What is Power Ledger (POWR)? How to Buy POWR in NZ?
Learn and take a closer at the innovations by Power Ledger (POWR) to integrate blockchain technology to make renewable energy more accessible.
Energy used to travel one way from large power stations all the way to homes and businesses. As time goes by, retail battery and renewable private energy generators, such as solar panels and wind turbines, became increasingly cheaper to install.
Power Ledger, an energy trading company based in Perth, saw an opportunity to enable energy producers to directly and conveniently sell excess energy to consumers.
Using blockchain technology, energy can be distributed in a fair and transparent way — within and between communities.
Start from the basics: What is blockchain?
What is the Power Ledger Token (POWR)?
As prefaced above, the Power Ledger platform aims to reform the existing global system of energy distribution by utilizing blockchain technology to establish the following:
- Create a system where users are able to choose their own source of electricity.
- Provide consumers and communities access to more affordable, reliable, and more eco-friendly electricity by eliminating intermediaries of energy production.
- Facilitate the creation of an ecosystem that is focused on enabling peer-to-peer (P2P) transactions with renewable sources of energy.
Related: Read the official Power Ledger whitepaper.
With that being said, Power Ledger’s network requires two ERC-20 tokens to operate. One is called Sparkz, which tokenises units of energy (in kWh). The other is called POWR, the Power Ledger Token, which is used to exchange monetary value around the network.
POWR is used by clients to gain access to the network. Through exchanges, fiat currency can be swapped with POWR, which then enables clients to swap for Sparkz at any time, or at a favourable rate when demand for energy is low.
The two tokens serve to separate the price of the POWR token from the price of energy supply in a specific market or community.
While the price of POWR fluctuates due to market trading activities, the price of Sparkz fluctuates due to the changing supply of energy from renewable sources.
This also gives clients the assurance that they have access to the same amount of energy, even if the price of POWR were to crash in the financial market.
What is an ERC-20 token?
In short, these are simply tokens that are used on the Ethereum blockchain and act as assets that facilitate the various utilities and functions on the network.
What problem is Power Ledger trying to solve?
The advancement of battery technology and small energy generators makes it cheaper for retail consumers to install them. This is an incredible progress towards sustainability and consumers taking part of the responsibility to supply their own energy.
However, there is one issue. Renewable energy sources do not have consistent outputs.
Excess energy can be stored in batteries, but there even batteries have limited capacity. Some communities allow homeowners to sell excess energy back to the national power grid, but at an undermining rate.
Dave Martin, the managing director of Power Ledger, addressed this issue in an interview with A Greener Life.
“Since the system was modeled for only central players to feed the energy supply, consumers producing energy don’t get fair value for their investment.”
As a result, a couple of other problems emerged. Firstly, this disinsentivises homeowners to invest in rooftop solar panels and batteries, as they are unable to monetise excess energy.
Secondly, retail energy distributors can’t find other ways to gain additional power during peak hours, raising the energy bill as energy gets expensive on average.
To bypass the conventional system of power distribution, retailers and homeowners can collaborate by installing an infrastructure that allows for direct peer-to-peer power distribution.
Homeowners can switch roles between becoming power consumers and power prosumers.
During peak hours, prosumers that install batteries can support retailers, and earn a better deal per kilowatt hours. Retailers can also tap into an abundant supply of energy, which was stored by prosumers during hours of low demand.
This model incentivises communities toward a more sustainable practice, such as installing rooftop solar panels and storing excess energy. Not only that, excess energy can be distributed to people without access to sufficient amounts of power.
“As well as giving consumers a better deal on their investment and keeping value in the grid, Power Ledger has the potential to help with the vast amount of humanity who still don’t have any access to electricity or energy,” said David Martin.
This is especially true in places that were struck by a natural disaster, which cut access to power from central power stations.
What is a virtual power plant?
Virtual power plants are a new concept that is already proven in real life, especially through Power Ledger’s many projects.
It’s the idea that instead of only relying on power companies to be the sole producer of energy, homeowners can proactively produce and share their supply of energy.
With solar panels and batteries, power consumers can collectively become a power plant themselves. This is akin to having a community-oriented vegetable supply chain, where food is homegrown and sold within and between communities.
Of course, we don’t refer to this model as “virtual farm”, since that is what traditional food production looks like, before industrial farms take over.
Therefore, the virtual power plant movement is the reverse — moving from industrial energy production to community-oriented energy sharing.
Related: How crypto mining has changed since China’s ban in 2021
Why blockchain technology is needed in Power Ledger
Critics argue that the same system and infrastructure can be set up without using blockchain technology. However, for Power Ledger, blockchain isn’t used simply to boost the company’s valuation.
Blockchain technology allows for
- True ownership of energy,
- Decentralised and private trading agreements,
- A verifiable source of truth, and
- Avoids counterparty settlement risk.
We can use an example to highlight the advantages of using blockchain technology. In this consumer energy trading network, there are players with certain goals:
- Prosumers who have installed solar panels and batteries, looking to earn some return on their investment.
- Retailers who buy and sell energy from prosumers to consumers, as well as from the grid to consumers.
- Consumer-only homeowners, looking to diversify their energy sources.
- National power grid, which backs up retailers in case of a spike in energy demand.
Sparkz is actually a bond that represents a unit of energy, and it can be redeemed into fiat currency, POWR, or energy. Blockchain technology can enforce the ownership and transactions so that token owners don’t have to rely on financial intermediaries.
Energy trading can get complicated under the hood. Ethereum smart contracts, for example, can rapidly execute trades between fiat currency, POWR, and Sparkz between the different parties, but in a privacy-respecting way.
All of this can be done without worrying about counterparty risk. This is because smart contracts follow the law of code, and make no exception. Transactions can be made frictionless and fluid.
Learn more: What are Smart Contracts? – A Complete Beginner’s Guide
The future and takeaways
Now that you’ve had an overview of what Power Ledger (POWR) is, what does the future look like for it?
Power Ledger now exists around the world, partnering up with clients like Tata Power DDL (India), EkWateur (France), American PowerNet (US), Clearway Energy Group (US), KEPCO (Japan), SEDA (Malaysia), TDED (Thailand) and more. You can see a complete list of clients on their official website.
In July 2021, Power Ledger’s network began to switch from using Ethereum, and using Solana instead. Solana is a blockchain network that utilises the Proof of History consensus protocol, which uses significantly less energy compared with Ethereum’s Proof of Work protocol.
Although Ethereum is moving to a more sustainable Proof of Stake protocol (which reduces its power consumption by more than 95%), this transition will take some time. Meanwhile, Solana has been built for sustainability and scalability from the ground up.
Climate change has been regarded by many developed nations as an emergency. Even in emerging economies, governments are taking steps to become more eco-friendly each year.
This will increase demand in battery and renewable power generators. This will also likely increase the demand for POWR tokens if Power Ledger successfully dominates the decentralised energy niche in the future.
Related: What is Solana (SOL)?
How to buy Power Ledger (POWR) in New Zealand?
With that being said, what are your own thoughts on Power Ledger?
If you believe in the technologies, infrastructure, and innovations that Power Ledger has to offer in the crypto and blockchain space, consider adding POWR to your crypto portfolio.
Here at Easy Crypto New Zealand, we offer over 160+ cryptocurrencies, including POWR. We are a non-custodial exchange, and send your crypto purchases directly to your crypto wallet.
Invest in Power Ledger: Buy POWR with Easy Crypto NZ.
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Last updated March 8, 2023