Peer-to-Peer Micro-Payments and Settlement Market for the Decentralised Energy Grid

* Article: INTRODUCING THE ELETHRON: A Peer-to-Peer Micro-Payments and Settlement Market for the Decentralised Energy Grid.

URL = https://docs.google.com/document/d/1cASnVmT3Fdfk6lSzgBiBmFjRnhbrTWWyOJWHFR5t-Yg/edit

Summary

"There is presently no payments and settlement protocol that can cope with continuous micro-payments from the netting and settlement of income received from posting energy to a smart grid, and money spent purchasing energy from it.

In addition, there is currently no “colour” to the unit of energy used or produced which indicates its origin and the reputation of its providers, and which could therefore address the shortcomings of the present carbon credit market.

Blockchain can be used to create a decentralised marketplace for energy tokens, and “watermark” the tokens with the energy’s provenance, thereby entirely replacing the faulty carbon credit system.

We introduce the Elethron, an Ethereum-based token as the unit of exchange in a decentralised marketplace that supports “point-to-point” sales of power, either from an end-point power supplier to an end-point power consumer, or from a community commons storage/grid to an end-point power consumer or supplier.

The Elethron is essentially a smart contract on Ethereum that holds both the unit of energy, and its certified provenance." (https://docs.google.com/document/d/1cASnVmT3Fdfk6lSzgBiBmFjRnhbrTWWyOJWHFR5t-Yg/edit)

Discussion

"Blockchain presents itself as the enabler for three key disruptions in energy markets:

1. As the rails for a decentralised market for energy units

At this level, the smart contract functions as a fully asset-backed digital token representing a specified unit of energy, most probably a Kilowatt per Hour (which measures a commitment to deliver energy rather than the actual generation of energy in Watt).

2. As the mechanism to clear and settle micro-payments

Here, the blockchain fulfils its role as a frictionless payment layer to clear and settle a continuous stream of payments between stakeholders in the ecosystem.

3. As the irreversible, tamperproof ledger of energy provenance

Finally, smart contracts on Ethereum would allow us to “watermark” each energy token with the source of energy production.

This opens the potential to apply a consensus mechanism over a ring-fenced commons of Elethrons which can be allocated to responsible actors by way of rewarding their behaviour.

It further opens the potential to apply a policy preference overlay to embed desired regulatory outcomes into the smart contract.

Any proof of concept in this space would hence look to combine these three components into the architecture of an initial suite of smart contracts."