Power Ledger is building an energy blockchain platform to connect all of the players of the energy ecosystem together - prosumers, consumers, market operators, utilities, etc. They want to “enable interoperability between diverse market management/pricing mechanisms and units of electricity (kWh) by way of pre-purchased tokens.” Here's my take on what they are up to.
Business Model / Offering
Power Ledger's offering is a blockchain-based platform that facilitates participation by “all” parties in the energy ecosystem, called the Platform. Utilities and other 3rd-party businesses that will facilitate trading on the platform are called Application Hosts. Examples of Application Hosts include energy retailers, property managers, and EV-charging businesses. Participants are the consumers or non-Application Hosts and the users.
There will or can be an unlimited number of applications that run on the Power Ledger Platform. The first, and only one currently available, is FuseBox, Power Ledger’s P2P Energy Trading Application, which acts as a “utility in a box”, allowing utilities to manage and on-board participants to the Platform. Other applications can be developed by 3rd-parties, using the Platform’s designs and services to quickly build new applications.
People and entities that want to participate on the Platform will do so through using tokens. Power Ledger (like most others I’ve seen) is implementing a dual token system. There will be POWR and Sparkz tokens operating throughout the Platform’s two blockchain layers. POWR tokens are the “frictionless” blockchain tokens that will allow Application Hosts and Participants access to the Platform (like a limited software licensing permission). Sparkz tokens are issued against escrowed POWR tokens, via a Smart Bond, and are used by the Application Host to onboard its customers and are used for transactions within the ecosystem. Sparkz tokens are priced, issued, and redeemed in the local currency of the Platform Participant. (Note: Smart bonds are an automated contract bond using smart contract technology that has been built in code to enforce compliance of the contract bond parties.)
At its core, Power Ledger says that its focus is on providing lower cost energy and better returns on energy for citizen investors, while providing powerful incentives to prioritize the adoption of renewable clean energy.
POWR tokens will allow Applications Hosts to access the Platform and applications and are required to generate Sparkz. POWR tokens can be seen as the global token that opens access to the Platform for all Participants, to on-board the system. The POWR token is the access token, like a software license, that grants ability for Application Hosts to transact on the Platform, through trading POWR tokens for Sparkz.
The Application Host will need to maintain a sufficient number of POWR tokens to generate the necessary Sparkz required, for their consumer base. Once an Application Host has exhausted all POWR tokens they can no longer transact on the Platform until they obtain more POWR to provide Platform access.
In a future, deregulated market, where Participants are able to trade directly with each other without the need for intermediaries, Participants will be able convert their POWR tokens directly to Sparkz and transact on the platform without an Application Host.
POWR tokens from Power Ledger's growth pool will be gifted to incentivize Application Hosts to use and contribute to the development of the Platform Applications and on-board their consumers to facilitate its global reach.
Application Hosts such as Energy Retailers and Network Utilities will be required to provide the POWR tokens as surety for the Sparkz they receive from the Platform. The Sparkz are then used to transact electricity between their Customers in their home market. POWR tokens will be escrowed for Sparkz in an Ethereum Smart Bond, and can only be unlocked from the Smart Bond upon the return of the Sparkz.
It is expected Application Hosts will need to acquire more POWR tokens over time to facilitate an increase in transactions as their consumer base grows and the technology becomes more widely adopted. The more POWR tokens that are escrowed for Sparkz, the more organic demand is created for the POWR tokens.
The Smart Bond contract will ensure consumer protection in the event of the failure of an Application Host (i.e. bankruptcy).
The goal of the POWR tokens is to ensure that incentives for Developers, Application Hosts, and Participants are all aligned and, as they contribute to the democratization of energy, they are rewarded for the evolution and future success of the Power Ledger Ecosystem.
Sparkz and POWR tokens will be exchangeable, connecting the functions of the Ecosystem. Sparkz are a local market level token and are priced for the exchange market they are deployed in, e.g. In Australia 1 Sparkz = 1 cent AUD. They allow for “frictionless” transacting throughout the FuseBox applications. Sparkz are the “low level” token specifically limited to representing the tokenized value of a unit of electricity in varying markets around the world. Sparkz will maintain a steady exchange rate between local market electricity prices and the exchange priced POWR token.
Consumer and Prosumers buy and sell energy, which is settled with Sparkz tokens and may redeem the Sparkz for cash via their Application Host.
Incentives and Loyalty Program
All Prosumers generating energy and Consumers purchasing renewable energy are rewarded with POWR tokens, under the Green Energy Loyalty Rewards program, for using the Platform. The incentive formula is weighted towards renewable energy producers. The Loyalty Incentive Program is funded by charging a small fee for all P2P transactions on the Platform. Part of the fee is then used to purchase POWR tokens on exchanges and distribute them under the program, incentivizing renewable energy generation.
Starting in 2016, Power Ledger built their Platform on top of Ledger Assets' blockchain, a "permissioned" or private blockchain dubbed "EcoChain". EcoChain uses the bitcoin blockchain as a backbone. EcoChain uses the "proof of stake" blockchain mining protocol, which means that whomever owns the "coin" or transaction gets "the right to mine subsequent blocks in the blockchain" – or in other words, to verify the transaction and add it to the blockchain. This process uses much less energy to run compared to proof of work consensus, and increases speed of settlement, though there are, of course, many pros and cons associated with each mechanism.
Currently, Power Ledger is using a hybrid public and private consortium blockchain approach, where a few select nodes are predetermined to verify transactions. POWR tokens on the public Ethereum blockchain and a fee-less Ethereum blockchain will handle the high transaction volume of P2P energy trading. In the future, Power Ledger will transition to a fully public proof-of-stake blockchain. There are many arguments that support a long-term public blockchain approach for efficiency and security.
A number of technology layers make up the Platform. The top, public, layer is the Ethereum blockchain. This is where the ecosystem interfaces with third party token exchanges. The public layer and third-party exchanges operate independently, are outside of Power Ledger’s control, and provide the advanced security and decentralization available through the ERC20 standard POWR tokens. Users may choose to exchange their POWR tokens publicly or store them and later utilize them within Power Ledger’s FuseBox P2P application software, if/when they become available within the user’s local energy marketplace. The public layer provides a mechanism for interfacing and transacting with the Consortium and Application Layers through the POWR tokens.
The Power Ledger Core layer is the public smart contracts layer which provides a trustless and open-sourced implementation of the key components of the Platform. The Power Ledger Core layer is built on top of EcoChain. This is Power Ledger’s industry specific consortium blockchain, which is a private Proof of Stake (PoS), low-power blockchain developed in-house and live tested in the energy markets during trials in 2016 and 2017. Power Ledger has already begun the transition to a modified fee-less Consortium Ethereum network, while retaining its existing Ecochain system benefits for specific platform services where current Hosts run applications.
Both Ethereum (consortium) and the original private EcoChain blockchain currently run in the Ecochain Services, Consortium Blockchain Layer.
The State Channels layer is part of the EcoChain Services Consortium Blockchain. State Channels provide a way to execute blockchain transactions in an off-chain manner by locking the blockchain state utilizing multi-signatures or smart contracts. In order to update the state, a specific set of participants must completely agree with each other. Eventually the state is closed and sent to the blockchain. Due to the high frequency nature of energy transaction settlement, the Platform will increasingly utilize state channels to handle these events.
The bottom and last layer is the Power Ledger Applications layer, currently Fusebox. Fusebox is the Platform’s only current Application. It was developed by Power Ledger and is a P2P Trading Application. It allows for direct trading and Application Hosts are already trialing this Application for their consumers. Currently, all transacting of energy within Fusebox is performed via the Sparkz tokens, which are pegged to the local unit of currency. This allows for any number of economic and time-based pricing scenarios, to be applied across all countries and electricity pricing structures.
Figure from Power Ledger's White Paper
Funding / ICO
Power Ledger held its ICO Sept/Oct 2017, offering Power Ledger POWR tokens. In the presale, Power Ledger raised $17M AUD, and raised a total of $34M AUD with the following public sale.
Strategic investors in the pre-sale included Blockchain Capital out of San Francisco. Blockchain Capital is and has been one of the earliest investors in blockchain-based technology.
Power Ledger went with two tokens in order to provide global interoperability. Their Sparkz token is pegged to the local currency, which helps to ensure that the volatility of cryptocurrencies won’t impact revenues earned from selling energy. However, because it’s pegged to the local currency, this would mean a new Sparkz coin would be required for each country. POWR tokens can be transferred across borders and converted to Sparkz in the local market, and they can be used across Power Ledger platform applications.
Among other things, the ICO was intended to give future platform application developers (the Application Hosts in Power Ledger ecosystem) and future platform users the ability to purchase a service or product in advance in order to fund its development and be rewarded for loyal support.
Power Ledger’s ICO was quite well done, according to some, for several reasons. First, the fact that Power Ledger conducted an uncapped token sale with a fixed sales timeframe, as opposed to setting a fixed token price or target raise amount like other ICOs, gave as many people the opportunity to buy into the token sale as possible. This meant that it wouldn’t just be large investors, “flippers” or opportunists who ended up buying up all the tokens, and that regular people could participate too, which goes a long way towards starting to build a community around their platform and ecosystem. It also supposedly reinforces the idea that it is not a security… Second, Power Ledger also used a public blockchain-based utility token to drive buy in, and then drove these buyers into their own private blockchain ecosystem. (POWR is an ERC20 token.)
Additionally, Power Ledger recently partnered with Bancor for ease of trading tokens. Bancor will maximize the trading liquidity of POWR tokens. Holders of the Bancor Network Token (BNT) will be able to convert BNT for POWR tokens, and vice versa, instantly. “This technology solves the potential problem known as ‘Double Coincidence of Wants’ — where a seller of a set number of tokens must find buyers wanting the same number of tokens — at the same time — in order for a trade to take place. This is traditionally achieved through matching buyers and sellers in exchanges, and now can be executed automatically, directly on the blockchain, thanks to Bancor protocol smart contract technology.”
History and Projects
Power Ledger originally started off being focused on building a product that enabled tracking of generation from behind-the-meter renewable energy systems (PV, primarily) at homes, multi-unit residential, and commercial sites so that it could more easily be sold. The idea was to make it easier for the owners of these distributed energy resources to understand exactly where their electricity was being consumed. They have expanded their vision since then.
Power Ledger's first project was in 2016 in Western Australia at retirement community called the National Lifestyle Village in Busselton. The project installed energy meters at 20 households plus a clubhouse in Busselton with Raspberry Pi mini-computers to track energy usage and generation. Residents could then decide who to sell excess energy to, and how much, with each transaction logged on the blockchain. Like the Brooklyn project with LO3, which inspired Jemma Green to start this project, the initial goal was to run the trial to prove the technology worked - no actual energy was traded.
In late 2016, Power Ledger won a 500-site project with New Zealand utility Vector (Note: it's unclear what was actually done in this project). In 2017, Power Ledger started its first commercial deployment in a residential development in Fremantle, where it became the first company in Australia to “facilitate electricity trading across the meter and manage settlements without going through an electricity retailer.” (Note: again, it's not clear what they actually did here, needs more research)
Since then, Power Ledger has signed a technology integration agreement with Indra Australia, and has launched plans to extend its platform to electric-vehicle charging with Western Australian energy provider Synergy. In September 2017, Power Ledger signed a deal with Origin Energy in Australia to do a “field trial” that was mainly a simulation / data analytics effort. The goal was to use anonymized and historical customer data to explore the benefits and challenges of peer-to-peer energy trading across the regulated network. The trial was to begin in October and run for a period of three months.
Jemma Green - https://www.linkedin.com/in/jemmagreen
Jenni Conroy - https://www.linkedin.com/in/jenni-conroy-a1ab0216/
John Bulich - https://www.linkedin.com/in/john-bulich-75561a99/
- Power Ledger White Paper: https://powerledger.io/media/Power-Ledger-Whitepaper-v3.pdf
- GTM article: https://www.greentechmedia.com/articles/read/power-ledger-blockchain-energy-trading-startup-raises-17-cryptocurrency
- Article on first trials last year: http://www.afr.com/technology/perth-firm-claims-to-have-created-first-australian-blockchain-20160815-gqssup#ixzz4vF5yUW3N
- Power Ledger Token Generation paper: https://tge.powerledger.io/media/Power-Ledger-TGE-Token-Paper.pdf
- Power Ledger Slide Deck: https://tge.powerledger.io/media/Power-Ledger-Platform-Token-Interactions.pdf
- Power Ledger Disclosure Document: https://tge.powerledger.io/media/Power-Ledger-TGE-Disclosure-Document-v1.3.pdf