Australia’s Digital Currency Opens Avenues for Renewables

Australia’s Digital Currency Opens Avenues for Renewables Trading

Snapshot
• Renewable energy currency allows for multiple parties to trade
• Further offering in September

By Murray Griffin

An Australian company developed a digital currency designed for peer-to-peer trading
among businesses and homeowners looking to sell surplus renewable energy.

Power Ledger’s decentralized trading platform relies on its own version of bitcoin
blockchain technology to instantaneously track transactions, making it possible for them
to trade clean energy without the need for accountants, lawyers, or banks.

The blockchain encrypts, replicates, and shares multiple transaction records across a
network of participants.

Power Ledger said a key benefit of its platform is that participating small and midsize
businesses and homes with rooftop solar photovoltaic systems in Australia will no longer
have to sell excess power back to electricity retailers at the low prices they offer.

The penetration rate for rooftop PV systems in Australia is now among the world’s
highest, according to the Australian Energy Regulator.

While state governments are phasing out premium feed-in tariffs, the loss of these
incentives is being largely offset by declining installation costs for solar systems, the
regulator said.

Those using the peer-to-peer platform instead can sell their excess power to businesses
or households prepared to buy it possibly at a higher price. The buyers also benefit
because they still pay less than they would if they were purchasing from an electricity
retailer. A $25,000 cap discourages large businesses and utilities from controlling the
market.

Expanding Market

It’s a large potential market, given Australia has more than 1.7 million small-scale solar
PV systems on the rooftops of small businesses and homes, and there is a fast-growing
number of slightly larger systems installed on commercial and industrial buildings,
according to the federal Clean Energy Regulator.

The Power Ledger platform can accommodate various forms of peer-to-peer renewable
energy trading, company co-founder and chairwoman Jemma Green told Bloomberg BNA
by phone.

In addition to allowing trading among apartment block occupants or industrial park
tenants that all use power behind the same main meter, developers of projects such as
community solar farms could use it to secure funding, she said Aug. 28.

Developers “could sell shares in their solar farm via the platform,” with the shareholders
then receiving some of the income from the project. Power Ledger would in turn charge
the developer a fee based on “a percentage of the capex [capital expenditure] of the
project,” she said.

For households, the digital currency enables owners to sell their excess energy, much in
the same way Uber and AirBnb lets people make money from their cars and spare
guestrooms.

Larger Networks

If partnerships are forged with electricity distribution businesses, then trading also could
occur across larger electricity networks, according to Green.

The company already is testing its trading platform at a new housing development in the
Western Australian city of Perth. Green said residents were paying at least 20 percent
less for power than if they were buying it from the grid.

Power Ledger is currently piloting the platform in conjunction with New Zealand’s largest
electricity distributor, Vector Ltd. “Vector is looking at the potential for blockchain
technology in peer-to-peer energy trading, and has been working since the start of the
year with Power Ledger on a trial,” said a Vector spokesman, adding that it’s too early to
comment on the trial.

It’s also in discussions with Western Power, the distribution business owned by the
Western Australian state government, regarding a trial that would involve some of the
11,000 homes—as well as TasNetworks, the electricity distribution network owned by the
Tasmanian state government—Power Ledger managing director David Martin told
Bloomberg BNA by phone Aug. 28.

In addition, discussions are underway with a large distribution business in the U.S. and
another in Japan, although Green said neither could be named at this stage for reasons
of commercial confidentiality.

The company started selling 100 million tokens that give those holding them rights to
use its trading platform Aug. 27 and by Aug. 30 more than 90 percent had been sold at
a fixed price of 8.8 cents.

Disruption?

Power Ledger has created 1 billion tokens and a follow offering will take place in
September at an uncapped price.

Meanwhile, the federal government’s Australian Renewable Energy Agency (ARENA) has
separately been looking into using blockchain to enable peer-to-peer trading in
renewable energy among businesses and households.

In May this year it contributed A$120,000 ($95,000) to an A$293,000 desktop trial by
AGL Energy, one of Australia’s largest electricity businesses.

“Australia has experienced a rooftop solar boom in the past decade and we are expecting
a residential battery boom to follow in the coming years,” ARENA chief executive Ivor
Frischknecht said. “Ultimately, these investigations are about getting the most value out
of solar and battery systems through a more flexible and modern marketplace.”

A report on the findings of the ARENA-funded study is expected to be released soon.

To contact the reporter responsible for this story: Murray Griffin in Melbourne
at correspondents@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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