Is energy the new cash?

 By Jim McClelland

From SolarCoin, which at $4bn claims to be the world’s largest community-driven solar electricity reward programme to Zapp, which is an exciting start-up bidding for funding at present. Jim McClelland looks at the emergence of digital energy currencies, what they are and how they might impact the market…

Money is not what it used to be; at least not when it comes to cash. The traditional check might be history, but digital transactions are now commonplace. Cash is old and out.

Today, we can transfer money and make purchases using email addresses, smartphones and contactless cards, nevermind chip-and-pin technology. However, much as these payment methods are cashless, all still typically trade in established global currencies, such as the US Dollar ($), Japanese Yen (¥), Euro (€) or Pound Sterling (£). What if there was a new currency on the exchange: energy?

As a currency option, there are good reasons why energy potentially fits the bill, explains self-styled Alternative Finance Explorer and author of The Heretic’s Guide to Global Finance: Hacking the Future of Money, Brett Scott:

“Ideally, a currency should be anchored in something that people always need, so energy-backed currencies are interesting precisely because they are vouchers for an essential commodity that is universally required.

“Alternatively, we might even think of these as a financing tool – you can raise finance for a renewable energy project by issuing vouchers for the future energy generated. (In this sense, energy-backed currencies are a bit like using equity shares).”

Radical as this might sound, digital energy currencies are not entirely new and certainly not unproven. Launched in 2014, SolarCoin (§) is one of the oldest examples, and is now adopted in some 21 countries. It provides what is described as a social protocol that supports value exchange, where §1 represents 1 MWh of solar electricity generation. At present, SolarCoin claims to be the world’s largest community-driven solar electricity reward program, worth over $12 billion.

ZAPP Digital Energy Currency

Innovation continues apace though in the digital space and one of the newest aspiring energy-sector entrants is a UK-based start-up focused on demand-side management, ZAPP. Currently in fundraising mode and seeking commercial partnerships, ZAPP is looking to bring to market an app that rewards you for sharing your capacity to store and utilize renewable energy. ZAPP Points are earned (mined) by customers either charging or using devices in sync with renewable electricity production, then traded for goods and services with brands looking to generate income (or converted into cash).

To really understand what digital energy-backed currencies can do for real-world physical development, however, the place to visit is President Street, in Brooklyn, New York.

Putting renewable money on the map, here you will find a pioneering project that combines a solar-PV-powered microgrid with cloud-based technology and the Internet of Things (IoT) to enable energy transactions peer-to-peer (P2P).

Excess solar energy generated by properties on one side of the street can automatically be made available for use on demand by power-needy houses on the other.

The renewable energy is harvested for cashless cross-street sharing P2P by TransActiveGrid (TAG), a joint venture between LO3 Energy and Consensus Systems (ConsenSys). ConsenSys is a specialist developer of digital transaction applications on the secure Ethereum platform, which is based on Blockchain software (as with the crypto-currency Bitcoin).

What these energy-backed digital currencies have in common is the concept of a commodity to be sold, shared and saved. We already talk of households in fuel poverty and countries that are oil rich — digital currencies take the energy debate one step further. We are entering an era where power is money, literally; a world where energy is the new cash.

about the author
Jim McClelland
Editor + journalist for supplements to The Times + Sunday Times, also quoted in Guardian, Sunday Telegraph. I blog for such as GE + Gap. Active on social media. Specialisms include Sustainability.