Bitcoin boom holds key for small wind

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Richard Heap
September 16, 2016
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Bitcoin boom holds key for small wind

What is bitcoin? This is a question you can ask many times and still feel as ignorant after you’ve heard the answers.

But it could hold also the key to the energy grid’s future.

Here is the basic version. Bitcoin is a digital currency that was created by a software developer in 2008. Bitcoins are created by computers that are solving mathematical problems, and each bitcoin has a unique number so that only one person can own it at a time. The idea of bitcoin is to let people trade the unique bits of digital data with each other directly, and without having to go through a middle man. Still confused? Well, don't be.

Thankfully, bitcoin itself doesn’t matter much here, but the more interesting element is how these bitcoin deals are tracked.

Each deal is logged in a system that is called a blockchain, which effectively acts as a ledger for billions of micro-transactions. The blockchain is crucial so that bitcoins are not held by two people at the same time.

This is where it starts to get interesting for companies in the wind industry, as well as the energy sector more widely. We are seeing start-ups working on software that can enable individuals and businesses to trade electricity directly with each other, rather than having to go through a centralised grid. This could have major ramifications on how wind grows in the next decade, as well as our current crop of traditional utilities.

Let’s touch on two specific examples.

Last month, a company called PowerLedger in Australia set up a system that enables a group of neighbours to sell excess power produced by solar panels in a community grid. This saves the neighbours the cost and hassle of selling power to, and buying it from, a central grid operator.

And meanwhile, in New York, a start-up called Transactive Grid is doing similar with a blockchain-enabled solar system that cuts the main utilities out of the process.

This technology may still be in its infancy, but there are reasons for manufacturers to take interest. If such systems take off and people see the benefits of generating their own power from small wind turbines then that opens up a big market for small turbine makers.

The distributed wind market has not taken off in the same way as distributed solar, but a simple trading system could make it seem more viable. Companies like United Wind are already eyeing major growth in distributed wind – and such software infrastructure can only support those plans.

There is also a question about whether it poses a risk for utilities, but we don’t think so. Yes, if everyone was able to sell electricity directly to each other without the need for a central utility then that would clearly damage those companies.

However, most people do not have solar panels or wind turbines on their homes; and still rely on large utilities producing their power, whether that is from renewable sources or fossil fuels. We see that utilities will still play a key role in the electricity system for years and decades to come.

In any case, if utilities see potential in blockchain then they will just buy those start-ups and work out how they can use the technology for themselves, which could mean they end up selling software systems for use on distributed grids alongside selling their own electricity. They should be canny enough to know how to profit.

The final point here is that a lot of this is still theoretical.

Yes, blockchain start-ups are predicting that the electricity market will be one of their biggest focuses over the coming years because everyone uses electricity. And yes, they are predicting that there will be a gold rush of companies coming into this sector trying to make it pay. But they have to prove that their systems make sense.

If this is anything like bitcoin then it could take years to decipher.

What is bitcoin? This is a question you can ask many times and still feel as ignorant after you’ve heard the answers.

But it could hold also the key to the energy grid’s future.

Here is the basic version. Bitcoin is a digital currency that was created by a software developer in 2008. Bitcoins are created by computers that are solving mathematical problems, and each bitcoin has a unique number so that only one person can own it at a time. The idea of bitcoin is to let people trade the unique bits of digital data with each other directly, and without having to go through a middle man. Still confused? Well, don't be.

Thankfully, bitcoin itself doesn’t matter much here, but the more interesting element is how these bitcoin deals are tracked.

Each deal is logged in a system that is called a blockchain, which effectively acts as a ledger for billions of micro-transactions. The blockchain is crucial so that bitcoins are not held by two people at the same time.

This is where it starts to get interesting for companies in the wind industry, as well as the energy sector more widely. We are seeing start-ups working on software that can enable individuals and businesses to trade electricity directly with each other, rather than having to go through a centralised grid. This could have major ramifications on how wind grows in the next decade, as well as our current crop of traditional utilities.

Let’s touch on two specific examples.

Last month, a company called PowerLedger in Australia set up a system that enables a group of neighbours to sell excess power produced by solar panels in a community grid. This saves the neighbours the cost and hassle of selling power to, and buying it from, a central grid operator.

And meanwhile, in New York, a start-up called Transactive Grid is doing similar with a blockchain-enabled solar system that cuts the main utilities out of the process.

This technology may still be in its infancy, but there are reasons for manufacturers to take interest. If such systems take off and people see the benefits of generating their own power from small wind turbines then that opens up a big market for small turbine makers.

The distributed wind market has not taken off in the same way as distributed solar, but a simple trading system could make it seem more viable. Companies like United Wind are already eyeing major growth in distributed wind – and such software infrastructure can only support those plans.

There is also a question about whether it poses a risk for utilities, but we don’t think so. Yes, if everyone was able to sell electricity directly to each other without the need for a central utility then that would clearly damage those companies.

However, most people do not have solar panels or wind turbines on their homes; and still rely on large utilities producing their power, whether that is from renewable sources or fossil fuels. We see that utilities will still play a key role in the electricity system for years and decades to come.

In any case, if utilities see potential in blockchain then they will just buy those start-ups and work out how they can use the technology for themselves, which could mean they end up selling software systems for use on distributed grids alongside selling their own electricity. They should be canny enough to know how to profit.

The final point here is that a lot of this is still theoretical.

Yes, blockchain start-ups are predicting that the electricity market will be one of their biggest focuses over the coming years because everyone uses electricity. And yes, they are predicting that there will be a gold rush of companies coming into this sector trying to make it pay. But they have to prove that their systems make sense.

If this is anything like bitcoin then it could take years to decipher.

What is bitcoin? This is a question you can ask many times and still feel as ignorant after you’ve heard the answers.

But it could hold also the key to the energy grid’s future.

Here is the basic version. Bitcoin is a digital currency that was created by a software developer in 2008. Bitcoins are created by computers that are solving mathematical problems, and each bitcoin has a unique number so that only one person can own it at a time. The idea of bitcoin is to let people trade the unique bits of digital data with each other directly, and without having to go through a middle man. Still confused? Well, don't be.

Thankfully, bitcoin itself doesn’t matter much here, but the more interesting element is how these bitcoin deals are tracked.

Each deal is logged in a system that is called a blockchain, which effectively acts as a ledger for billions of micro-transactions. The blockchain is crucial so that bitcoins are not held by two people at the same time.

This is where it starts to get interesting for companies in the wind industry, as well as the energy sector more widely. We are seeing start-ups working on software that can enable individuals and businesses to trade electricity directly with each other, rather than having to go through a centralised grid. This could have major ramifications on how wind grows in the next decade, as well as our current crop of traditional utilities.

Let’s touch on two specific examples.

Last month, a company called PowerLedger in Australia set up a system that enables a group of neighbours to sell excess power produced by solar panels in a community grid. This saves the neighbours the cost and hassle of selling power to, and buying it from, a central grid operator.

And meanwhile, in New York, a start-up called Transactive Grid is doing similar with a blockchain-enabled solar system that cuts the main utilities out of the process.

This technology may still be in its infancy, but there are reasons for manufacturers to take interest. If such systems take off and people see the benefits of generating their own power from small wind turbines then that opens up a big market for small turbine makers.

The distributed wind market has not taken off in the same way as distributed solar, but a simple trading system could make it seem more viable. Companies like United Wind are already eyeing major growth in distributed wind – and such software infrastructure can only support those plans.

There is also a question about whether it poses a risk for utilities, but we don’t think so. Yes, if everyone was able to sell electricity directly to each other without the need for a central utility then that would clearly damage those companies.

However, most people do not have solar panels or wind turbines on their homes; and still rely on large utilities producing their power, whether that is from renewable sources or fossil fuels. We see that utilities will still play a key role in the electricity system for years and decades to come.

In any case, if utilities see potential in blockchain then they will just buy those start-ups and work out how they can use the technology for themselves, which could mean they end up selling software systems for use on distributed grids alongside selling their own electricity. They should be canny enough to know how to profit.

The final point here is that a lot of this is still theoretical.

Yes, blockchain start-ups are predicting that the electricity market will be one of their biggest focuses over the coming years because everyone uses electricity. And yes, they are predicting that there will be a gold rush of companies coming into this sector trying to make it pay. But they have to prove that their systems make sense.

If this is anything like bitcoin then it could take years to decipher.

What is bitcoin? This is a question you can ask many times and still feel as ignorant after you’ve heard the answers.

But it could hold also the key to the energy grid’s future.

Here is the basic version. Bitcoin is a digital currency that was created by a software developer in 2008. Bitcoins are created by computers that are solving mathematical problems, and each bitcoin has a unique number so that only one person can own it at a time. The idea of bitcoin is to let people trade the unique bits of digital data with each other directly, and without having to go through a middle man. Still confused? Well, don't be.

Thankfully, bitcoin itself doesn’t matter much here, but the more interesting element is how these bitcoin deals are tracked.

Each deal is logged in a system that is called a blockchain, which effectively acts as a ledger for billions of micro-transactions. The blockchain is crucial so that bitcoins are not held by two people at the same time.

This is where it starts to get interesting for companies in the wind industry, as well as the energy sector more widely. We are seeing start-ups working on software that can enable individuals and businesses to trade electricity directly with each other, rather than having to go through a centralised grid. This could have major ramifications on how wind grows in the next decade, as well as our current crop of traditional utilities.

Let’s touch on two specific examples.

Last month, a company called PowerLedger in Australia set up a system that enables a group of neighbours to sell excess power produced by solar panels in a community grid. This saves the neighbours the cost and hassle of selling power to, and buying it from, a central grid operator.

And meanwhile, in New York, a start-up called Transactive Grid is doing similar with a blockchain-enabled solar system that cuts the main utilities out of the process.

This technology may still be in its infancy, but there are reasons for manufacturers to take interest. If such systems take off and people see the benefits of generating their own power from small wind turbines then that opens up a big market for small turbine makers.

The distributed wind market has not taken off in the same way as distributed solar, but a simple trading system could make it seem more viable. Companies like United Wind are already eyeing major growth in distributed wind – and such software infrastructure can only support those plans.

There is also a question about whether it poses a risk for utilities, but we don’t think so. Yes, if everyone was able to sell electricity directly to each other without the need for a central utility then that would clearly damage those companies.

However, most people do not have solar panels or wind turbines on their homes; and still rely on large utilities producing their power, whether that is from renewable sources or fossil fuels. We see that utilities will still play a key role in the electricity system for years and decades to come.

In any case, if utilities see potential in blockchain then they will just buy those start-ups and work out how they can use the technology for themselves, which could mean they end up selling software systems for use on distributed grids alongside selling their own electricity. They should be canny enough to know how to profit.

The final point here is that a lot of this is still theoretical.

Yes, blockchain start-ups are predicting that the electricity market will be one of their biggest focuses over the coming years because everyone uses electricity. And yes, they are predicting that there will be a gold rush of companies coming into this sector trying to make it pay. But they have to prove that their systems make sense.

If this is anything like bitcoin then it could take years to decipher.

What is bitcoin? This is a question you can ask many times and still feel as ignorant after you’ve heard the answers.

But it could hold also the key to the energy grid’s future.

Here is the basic version. Bitcoin is a digital currency that was created by a software developer in 2008. Bitcoins are created by computers that are solving mathematical problems, and each bitcoin has a unique number so that only one person can own it at a time. The idea of bitcoin is to let people trade the unique bits of digital data with each other directly, and without having to go through a middle man. Still confused? Well, don't be.

Thankfully, bitcoin itself doesn’t matter much here, but the more interesting element is how these bitcoin deals are tracked.

Each deal is logged in a system that is called a blockchain, which effectively acts as a ledger for billions of micro-transactions. The blockchain is crucial so that bitcoins are not held by two people at the same time.

This is where it starts to get interesting for companies in the wind industry, as well as the energy sector more widely. We are seeing start-ups working on software that can enable individuals and businesses to trade electricity directly with each other, rather than having to go through a centralised grid. This could have major ramifications on how wind grows in the next decade, as well as our current crop of traditional utilities.

Let’s touch on two specific examples.

Last month, a company called PowerLedger in Australia set up a system that enables a group of neighbours to sell excess power produced by solar panels in a community grid. This saves the neighbours the cost and hassle of selling power to, and buying it from, a central grid operator.

And meanwhile, in New York, a start-up called Transactive Grid is doing similar with a blockchain-enabled solar system that cuts the main utilities out of the process.

This technology may still be in its infancy, but there are reasons for manufacturers to take interest. If such systems take off and people see the benefits of generating their own power from small wind turbines then that opens up a big market for small turbine makers.

The distributed wind market has not taken off in the same way as distributed solar, but a simple trading system could make it seem more viable. Companies like United Wind are already eyeing major growth in distributed wind – and such software infrastructure can only support those plans.

There is also a question about whether it poses a risk for utilities, but we don’t think so. Yes, if everyone was able to sell electricity directly to each other without the need for a central utility then that would clearly damage those companies.

However, most people do not have solar panels or wind turbines on their homes; and still rely on large utilities producing their power, whether that is from renewable sources or fossil fuels. We see that utilities will still play a key role in the electricity system for years and decades to come.

In any case, if utilities see potential in blockchain then they will just buy those start-ups and work out how they can use the technology for themselves, which could mean they end up selling software systems for use on distributed grids alongside selling their own electricity. They should be canny enough to know how to profit.

The final point here is that a lot of this is still theoretical.

Yes, blockchain start-ups are predicting that the electricity market will be one of their biggest focuses over the coming years because everyone uses electricity. And yes, they are predicting that there will be a gold rush of companies coming into this sector trying to make it pay. But they have to prove that their systems make sense.

If this is anything like bitcoin then it could take years to decipher.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.