Creating the Energy Data Commons
Like it or not, the evidence of our interdependence is clear, and the world only seems to be shrinking. Whether it is migration challenges or Facebook peddling fake news, global issues manifest locally. Energy is itself the underpinning of wealth creation, and even this is rapidly shifting, with consumers seeking choice in how to produce and consume it, right down to their rooftops, which if scaled, has big implications not just for energy technology but for energy markets and our broader economies.
What should our energy markets look like? As we rapidly digitise our world, have we considered what needs to be built into the new digital economy of energy that is fit for this increasing interdependence?
One answer is to look at models of ‘abundance’ such as the commons, made famous by Elinor Ostrom (Governing the Commons). In this version of economic activity, when many people need to share land to graze cattle or water to drink, they form a set of rules rooted in interdependence, such as qualifications for participation and progressive sanctions for those who don’t play fair, with the outcome that common resource allocation happens at appropriate geographic layers.
Can a ‘commons’ resource model be accelerated by new digital capabilities?
Perhaps. Blockchain technology is allowing rapid innovation in a new kind of highly mutable asset class, the “digital asset”. It has become possible to issue native ‘tokens’ that, through self-executing contracts, can behave as liquid forms of value creation around a blockchain ecosystem.
Tokens of value in a digital era seem well suited to testing out new or alternative economic models to the ones that dominate today. What would basic income look like? Property ownership? Insurance? Debt? New energy prosumers and consumers?
Key properties of digital assets
Digital assets can more easily be comprised of non-financial values than in current fiat currency systems (see more at http://tokencommons.org/the-token-commons-foundation.html#token) . The value of government-funded scientific research that led to price decreases in a product like solar power, for instance, is included in the price of a solar kWh, but what if we want to layer more values as well? With digital assets, other dynamic values including social utility in reducing carbon emissions, could be built into the asset itself.
This is what Swytch is doing by allocating a value to a generated unit of renewable electricity — a value that isn’t just a kWh, but includes the contextual information about how much carbon that unit of renewable energy is displacing. Essentially this becomes a new digital asset created alongside the generation of renewable power, reflecting the value carbon avoided rather than the kWh generated.
With the Exergy platform, another digital token XRG allows digital assets to be created out of the grid-edge data, which can in turn be utilised as a direct input into an energy service. For instance, we need to know if renewable energy is generated nearby to create a local green energy product.
Exergy and Swytch are also explicitly utilizing digital assets for another of their unique properties: the ability to incentivize new behaviours within a digital economy. Swytch is rewarding those who undertake a range of carbon displacement actions, starting with generating renewable power. Exergy rewards for the inputs of data into a system in order to make new services possible. Exergy tokens are not kWh, but rather function as a way to open communication to devices and reward those who provide data. Without a ‘common’ pool of data available, each of us loses the potential to buy that local green product.
This reward for data sharing is new to the energy economy but aligns well with the trajectory in digital markets toward consumers awareness of (and owners of) their data, increasingly being upheld by governments through new data regulation from Europe to Australia.
Governance is a rich area of partnership and collaboration amongst token creators. How are we all addressing the same concerns across token projects, or energy token projects more specifically?
Among these are questions around how to fairly and transparently design, manage and evolve (in a distributed way) the algorithms that guide the creation and exchange of these digital assets. Unlike monetary policy led by national governments, we have more freedom in how to, in a decentralized way, coordinate market participants that hold and exchange these digital assets, that no single party controls. Participants will, individually or in groups (which can be organized by interest, geography etc dynamically) provide value to their chosen networks to create or exchange these assets.
We will also require collaboration in how we begin integrating these distinct economies into nested communities or cities and apply algorithmic polycentric governance models to them. Already we are seeing thousands of new digital tokens, and will increasingly see different marketplaces interacting. In energy, with hundreds of projects already in a nascent stage, the goals of which in many cases align (decarbonisation is a strong theme), each with a different approach and intention for the digital assets they are creating. Some of these will naturally compete or collaborate and possibly provide the basis for creating baskets of tokens that each represent a piece of a larger asset class similar to an exchange-traded fund, ETF.
What we are moving toward is a new way to value our interdependency, and coordinate without losing individual, unique properties. In spite of the hype about ‘permissionless’ or ‘trustless’ technology, it has never been more important to communicate with one another. A new era of digital asset policy seems likely and needs to be built based in the properties of digital ecosystems, rather than mirroring existing market and governance structures.
The article was co-written by Evan Caron, co-founder and director of Token Commons Foundation, http://tokencommons.org, and Molly Webb, founder & CEO of EnergyUnlocked, and select partner to Exergy, a brand of LO3 Energy.