When Dr. Jemma Green was completing her PhD she found that apartments in Australia didn't have easy access to renewable energy.
She decided to try and solve this problem by opening up the energy market, so people in apartment buildings could trade energy between themselves, without the need for a third-party energy company. To do this, Green developed a battery system which was the first of its kind in Australia. It would help people trade peer-to-peer, but she still needed software that would be able to sustain the process.
Her answer was blockchain technology and it was with this idea that Power Ledger was born.
Power Ledger is a peer-to-peer, blockchain-based energy trading platform, where renewable energy can be sold between buyers and sellers without a middleman.
So, let's take a step back and work through what blockchain technology actually is and how it allows Power Ledger to work towards making the energy market more accessible.
What Is Blockchain, Anyway?
Blockchain is an emerging technology that changes the way we trade and transact with each other. One major change that comes with blockchain is the way that it digitises transactions of both currencies and commodities. Another important factor that defines blockchain is the way it establishes peer-to-peer trading. This means that digital currencies or commodities, like energy, can be transferred from one person to another without relying on a middleman like a bank or power company to process the transaction for you.
Blockchain is in its early stages of development and will soon become something we use without really knowing. In terms of development, it's like we are back in 1994, when the internet or email was developing -- we don't really understand the full capabilities of blockchain yet, but eventually we will use it as easily as we use the internet now.
Sometimes it can be confusing to separate Bitcoin and blockchain but, it's important to remember that Bitcoin is simply the most mature example of a digital currency that uses blockchain technology. Bitcoin and blockchain are not the same thing -- Bitcoin just uses blockchain to move from person to person.
The blockchain is able to manage and organise a lot more than just money and the work Power Ledger is doing is a perfect example of how blockchain can be used to make transactions with commodities more transparent.
What Is Power Ledger And What Do They Do?
So, back to Power Ledger.
Power Ledger uses blockchain technology to allow buyers and sellers to trade solar energy between each other without needing to rely on a third-party company. Dr Jemma Green, Co-Founder and Chair of Power Ledger told HuffPost Australia that Power Ledger formed with two key concepts in mind -- peer-to-peer trading across energy networks and peer-to-peer trading of energy within buildings.
The focus of these two key areas aims to start solving structural problems in the energy market where people are moving off the grid.
"We set up the company in May of last year after seeing some problems in the market. So Dave [Co-Founder Dave Martin] who has been working in energy networks for two decades ... saw that the energy networks business has a structural problem and that because of distributed renewables the network is being used less," Green said.
"So people left using it are paying more and [he] saw that the blockchain could encourage more trading across the network."
So how are they approaching this widespread problem?
"We are moving from a centralised system to a distributed energy system," Green explained. "So, I think that in terms of the peer-to-peer trading product it can be about maintaining the utilisation of the grid and making the idea of going off the grid less attractive because the grid is a very valuable asset.
"Not everyone can afford to buy solar panels and they might not have the roof space for it or they are renting and I think our platform gives renters access to renewables."
Green also said that Power Ledger's distributed platform means that landlords would have an incentive to invest in renewable energy for their tenants.
"Landlords are like 'why would I put solar panels on the roof for the tenant if they get the benefit?', where as, if the landlord gets the income in the form of an electricity bill that would justify them investing in that in the first place."
How Is Energy Digitised To Sit On The Blockchain?
Power Ledger uses a software solution that measures the amount of electricity consumed or generated. The way the energy is moved from one person to another is via a unit called 'Sparkz' which is a tokenised unit of electricity or a digital representation of the energy that is being moved from the buyer to the seller.
"Basically, Power Ledger has a software solution and it connects to smart metres. It reads the outputs of the metres in terms of electricity that is being consumed or generated and it records that on the blockchain," Green told HuffPost Australia.
"As somebody purchases or consumes electricity that is also recorded on the blockchain and those two pieces of information from the transaction for which Sparkz are transferred -- so it happens synchronously. The actual recording of the electricity is the movement of Sparkz from the buyer's wallet to the seller's wallet."
This means that the buyer is receiving the payment for the electricity at almost the same time the seller receives the payment for the energy. This happens in the form of Sparkz being transferred between the two parties via the blockchain. Once the seller receives the Sparkz into their digital wallet, they can convert those to Australian dollars.
"So normally what happens is, you do a transaction and the payment happens afterwards and in electricity markets ... every 60 days you might get a bill and then in the wholesale market it could be 60-80 days, so this means that you get paid for the value that you provide instantly."
How Can We Get Involved And Why Should We Care?
Power Ledger has had massive success in both Australian and international markets. Even Elon Musk has approached Power Ledger for information about what they are doing in the energy space. Their success is fast proving that digital energy and the vast applications of blockchain technology is something we should be interested in.
Currently people can buy POWR Tokens in their sale, which closes Friday October 6 at 6pm AEDT. In their presale, over $AUD17 million was raised and so far in their current sale they have raised $USD10.9 million.
This sale is Australia's first ever Initial Coin Offering -- or ICO -- and Power Ledger is calling it the Token Generation Event. An ICO is a sale where a blockchain company like Power Ledger sells parts of their ledger to people and this gives them access to the function of the blockchain. This could be gaining an income stream, owning a portion of an asset or gaining a licence to some kind of data.
To participate in the ICO you need to go the Power Ledger website. To purchase a POWR token you need to use a cryptocurrency -- either Bitcoin, Ether or Litecoin.
Green says that digital energy and a peer-to-peer network is worth investing in, because it promotes a green and more accessible energy solution.
"I would say that Power Ledger's mission is around democratising power and we think ... that is going to become even more pronounced and this is about people getting a return for the contribution that they make to the energy system," Green said.
"And they get a proper return for those contributions and I think that the potential with the Power Ledger platform is to create a really fair and transparent energy system, that is low cost and low carbon."