With high-profile scandals and a market downturn, Web3 tech has taken a hit. But beyond currency and NFTs, there remains a strong case for the emerging technology.
“I called my mother over and said, “Mum, could you hold the baby while I talk to this person?”
Dr. Green is describing the day in her hometown of Perth when she first met her business partner, John Bulich, and discovered blockchain. Having just given birth to her first daughter, Green recounts scrambling out of her house clothes in time for the meeting and tells me about the moment she heard about this blockchain thing. It was going to change the world.
Behind every founder, every technology, is an aha moment. It’s endlessly fascinating to listen to the unlikely encounters and twists of fate that herald new enterprises. Amidst all the web3 hype for the creative industries, I think most haven’t caught on to what distributed ledger tech can do for the energy transformation to renewables. Dr. Jemma Green, however, figured all this out years ago. Back in 2016, Bulich and Green immediately saw what this tech could do for building decentralized, renewable energy communities. Understanding how blockchain could help communities trade renewable energy, the two decided there and then, on their first encounter, to set up a company—and Powerledger was born.
But Green’s ideas about blockchain and peer-to-peer energy trading didn’t start in Perth. Following a career in banking and a master’s in sustainability at the University of Cambridge, Green embarked on a nine-month hiking sabbatical while she considered her next steps.
“I’ve never been someone who could sit and meditate, but I found hiking a kind of meditative experience,” Green explains. “And all of these ideas started popping into my head. One particular idea was to build an eco-village. It was a bit of a radical thought, but it persisted and wouldn’t really go away.”
Encouraged by the Mayor of Fremantle, Green did work on developing an eco-village as part of an applied PhD. Green recounts how she wanted to create a “marketplace” within an apartment building in the eco-village so residents could fairly trade renewable electricity.
So, what was the answer to Green’s question? What can blockchain do with electricity? As it turns out, quite a bit. While Green does describe blockchain as a useful component to support the energy transition, she is quick to pre-empt skepticism and renounce the blockchain fanaticism that accompanied the technology’s nascence.
“Yes, you can do nearly all of it without a blockchain, just as you can have supermarkets without barcodes. You’re not going to say: ‘I’m going to that Waitrose because it’s got barcodes,’ no. But because it’s got barcodes, the system is more efficient, stock control is better, there are less mistakes at the cashier.”
Green explains that having blockchain in the background for record-keeping builds trust in the system, which is necessary to encourage participation in new markets. Another reason is to reduce the risk of issues with trades.
“Say I was to send you a [renewable energy] certificate in Oslo. The buyer says, ‘Well, send me the certificate, and I will send you the money.’ The seller says, “Well if I send you this certificate, how do I know if you’re going to pay me?” And no one wants to be the first mover because there’s counterparty settlement risk involved,” explains Green.
“Whereas with blockchain, the transfer of the certificate and the digital payment from digital currency are one and the same entry on the blockchain. One cannot happen without the other.”
Green points to the 2018 European Union clean energy package directive as a catalyst for the emergence of energy communities in Europe. The EU Directive is a legal framework that includes provisions for citizens to create local energy markets. Enabling people to trade energy with one another from, for instance, solar panels installed on your rooftops is an exciting idea for a few reasons. The main benefit, explains Green, is that it encourages closer proximity trading and energy consumption, which provides a service to the grid. Because we don’t choose when the sun shines and the wind blows, and sometimes the sun shines and the wind blows too much, people store and trade energy before it overloads the grid via the substation. Substation what, I ask? Green introduces another analogy.
“Think about the grid a bit like a tap: say you turn the water to the max. But say you had ten times the amount of water going through, it would burst the tap. [Substations] are only built to cope with a certain amount of volume, and if there is too much pressure on them, then it moves their lifespan from 30 years to 20 years to ten years, and that’s a multimillion-dollar piece of equipment. So, creating the local market within the town, encouraging people to store and trade energy with each other, reduces the pressure on grid infrastructure like substations.”
Our talk concludes with a discussion on another equally fascinating facet of Powerledger’s business model—their cryptocurrency POWR, a purpose-built digital currency for accessing their software. (full disclosure: this is not a sponsored article, but I did buy £15 of POWR. Out of curiosity. Just to see how it behaves). Here, Green outlines the digital shift she imagines we will see in the energy sector.
“In the same way we’ve got citizen journalists and citizen bloggers, we will have a new energy paradigm: a two-sided market with citizen energy utilities and citizen energy retailers. Ultimately, they will be able to trade and settle with each other financially on the blockchain. To start, the energy traded will be integrated into the customer’s electricity bill, but eventually, they will have enough of their own energy data to simply trade their excess solar energy and settle with our digital currency. I think that’s an exciting future stake.”