Introduction
Grid+ is a powerful application that can be marketed to standard consumers, save them significant money without any knowledge of blockchain. The premise is very attractive. Plug in a device, give it credits and it will reduce your electrical bill for you. It introduces a household appliance that trades on the blockchain on your behalf, our first IOT device! It is also the first application detailed on this website with a snappy video introducing their product.
!!! FLASH !!! Grid+ has begun supplying electricity using the Ethereum. It is just a small test group now, but it is real electricity and real Ethereum!
Problem Being Solved
For some of us, buying electricity is simple, one price day or night, pay for what you use. But if you are in a deregulated environment, then you have multiple suppliers that change their price as their demand changes. If you have household solar cells and a battery, then you can make some of your own electricity and use that when expensive. Any individual is allowed to purchase electricity as they need it but the process is complicated. Traditionally each household chooses a middleman to trade on their behalf. These middleman charge significant fees, rarely take solar cells into account and may not always trade in an optimal manner.
Grid+ uses the a hardware device (called a Grid+ Smart Agent, or GSA) to optimize your electricity purchases for you, removing the middleman and his fees. It is classic blockchain dis-intermediation. Another advantage is that the transactions and the logic behind the transactions can be audited. Nothing is hidden, though perhaps privacy might be an issue. You electricity consumption may become public to all.
Maturity
As of October 2018, Grid+ is in Beta testing with a small number of real clients using real Eth supplying electricity as a real utility. The Ethereum transactions Grid+ will do are relatively simple and will not require new technology except in ther quantity. Scaling specifically using Raiden (or Plasma?) will be required to handle the large number of similar transactions Grid+ will enact. As always, scaling is required.
How it Works
To the consumer, Grid+ is pretty simple. Buy your GSA IOT device and set it up. Next buy your electricity (in advance) by buying BOLT tokens. These are bought using fiat just like a normal utility.. No Eth or Ethereum account needed. The GSA device will trade the BOLT for electricity as you use it. If you move or buy too much BOLT, you can exchange it back to money. If you have a solar array, the energy is taken into account. If you have solar and a battery it also takes this into account. The IOT device can also talk to a smart thermostat, if equipped. Since it knows when electricity is expensive and the smart thermostat knows when you are maybe not at home, it can change the temperature to save you money. The result is lower electricity bills by removing the middleman and buying electricity intelligently at the optimum price. This can include selling excess power from your battery and solar cells back to the grid at an optimum price.
The consumer may not even know what a blockchain is, but can use it just the same.
Under the Hood
While to the consumer the system is very simple, there is a lot happening behind the scenes, some blockchain related, some not.
Before Grid+ starts selling electricity
Grid+ has to become an electricity utility in the area they want to offer service. This has nothing to do with blockchain and requires a substantial deposit. Thus is done for Texas, where they are already live.
The GSA hardware has to be designed and tested. It must transact with the blockchain seamlessly. It must interface with the household batteries (such as a Tesla Powerwall) and smart thermostats (such as a Nest) and have refined smart trading algorithms.
Grid+ must spend marketing dollars to build its initial customer base.
Once Grid+ is an established utility
The customer must have a smart electricity meter installed at the house for Grid+ to work. The customer buys his GSA and registers it.
While this will seem straight forward it has some complications in ensuring a secure wallet pair that is owned by the customer and not Grid+. Once registered, the GSA has a unique wallet and private key, known only to the GSA. See section 4.2 and 4.3 of the Grid+ whitepaper for details. The customer may never know their wallet address or private key of the GSA. When the customer registers their GSA it is associated with their account and address. Grid+ knows the GSA’s public ethereum address and the physical address and name of the customer.
Next the customer must buy Bolt. Bolt is a US$ stable coin token. The GSA trades Bolt for electricity. BOLT is an ERC20 token created by Grid+. The customer buys Bolt from Grid+ just like any other fiat transaction with a utility. They perform a bank transfer or use a credit card. At this point Grid+ performs an Ethereum transaction and creates an equivalent amount of Bolt tokens (to the USD amount of the transfer) and sends it to the GSA wallet of the customer.
The GSA now has an amount of Bolt tokens in its wallet. Only the GSA knows its private key, it is not known by Grid+ and Grid+ cannot withdraw the funds themselves. The tokens are fully managed by the GSA.
The GSA is programmed to buy electricity with the Bolt at a regular time period (say once an hour). The GSA checks its sensors (the price of electricity that it gets off the internet, the battery, solar panel and smart thermostat data and calculates the amount of electricity to buy. These calculations can be done off chain, so no oracles are required.
Regularly, as per its algorithm, the GSA exchanges Bolt for electricity. The Bolt is transferred to Grid+’s wallet. This wallet gets Bolt from many customers in parallel as they buy electricity. Grid+ then buys electricity from the wholesalers, burning the Bolt and paying the wholesaler in USD. The wholesaler never knows about Bolt or blockchain. From their perspective, Grid+ buys electricity using USD, like any other utility.
When the customer’s Bolt gets low the customer buys more just like any other monthly utility.
If the GSA goes off line or is destroyed, then in this simple mode the Bolt in the GSA is burned also and cannot be used. To avoid this a multi sig wallet between the customer between Grid+, the customer and the GSA will allow recovery of that Bolt. This will require to customer to know at least a bit about Ethereum to manage his wallet. Grid+ will know when a GSA drops off line and can keep electricity flowing to the house until the customer gets a new GSA.
As you can see above, the actual Ethereum transactions involved are quite simple and always involve moving BOLT ERC20 tokens around. However there will be a large number of transaction as Grid+ scales. This is an ideal application of a Raiden channel.
Revenue
Grid+ will have a number of sources of revenue, once the operation is up and running.
- Markup on wholesale electricity
- Sale of the GSA’s
- Interest in unused BOLT
- Charges on unused BOLT micro transactions
Competition
Once Grid+ becomes established and begins to steal market share from established players in a serious way, they will adapt in order to survive. Can a competitor copy Grid+’s technology? The simple answer is Yes (though I am sure, with the details it won’t be simple). There are no major secrets in the techniques used. With the public nature of blockchains, it will be easier that previously to make a look alike product. This will be good for consumers as the profit for the middlemen will decrease as the competition heats up.
Ideal Use Case for Blockchain?
According to Vitalik’s 5 Points how well does this use case suit a blockchain application? Score 17/25, 68%. Great!
Censorship Resistant (2/5) – Grid+ records electricity use and payments. Not really information that needs to be saved and protected from censors.
Fraud Resistant (3/5) – It will be important (but not vital) that no one can tamper with the results of Grid+’ electricity trading.
Transparency (4/5) – It will be important that the public using Grid+ can independently verify that Grid+ is dealing fair and above board
Robustness – (4/5) – As a utility, 100% up time is vital so Grid+ will lean on the robustness of Ethereum
Interoperability – (4/5) – the GSA IoT device will lean on the interoperability of Ethereum and even as it develops the existing IoT’s will lean on the interoperability of Grid+