NRGcoin is an industry-academia project that was originally developed at the Artifical Intelligence Lab of the Vrije Universiteit Brussel. The NRGcoin mechanism replaces traditional high-risk renewable support policies with a novel blockchain-based Smart Contract, which better rewards green energy. See below more about the concept and how it benefits different parties.
For every 1kWh of green energy consumers pay 1 NRGcoin directly to the Smart Contract. This ratio (1kWh=1NRGcoin) always holds, regardless the retail value of electricity. The Smart Contract then pays all grid fees and taxes to the DSO from the coins paid by the consumer. The Smart Contract then validates the reported injection of green energy by prosumers using a variety of methods.
If all reports check out, the Smart Contract mints new NRGcoins and rewards prosumers for their injected green energy. Prosumers can then sell those coins on a currency market, or use them to pay for green energy later on. The currency market is where consumers buy their NRGcoins from in order to pay for their consumption. When energy is paid, the associated coins are not destroyed, but remain in circulation. To prevent excessive inflation, the minting rate decreases with time.
Advantages for Prosumers
NRGcoin eliminates the risk of policy change for prosumers. Remuneration for green energy is governed by an immutable Smart Contract that cannot be changed by market actors. Therefore, prosumers have blockchain-level guarantees on their rewards for the energy they inject.
Advantages for Consumers
NRGcoin results in cheaper green energy for consumers. One unit of NRGcoin is always equal to one kilowatt-hour green energy, regardless of the electricity price in fiat currency. When the electricity price rises, 1 NRGcoin bought at a lower price will still buy you 1kWh of energy.
Advantages for Utilities
NRGcoin offers faster cash flow for utilities. Instead of receiving payment for energy once a month, the blockchain-based currency can automatically pay for consumption every 15 minutes at virtually zero overhead costs. Moreover, NRGcoin lowers the costs of utilities, because they do not need to pay prosumers for their energy. Instead, the Smart Contract mints the currency and pays prosumers.
Advantages for Governments
NRGcoin reduces the need for government’s renewable support schemes. The Smart Contract generates new currency and rewards prosumers for their green energy. Thus NRGcoin can save government budget without lowering the incentives for renewables.
Advantages for Grid Operators
Since NRGcoin makes green energy cheaper for consumers, they now have incentives to shift their consumption to periods when green energy is produced. This shift results in lower peak demand which helps stabilize the grid and minimize the stress on the grid infrastructure.
While NRGcoin offers numerous advantages to different stakeholders, there are a number of shortcomings. The concept relies on blockchain technology and smart contracts, which are themselves very new and rapidly changing technologies. They are quite different from established technologies and are relatively complex to grasp. Moreover, regulation is unclear and therefore adoption is slow. These factors render the NRGcoin concept too early for mass adoption. Nevertheless, blockchain technology and smart contracts are constantly evolving and improving.