Which problems is NRGcoin addressing?
The NRGcoin concept is motivated by the following issues in the energy sector:
- Inadequate subsidies for renewables. Too little subsidies lead to slower integration of renewables, while too high support causes stress on the grid infrastructure.
- Risk for policy change. Retroactive changes in support policy undermine the trust of investors and lead to slower adoption of renewables.
- Rising electricity prices. Without proper balance of supply and demand, the grid infrastructure needs to be reinforced to handle peak production and consumption.
- No incentives to consume renewable energy. While renewable production is subsidized, incentives lack to offset the consumption of energy from mixed sources in favor of locally produced green energy.
NRGcoin is related to numerous other concepts, such as demand-side management and peer-to-peer trading, but it is mainly designed to address the above four issues.
How is NRGcoin addressing the above problems?
- NRGcoin enables you to extract more value from your renewable generators (photovoltaic panels, windmills, etc.) without oversubsidizing those. It helps shorten your return on investment while minimizing the stress on the grid infrastructure.
- The support policy is built in an immutable smart contract, which cannot be changed by the utility or any other individual entity. In other words, the subsidies for your panels are set in stone that no single party can change.
- 1 NRGcoin always equals to 1 kWh green energy, regardless of current electricity price in fiat currency. An NRGcoin that you bought 5 years ago at lower electricity prices is worth exactly the same amount of energy today.
- You spend NRGcoin to pay for renewable energy currently available in your local district. Therefore, NRGcoin ensures that you pay for the actual green energy produced in your district at the time you consumed it.
Why does NRGcoin need a blockchain?
NRGcoin makes use of Smart Contracts that run on the Ethereum blockchain. A smart contract is software that runs not on a single server or a Cloud, but simultaneously on all nodes of the Ethereum world computer. Moreover, the smart contract mints new NRGcoins for green energy. These functionalities cannot be achieved without blockchain tech.
In addition, NRGcoin inherits the following advantages of blockchain tech:
- Decentralization: No single point of control or failure.
- Transparency: the protocol is implemented in an open-source Smart Contract that anyone can audit at any time.
- Reliability: the Ethereum protocol ensures that the smart contract reliably executes exactly as written and identically for everyone.
- Disintermediation: Direct transfer of value between users and the smart contract reduces friction and operational costs. This also allows for micro-payments of energy, speeding up the cash flow.
How does NRGcoin differ from green certificates or carbon credits?
Buying green certificates brings income to a given producer located anywhere in your country for the energy they generated any time in the past year. Moreover, with green certificates you are purchasing the environmental benefits of renewable energy, but not the energy itself, for which you need to pay in addition. In contrast, paying with NRGcoin ensures that you are buying the actual green energy produced in your local district within the last 15 minutes.
Furthermore, green certificates and carbon credits are issued by centralized authorities, which at any time can change the issuance rate of these instruments or stop them altogether. These events can introduce market shocks, which lower the attractiveness of renewable investments. In contrast, NRGcoins are issued at a stable rate by a decentralized smart contract, which no single party can alter or terminate. This brings more confidence and stability in the return of investments of renewable generators.
How is NRGcoin lowering the carbon footprint?
Unlike other projects and existing support policies, NRGcoin provides incentives to both produce and consume renewable energy. Incentivizing production helps feed in more green energy to the grid, while making its consumption cheaper helps offset the need for energy from mixed sources. NRGcoin helps to bring the consumption of green energy closer to its production both in space and in time. This means that you are paying for the actual green energy that you are using, not simply for green certificates.
How does NRGcoin differ from related projects?
Several projects have emerged at the intersection where blockchain meets the energy sector. We list here some projects and their summary (in no particular order).
- DAISEE is looking at energy as a commons and aims to design the common rules, infrastructure and governance for people to share electricity.
- BankyMoon enables the pre-payment of energy using bitcoin both from homeowners, but also from donors elsewhere.
- Brooklyn MicroGrid (LO3 Energy) is a pilot project in New York demonstrating how blockchain technology can in future be used to trade renewable energy between homes.
- PowerLedger enables renewable asset owners to sell their energy directly to consumers.
- Dajie develop network of nodes to allow for peer-to-peer energy exchange, simplifying the management of transactions.
- GridSingularity are developing a decentralized energy data exchange platform facilitating energy applications.
- EnergyCoin is an alternative crypto currency cloned from PeerCoin. It is meant to be integrated in future energy applications and to facilitate the energy transition.
- SolarCoin is an alternative crypto currency owned by the SolarCoin Foundation. The Foundation hands it out to owners of solar panels for their energy production, who in turn trade it as a speculative asset.
- TheSunExchange enables investors to lease solar panels to developing nations and collect income.
NRGcoin is a mechanism that facilitates the integration of renewable energy in the local grid by making it more profitable for producers and utilities and cheaper for consumers and governments. This is how NRGcoin differs from other initiatives:
- NRGcoin is not a peer to peer energy trading mechanism. Energy is not traded, but is bought and sold through a smart contract.
- NRGcoin is not just a cryptocurrency. It is a mechanism that also involves a smart contract, an exchange market and gateway devices.
- NRGcoin is not focused on solar energy alone. It supports all types of renewable generators.
- NRGcoin is not a company, but a concept and a project aiming to deploy this concept in reality.
- NRGcoin does not “blindly” support renewable production. It rewards injected green energy (not produced energy) and only if it matches local demand. Oversupply is not paid to minimize its negative impact on the grid.
What if users tamper with the electricity measurements?
Tampering with the electricity measurements is already an issue in the current system. NRGcoin is not designed to particularly address this issue, but we employ a variety of measures that lower this risk and its impact on the system. These measures include hardware anti-tampering technology, as well as machine learning and data analysis algorithms. More information on these techniques can be shared upon contact.
Why not use Bitcoin? Why need new currency?
The NRGcoin concept relies on a currency that is minted when green energy is injected in the grid. All existing (crypto)currencies are issued according to other criteria. Using a new currency allows the smart contract to create incentives for producers and consumers from within the mechanism, as opposed to relying on external subsidy. Using an internal currency lowers the initial barriers for entry and the overall cost of the solution.
How is NRGcoin deployed in reality?
There are three main components to the NRGcoin concept:
- a smart contract,
- a currency market and
- gateway devices
The smart contract is an open-source software running on the Ethereum world computer, i.e. on the decentralized network of Ethereum nodes. It is deployed online over the Ethereum blockchain. The currency market is an exchange platform that allows users to buy and sell NRGcoins for other currencies (e.g. bitcoin, euro, dollar, etc.). The market can be either deployed as a new currency exchange platform or it can be integrated in existing exchange markets, which can be either centralized (such as Kraken, Bitstamp, etc.), or decentralized (such as Bitsquare). The gateway devices are deployed in residential homes or offices, integrated with the local electrical installation and connected to the Internet. The gateway devices measure electricity inflows and outflows and communicate both with the smart contract and with the exchange market.
What are the business models of NRGcoin?
As NRGcoin comprises of several components, there are a number of business models that can be applied. Moreover, the concept itself can be deployed and integrated in different ways, offering a variety of revenue streams for different market players and stakeholders. A more detailed look into the business models can be shared upon request.
Who pays the blockchain transaction costs?
Depending on the chosen business model different solutions can be implemented. The costs can either be paid by the technology provider, supplying the solution, the end user as part of their subscription fee, or any other stakeholder playing a role in the mechanism.