For the last hundred plus years we have been busy developing technology and growing civilization to the unthinkable proportion in the known history. In the core of that process was the use of energy and technology, both of which have been driving each other’s progress and subsequently driving the progress of civilization.

Redistribution of power

However, even in the early days of electrification and extended use of (mostly fossil) energy there were those who understood it’s limitations. Nikola Tesla at the time said:

Energy, it is the key question for the future, matter of life and death. Current sources of energy are unreliable and are poisoning our planet. We might survive the poisoning, but there will come a day when these sources will dry up.

Besides being the inventor of the modern electricity world, we know he was also a big fan of renewables in the early days of energy (have you ever heard of first hydro power plant in Niagara Falls?). He was also a visionary in terms of how energy can change relationships in society – locally and globally.

It's very exciting that his vision is coming to fruition today! We are witnessing the future of energy being born. More to the point, participating in it and shaping it with our small contribution. A full-scale energy transition is on its way. Driven by technology. Decentralized, influencing redistribution of power in society. And as of recently with completely new tools to foster even more change in less time.

Convergence

So how did this happen? How is a system, for which I’ve been told over and over again during my studies has to be planned and developed for decades in advance – changing so rapidly, against everything we were taught?

Convergence. Convergence of social awareness, environmental awareness, technology breakthroughs, digitization and huge amount of social capital in start-up sector.
Nowadays I don’t think I will say anything revolutionary if I just use a few buzzwords to describe the future of energy. The future of energy will be in electricity exclusively. The energy will be produced mainly from the sun (bear in mind that wind, biogas, biomass and hydro are all ultimately forms of energy deriving from the sun – geothermal is the only exception).

In terms of technology it will be mostly PV (editor node - Photovoltaics a.k.a. solar power) and wind turbines. From there we will have large (mostly existing in Europe and North America, partly existing in South America and Asia) intercontinental transmission grids which will connect a lot of newly adapted distribution grids – soon becoming microgrids.

Most power sources will be connected to distribution grids. On the demand side, economy will be driven by electric vehicles (be it on the roads, water or in the air). Storing energy will be done with batteries and hydrogen, in some cases also with synthetic gas.

Production and consumption will be decentralized and only the transmission grid will be (partly) centralized as a natural monopoly. People, due to newly designed digital electricity markets, will be much more involved and engaged in investing in energy and consuming energy “the right way” (demand side management).


The decades that follow

The only argument we have is whether it’s happening in a decade or three or anywhere in between

The picture from the previous paragraph, if you really think about it, looks completely logical and anyone even superficially involved in the energy sector has heard the story.

There are few naysayers about that (I compare those few with flat-earthers). The only argument we have is whether it’s happening in a decade or three or anywhere in between. And most people are aware that this is the direction on which we are embarking for last ten years and in the future.
Being an active professional participant of energy sector my whole adult life I’m completely endeared by that picture, the vision. However, I’ve been also aware of missing links in the pathway to that vision.

But again, being an entrepreneur, I usually ignore the problems and missing links – the mindset is always the same, if it’s missing, create it! So, during time links were created for most of the problems.

Renewables today are the cheapest production options, grid balancing is not even a serious topic anymore (although improvements should be made, but we know how), energy storage in batteries is nowadays cheaper than gas power plants, citizens and SME’s have started investing a lot of their own money into energy projects making big electricity utilities lose a lot of their market…

Incentives are the key

But, up until last year there was still a big missing link – how do we connect all that?

How do we manage all that decentralization, different interests, markets, operators, prosumers, producers, consumers, technologies, meteorological conditions, behaviors’…and electricity being very specific goods – how do we manage all that in real time?!
How do we manage fast and reliable financing for projects? Fast and secure payments combined with the signals from electricity markets? People’s behavior in using their transportation?


We need incentives. We need solutions that will resonate with the modern world, that will empower people in a simple and efficient way. That will make a game of this problem – a game that you would want to play because it’s fun and it makes you or saves you money.


Hello blockchain and hello IoT.


As was mentioned in one of our previous blog posts the landscape of finance is changing and there is no better parallel fit to that change than the energy transition.

In the early days of money, we had gold as collateral for our payment value. Later on, as economy grew the gold wasn’t practical anymore and couldn’t keep up with that growth – so most of the value was virtually connected with energy, mostly oil.

However, oil and coal, as major representatives of fossil energy have their shortcomings in such a model – they are actually inherently flawed. Namely they are scarce and their value in economy is wrongly represented since they have been subsidized since the very beginning (see: externalities!). They are hence less available the more we use them, and as such in their nature, not able to sustain constant healthy inflation and progress needed for economy.

Renewables are completely opposite. Not scarce, available everywhere around the globe, technology driven and not resource driven (since resource is virtually infinite within boundaries of this planet).

So, there you go. The world is in full energy transition mode. And has started it due to climate change, ecology and social responsibility. However, turns out that the “side benefits” of renewables is much more important (I don’t want to sound like climate change is not important, but I like emphasizing hidden benefits which are equal in importance).

Turns out that those are the only energy sources that can actually follow economic growth in a sustainable manner, that can decentralize our world, allow for fairer distribution of wealth, more freedom.

And there is one more thing. Renewables, and especially wind, solar and hydro in combination with battery storage, EV’s and electrification of heating and industry sector are in fact the digitization and decentralization of energy sector which perfectly fits IT industry and decentralization of currencies that blockchain brings.