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Solar DAO: Making A Difference

22.08.2017 — 0

**How Solar DAO differs from other solar blockchain projects. **Take a look at the appendix in the end of this article to see all differences in one table.

Solar DAO is bringing the advantages of blockchain to the rapidly growing industry of renewable energy. This article explains how it differs from other blockchain-based projects in this field.

The famous Austrian economist Joseph Schumpeter defined innovation as a new business combination. If you want to bring value to the people, you have to catch a trend, but also make a difference. That is, a business opportunity emerges when one sees how to combine existing processes or technologies anew.

Solar DAO aims to do precisely that, by integrating blockchain technology into the field of solar photovoltaics. In so doing, it is genuinely different from many other projects that have their stakes in similar combinations. Here’s how.

Energy Tech via Blockchain: Setting the Agenda

The idea that blockchain technology can be an opportunity for the development of renewable energy has become quite a trend over the recent years, as evidenced in numerous media and scholarly publications.

Gradually becoming prominent and legitimate (if not fashionable) across different circles, it now features on the pages of Harvard Business Review and PwC reports. Moreover, in May 2017 several energy giants, including Shell, Statoil, Tepco, Centrica and others, contributed $2.5 M to the establishment of the Energy Web Foundation (EWF), a global non-profit organization focussing on the acceleration of blockchain adoption within the energy sector. The EWF aims to “identify, document, and assess the most promising use cases of blockchain technology in the energy sector”, as well as “launch a new energy-focused blockchain platform (“Energy Web Platform”) that provides the functionalities needed to implement these use cases at scale”.

Alongside more conventional policies to support renewable energy production, like tax incentives or favourable regulations, governments, companies and communities are increasingly concerned with managing the demand-side, that is, energy consumption behavior. Here the goal is to effect the transition to a “greener” energy by changing the way people produce and consume it, and simultaneously to mitigate the most important risks involved in such a transition.

Most of the recent blockchain-based projects in the field of solar energy fall into this category. As such, being focused on the demand side, they do not compete with Solar DAO directly.

Still, it is worth taking a closer look at them, just to see how different Solar DAO is.

Variable Renewable Energy Generation

To understand the variety of blockchain applications in the energy sector one needs to get the basics right.

The basic problem with renewable energy like wind or solar power is that it is inherently unstable, being categorized as variable renewable energy (VRE) in the professional discourse.

VRE means that, as different from the traditional energy paradigm (also known as “baseload generation”), the possibility to predict and control the output of solar panels or wind generators is very limited, due to the unstable nature of energy supply. Since the output of solar or wind energy depends on the weather conditions and climatic change, it requires a far more flexible system of demand and supply management, as compared to the traditional energy systems like coal or nuclear power.

In the latter case, once a power station is set up, usually as a result of a very expensive construction process, the variable costs of its energy decline to a minimum, provided that the facility works at full capacity and without major interruptions. This clearly depends on the stability of demand, which is why baseload energy generation is used to provide the population with a necessary minimum of electricity, and is usually complemented by other energy sources in the times of peak demand.

In fact, as the renewable energy promoters argue, electricity demand is never stable, nor has it ever been. That is especially true for the rapidly developing countries, where new economic growth needs to be fueled with additional energy and the demand is completely unpredictable. So, there is always an opportunity for renewable generation. However, any increase of the share of renewables among the energy sources of, say, a nation, would require increasing flexibilisation of energy consumption. Here blockchain can help.

Managing the Demand Side

The ideology behind the demand-side projects that introduce blockchain into the management of energy consumption goes back to the idea of the prosumer (that is, a person simultaneously producing and consuming) invented by Alvin Toffler, as well as the economics of peer production networks.

In this context, blockchain is used to incentivize people to change their energy consumption behavior, rewarding them for economizing on energy and using renewable generation, while at the same time allowing greater flexibility of supply and demand management to make variable renewable energy more convenient for them as consumers.

There are some typical cases exemplifying how such demand-side projects work.

For example, take Scanergy, a EU-funded blockchain project under development in Brussels. Scanergy is a decentralized blockchain-based energy network that allows users to trade home-generated energy with neighbours within a local community. With the help of an alternative currency called NRGcoin, the locals can inject the excess power they have generated into the local smart grid and get coins in return. In the opposite case, one can get additional energy for coins (say, on a cloudy day). One NRGcoin equals one kilowatt-hour. This ratio is fixed and thus not subject to the changes in the governmental regulation of renewable energy. NRGcoins are also tradeable on traditional exchanges for money. The project allows for a decentralized exchange of energy units within a local neighborhood and independently from the state, as well as from the state-induced incentives to reduce energy consumption.

A similar project exists in the US, known as the Brooklyn microgrid-on-the-blockchain, operated by LO3 Energy, an energy tech company. It connects people living in a neighborhood who have solar panels on their roofs and enables them to trade solar energy units among themselves, instead of selling the excess power to the central grid. Here, like in Scanergy, blockchain is used as an electronic ledger to record transactions, creating a decentralized P2P energy market. The microgrid operates autonomously, but alongside the central grid, making the locals less dependent on the latter.

The German project Conjoule is yet another example of this kind. Similar initiatives exist and are currently undergoing testing in Austria, Germany, and the UK.

Other demand-side applications of blockchain also involve special cryptocurrencies designed to enable peer-to-peer energy trading and lending, smart devices like electricity meters, decentralized energy transaction and supply systems, energy data sharing platforms, smart grid monitoring systems, and the like.

Basically, any and all such project aim at **enabling people to use renewable energy and incentivizing them to do so. **They also allow for more decentralization and less reliance on traditional non-renewable energy generation.

Some of these projects rely on certain forms of solar crypto-assets, such as cryptocurrencies tied to the production of solar electricity, or designed to serve as a means of solar energy trading. The following section presents a comprehensive overview of the blockchain projects in the field of solar energy at various stages of their development. While none competes with Solar DAO directly, taken together, they provide a good background against which to see the difference.

—** Solar Crypto-Assets: the Lay of the Land —**

1. Solar Bankers / SunCoin

Solar Bankers is an exemplary project of this kind. It is based on a particular kind of solar photovoltaics technology using thin film solar cells. According to the official information provided on the project’s web-site, the device invented by Solar Bankers is “micrometric-thick polymeric layer that can concentrate, bend and filter the different colors of light”. As such, it allows transforming sunlight into electricity, similar to crystalline silicon solar cells used by Solar DAO. There is a variety of applications, including the use of the film in the solar panels, windows, buildings and home equipment.

The project aims to create and facilitate the community of the owners of Solar Bankers equipment, called the SunChain. The project team promises that the network will connect different devices that produce solar energy and are equipped with SunChain Wallet. It will be decentralized and regulated by Solar Bankers smart micro-grids. The users will have an opportunity to produce solar electricity, store it, or trade with neighbors. To facilitate this process, there is also an alternative currency called SunCoins.

SunCoins are Solar Bankers’ tokens. They can be obtained via buying for BTC or Ethereum, and also via the injection of solar electricity into the micro-grid that connects neighbors. SunCoins can also be traded on several cryptocurrency exchanges, including for fiat money. Finally, the users can also exchange SunCoins for the solar energy generation equipment provided by Solar Bankers (solar panels, windows, or tiles), as well as for CO2 emission certificates.

Thus, although tradeable, SunCoins are not backed by any specific commodity, but represent the access to the decentralized energy exchange network and the variety of services offered by Solar Bankers.

2. MyBit

MyBit is a project with a broader scope than renewable energy, encompassing all the applications of revenue-generating machines (or IoT Assets). Effectively, MyBit is a tool for crowdfunding such machines, whereby anyone can buy a percentage stake in a device that generates revenue and get a portion of this revenue in return. MyBit is designed to be a decentralized investment network managed by Ethereum smart contracts, leveraging their potential to minimize the transaction costs of P2P exchanges.

The simplest examples of IoT assets are self-driving cars, 3D printers, drones, and smart homes. In that respect, MyBit aims at a broad integration with the Internet-of-Things. However, currently it is focused on solar panels as yet another example of IoT Assets. Still, according to the project’s vision, it is more oriented towards active prosumers who will install solar panels in their own private spaces, and thus will have an opportunity to monetize these installations, while at the same consuming energy generated by them in-house.

The management of the whole network will be the task of MyBit Foundation, a Swiss-registered non-profit organization. The Foundation issues a fixed quantity of tokens, and the investors can by tokens to become members of the network. This can be done during the crowdfunding period, on exchanges, or privately.

Since the quantity of tokens is fixed, the token holders will have an opportunity to benefit from the price of token appreciation due to the rise of demand (the growth of the system’s users). The same applies to the opposite case, if the number of users will fall down, so the prices will be depreciated. There is also a transaction fee within the MyBit network, so all users will be paid 1% of the network transaction fees proportionate to their stakes divided by the total supply of MyBit. Finally, the investors who finance revenue generating IoT Assets will have an opportunity to collect a portfolio of different devices and receive stable returns, comparable to government bonds but more profitable, and also with a potential increases due to technological efficiencies.

According to what the founders promise, the token holders will ultimately control the direction and ongoing success of the MyBit network and receive revenue distributions proportionate to their percent stake from all transaction fees associated with using the MyBit platform.

3. Power Ledger

Power Ledger is another example of a platform for P2P renewable energy marketplace. It provides a blockchain-based interface between the buyers and sellers of energy, so that can manage the supply and demand without relying on third parties. Effectively, it functions in a similar way to Scanergy, with an important difference that the users are expected to sell their excess energy capacity to each other, rather than simply injecting it back to the grid, and at a higher price.

The applications of Power Ledger include P2P renewable energy trading platform, renewable energy retail, integration with micro-grid networks and smart devices (similar to MyBit), big data aggregation and others.

Power Ledger supports two tokens: Sparkz and POWR. The former is for the local circulation, and the latter is a genuine cryptocurrency. The value of POWR will be set on exchanges. POWR provides governance and consumer protection via Smart Bond technology, loyalty rewards for participants, connects renewable energy charities and organizations, and provides access priority to benefits from an asset’s POWR generation. Sparkz will maintain a constant exchange rate between POWR and the local market electricity prices. It is used to make the local electricity market prices compatible. To get Sparkz, one needs to obtain POWR first.

4. SunContract

SunContract is a Slovenian blockchain-based platform that directly connects solar electricity producers and consumers into an electricity pool based on smart contracts, in order to facilitate peer to peer electricity trading. The idea behind the project is to join together electrical power producers and consumers and enable them to trade electricity through the Energy Pool.

To join Energy Pool, one will need to register via mobile app (currently under development). However, to actually trade energy via the Energy Pool, one needs SunContract tokens (SNC), which can be obtained via a pre-sale of tokens, or on exchange. The pre-sale is opened now at a ratio of 10’000 SNC per 1 ETH.

The mobile app will allow users to buy electricity from the Pool for SNC, sell it to the Pool and get SNC in return, or both. The mobile app will automatically convert SNC to ETH or fiat currencies. The developers of the project urge that the tokens will be tradeable and will increase in value as the demand for solar energy increases worldwide. The project is scheduled to be completed in 2018, when the network will be tested in Slovenia, and prepared to be exported elsewhere.

5. Grid+

Grid+ is a commercial utility operating in several deregulated markets in the U.S. It uses blockchain to achieve technological efficiencies in the energy market. Grid+ agent devices are installed into homes and pay all electricity bills automatically and in real time. The payments are done using BOLT tokens. BOLT is a USD-backed cryptocurrency fixed at a ratio $1 equals 1 BOLT token and is backed by 100% USD deposit.

First, the users register with the platform and purchase the agent. The agent then gets registered to setup a key, and gets seeded with some amount of ETH. The agent gets sent to user, the user boots the agent for the first time and the agent edits the registry, replacing the setup key with a new key-pair (user agency).

Once the agent is set up, the user purchases BOLT tokens via fiat currency or ETH. BOLT tokens are then moved from the platform wallet to agent and act as a deposit. Once the agent registers some minimum amount of BOLT, it automatically opens a payment channel with the smart contract, and pays electricity bills in real time (every hour), decreasing the BOLT deposit.

The core value proposition of Grid+ is to take the advantage of deregulated electricity markets and unlock the technological efficiencies of blockchain. In the short term, Grid+ will lower variable costs, eliminate bad debts, and lower marketing expenses as well. In the longer run, it could also serve as a platform for P2P exchanges and enable efficient energy markets.

6. SolarCoin

SolarCoin is a digital asset rewarding solar energy producers. It was created in 2014 and run by an open community of volunteers called SolarCoin foundation. The main goal behind SolarCoin was to invent a non-governmental mechanism for incentivizing solar energy generation.

An alternative currency, it works like air-miles for solar electricity generation. Individuals who have solar panels in their homes or commercial solar electricity producers can claim Solar Coins at a ratio of 1 SolarCoin for 1 MWh of solar electricity produced by a photovoltaic installation.

As such, SolarCoin is an altcoin and is backed by two forms of proof of work. One is the traditional cryptographic proof-of-work (PoW) associated with digital assets. Another proof of work is a 3rd party verified meter reading of solar energy that is produced. SolarCoin is equitably distributed using both of these proofs of work as a means to reward solar energy generation. The condition of 1MWh = 1§SLR has been designed to hold for the 40-year project intended lifetime.

The issuance of a SolarCoin proceeds as follows: first, solar energy is being generated from a verified meter reading; then, SolarCoin Foundation and community verifies the claim and records the issuance in the public ledger. After that, SolarCoin Foundation sends coins from reserve account to the claimant. The transaction is visible in the blockchain. The coins enter circulation or get stored in the claimant’s wallet. SolarCoin is tradable on exchanges and can be used as a means of payment in a range of ordinary transactions. It is accepted in 35 countries.

SolarCoin has several affiliated sites that facilitate the registration of solar installation in the SolarCoin network. SolarChange is a web & mobile platform using Artificial Intelligence to pre-predict solar production values. SolarChange acts as Claims Facilitator in the MENA and US regions. The ElectriCChain is a global platform to accelerate the growth of solar energy, IoT and Blockchain data technology. Solcrypto acts as a claiming portal for SolarCoin rewards and as a peer-to-peer broker for SolarCoin trades. It is an officially recognized affiliated website of the SolarCoin Foundation (SCF).

The Difference of Solar DAO

As the previous section shows, most of the blockchain-based projects in the field of solar energy have broad aims, covering the energy production and consumption behaviors. Some projects offer flexible peer-to-peer energy trading platforms, with some further functionality, like Power Ledger or SunContract. Some of them are backed by technology: either developed by themselves, like in the case of Solar Bankers, or otherwise, like in the case of MyBit. Grid+ and SolarCoin are exceptions. Grid+ is a commercial utility that aims to introduce blockchain into electricity billing in several deregulated markets so as to unlock technological efficiencies. SolarCoin is a voluntary (non-commercial) project aiming to create flexible incentives for solar energy producers, similarly to the demand-side oriented projects.

How Solar DAO works in one image

Solar DAO is remarkably different from all those applications of blockchain in the field of solar energy. Solar DAO is more conservative and more disruptive at the same time. It utilizes blockchain not for changing energy behavior of individuals and businesses directly, but to empower anyone to invest in solar energy. The blockchain is used here to crowdfund the construction of solar panels, and to radically democratize access to solar photovoltaics industry. Most of the projects reviewed above are designed to serve the needs of those who already own solar installations or other renewable energy generating equipment. Solar DAO is more radical, since it gives everyone the opportunity to become the owners of PV solar plants around the world.

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Appendix: Summary

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