Meet Japan Energy Challenge 2019 Cohort: Power Ledger

Our new series of blog posts introduces this year’s participants of Japan Energy Challenge. In this edition we’re sitting down with David Martin of Power Ledger to discuss the role his company can play in the future of Japan’s energy market.

Power Ledger have designed a Peer-to-Peer trading software that utilises blockchain technology to allow utility customers to buy and sell electricity in real time. Following the evolution of electricity consumers into prosumers and the pressure placed on networks to handle this expensive change, a significant amount of interest is now surrounding these types of technologies. We’ll try to shed some light into what makes Power Ledger stand out from the rest.

Hello Mr. Martin, can you tell us a bit about the company and its founders?

We founded Power Ledger in 2016 as a group of blockchain and energy professionals with the goal of providing an economic incentive for consumers with distributed energy resources (DER) to stay connected to the grid. As decentralised sources of generation became more widespread, we noticed that consumers started defecting from the grid in sufficient numbers that it started causing an increase in the cost of delivering electricity. Our initial focus was thus to enable Peer-to-Peer (P2P) trading to counteract this phenomenon, but we’ve now broadened our scope to include measurement, reporting and validation of environmental attributes from renewable generation or certificates and the creation of an asset financing product.

How does your solution fit within the wider trends of Digitalisation and Decarbonisation in the energy sector?

Our skillsets as founders of the company came together around the resolution of a problem, but I should say around the realisation of an opportunity: an energy world where distributed resources were becoming more mainstream, and in which blockchain provided an elegant technology solution for the creation of a new business model.

While blockchain is not a silver bullet, what we’re trying to resolve is the challenge of creating a new energy marketplace, as the model for energy supply goes from a very centralised model to a vastly more decentralised one. Under the new arrangement, the linear relations generator-to-market-to-retailer-to-customer -that have been used to manage energy transactions so far- don’t make sense any more. Our current energy system is vastly more interactive and bi-directional, while consumers are contributing as much or more energy as traditional players at some points in the daily supply curve and transactions are becoming much more complex, both from a party perspective and a temporal perspective (energy is being bought and sold by more players and in much shorter time frames). These relationships have become more complex than a traditional relational database can deal with, and this is where blockchain comes into play.

Are there milestones you are particularly proud to have achieved as a company?

Yes, quite a few, actually! We achieved initial seed funding only 6-7 months since starting the company -which we bootstrapped ourselves-. We received funding from a strategic investor in December 2016, completed Australia’s first ICO in August 2017, and were awarded Richard Branson’s Extreme Tech Challenge in September 2018. In that period of time we deployed projects in 8 countries on 4 continents, broadened our platform from P2P, to energy and carbon trading and asset financing. So in 3 years we have achieved broad market penetration, product differentiation and significant financial traction.

Let’s look at Japan Energy Challenge’s scope, what specifically attracted you about the prospect of expanding to the Japanese market?

The Japanese market, like the Australian one, is experiencing the consequences of unmanaged DER penetration. Resolving the challenges of this unbridled penetration presents an opportunity to provide an economic driver for the sympathetic operation of those assets.

What struck me about Japan was an issue highlighted by a Japanese professor I met at a conference in 2017 in South-East Asia. He had modeled the impact of solar PV in his country and was talking about the challenge of the duck curve that was created as a result. According to him the increasing volume of these solar installations were causing a sudden decay in the daytime demand (the amount of energy met by wholesale generators) and he was concerned about system and individual power plant stability, as all this PV was coming into the system. So much so, that it would need to be scaled back.He had created an algorithm that throttled back solar generation in an autonomous way, which seemed bizarre to me, to which he replied that turning off this free energy seemed the only solution, if an unfortunate one.

Another similar challenge to Australia that the Japanese market is going through is the sudden loss of the Feed-In Tariff. Distributed solar PV is seen as the problem, and the first response is to stop its spread, which would be a massive mistake. We must find an alternative economic model that supports an increase in consumption and gives continued incentives for citizens’ PV installations. Japan therefore is a significant market opportunity as it also has a similar energy market as Australia. It was deregulated 10 years exactly after the Australian one -with a real political will to do something different- and also has a less entrenched regulatory model compared to other parts of the world. All these factors come together to make Japan quite an attractive space for P2P technology to be really effective.

And finally, how will your solution promote the expansion and modernisation of the Japanese energy sector?

Providing an alternative market framework that recognising the opportunities presented by der and storage. A platform like ours doesn’t seek to disrupt the energy system, rather provide an additional, more efficient distributed energy market that dovetails well with existing wholesale market. It’s not a disruptive technology, it’s a transformational one, allowing existing system to maintain its value while we move towards a more distributed system. This is why we started Power Ledger in the first place, as more consumers generated and stored their own energy, we were losing the value of our existing assets, electricity networks are enormously important social and economic assets, so if installing PV allows to get off-grid, and many people do this that means that all these physical costs are not being paid any more, which is neither fair nor sustainable from an economic perspective for the whole energy sector. Our driver was to create a framework allowing a transition to a new market model that maintained as much value in the existing system as possible. We believe we can provide this for Japan as well.

Power Ledger will be taking part in Japan Energy Challenge in London this year, you can read about the other companies taking part in this year’s edition here. You can also find out more about the program, ventures and sponsors by clicking the links.



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