology, region, location of house/panel, etc. Here’s a rough estimate:

Keep in mind that these rates are based on what existing utilities pay for power — we will provide market-based pricing for generators.

BLOCK TRIBUNE: Do you have to take Grid+ into consideration when purchasing a solar array?  Is there a minimum hookup or some other technical specifications?

KARL KREDER:  No, Grid+ just provides an accounting and transactional system. Any hookup that works with an existing utility should work with Grid+.  However, the impact of Grid+ on the revenue generated from a solar installation would have to be considered.

Grid+ customers do not need solar panels or batteries. We are happy to simply provide energy to consumers at one of the lowest available price points.

BLOCK TRIBUNE:  Does the technology currently exist and is it deployed?  If so, where?  If not, what is the target date for deployment?

KARL KREDER:  A previous iteration was deployed as part of a Proof-of-Concept for a client engagement in April. We are targeting Q2 2018 for our first commercial utility in Texas and plan to conduct a larger scale pilot with around 5000 customers.

BLOCK TRIBUNE:  What is the target number of homes to be considered at scale?  When that is reached, what will be the effect on utility capacity – in other words, do you anticipate it being boosted 10 percent?  

KARL KREDER:  We are targeting ~100,000 customers in Texas by the end of 2019 to reach what we consider to be at scale. It is hard to say what extra capacity the average customer will provide because we don’t know how many customers will have solar panels, batteries, etc. The goal of Grid+ is to open market pricing and incentivize our customers to purchase those resources. This will result in additional infrastructure inside the grid, which will indeed increase the overall capacity of the grid. The scale and time frame are difficult to estimate right now.

BLOCK TRIBUNE:  Can you break down the financial chain on this – in other words, power is available for purchase – what are the cuts that go to the homeowner, the utility, and to Grid+?

KARL KREDER:  The average price of residential electricity in Texas is 11¢/kWh.  The average cost of electricity is ~3¢ while distribution and transmission costs are around 3¢. The rest of the cost is the retailer markup, which is around 100% over the cost of the electricity and distribution. The markup that a retailer charges roughly can be broken down as follows. 25% of the markup goes to amortizing bad debts of non-paying customers amongst the other rate payers. 25% goes to administration costs, and 50% goes to marketing. We believe that we can eliminate all costs associated with bad debts, and half of the administrative costs by using blockchain to allow customers to pay in real-time. Once we have a structural competitive advantage we can than synergistically save money on marketing as we can compete on price. Overall we believe we can lower the cost of electricity by 35-40% for a residential customer.

BLOCK TRIBUNE:  One of the knocks on solar is that it is more suited to sunny climates than to other areas. With that in mind, where are your targets for deploying the technology?

KARL KREDER:  Solar has proven that it can be economically competitive even in less sunny climates such as Germany.  Although solar has a better return on investment and lower overall cost when used in climates with more solar irradiance, the fact it can work in Germany demonstrates it can work almost everywhere.  We are therefore not focused specifically on climates with the best solar irradiance, but rather on markets which have the best markets, regulations, and required smart meter infrastructure.