Carsten Stöcker: How Blockchains Will Power the Energy Grids of Tomorrow (Episode 174)

Transcript

[Music] this episode of epicenter is brought to you by Jax Jax is a userfriendly wallet that works across all your devices and handles both Bitcoin and ether go to jx. and embrace the future of cryptocurrency wallets hi welcome to center of the show which talks about the technology projects and startups driving decentralization and the global blockchain Revolution my name is Sebastian K and my name is Brian fman crane we're here today with Carston stuer I've known Carston for for quite a

long time he's he's been a podcast listener for a long time he reached out to me I don't know when it was maybe a year and a half ago two years ago or something when he came to Berlin and we met up with him and uh it was amazing because he was so excited about blockchain he had so many ideas so many uh things he wanted to pursue and so he's today he's a senior manager and an evangelist for machine economy Innovation Lighthouse at the energy SE Innovation Hub uh which is quite a job title uh is that really your job title oh yes um it's it's it's my job title Yeah so basically what's very nice about the job title is that um it resonates

very well with the media because it's pretty much in contrast to the utilities we know from the past where utilities are basically Silo oriented very conservative not moving at all no innovation and now we have this extreme job title machine economy evangelist um that's quite a contrast for very old industry yeah no that definitely sounds like it and yeah so Carson also has a PhD in physics and he was previously Accenture for a long time and then he's also part of the the world economic Forum they have this uh global future Council uh where he's he's a part of uh and uh and yeah so thanks so much for coming on yeah thanks for having me so just to give some background the company

you work for is called Energy but before you were working for uh rwe do you mind sharing a bit about you know what what is rwe what is energy you know what kind of company is it so people can picture a little bit you know kind of where you coming from so rwe um or the old rwe is um was utility an integrated utility and utilities typically have Upstream basically where they do mining of coal of oil of gas and um of fuels they can burn in their power plants and um so R has liite or cold fired power plants and nuclear power plants and of course the

old R before it split it had um a little bit renewable business it has a grit business grit business is a regulated business which is due to the fact that um utility business or the grid business is a natural monopoly and this um brings a lot of kind of questions how to set a price for a grid customer for example so it's um natural monopoly it's a regulated business so it's um Upstream power generation renewable grid um commodity Trading basically um buying fuels that can be burned and selling the energy that's being produced on the wholesale market and last but not need a retail division to um yeah sell the

energy to business to business or b2c customers for our us listeners uh you know just to sort of put in the context rwe is sort of the historical German utility company yeah and basically in Germany we have the energy transition and um part of the energy transition is that the utilities are obliged to turn off their nuclear power plants so in addition because in principle there's no space to burn fossile fuels anymore on this planet and for that reason in Germany there's also pressure kind of to think about um um the fact that we're burning fossil fuels in our cold fired

power plants or gas fired power plants and now there's also political first discussions um yeah to regulate um so what's the lifetime of the um Cal fired power plant um can we reduce it can we reduce the CO2 emissions and that basically led to the decision in rwe to split into two parts so one part is the nuclear power plant business the calire power plant business and the commodity trading that's now in rbe and now the new part is called Energy that's basically renewable business grid business basically Distributing energy to the customers's home and Retail so that that sounds a little bit like they

took all the parts that are like headaches and of the past and you know difficult to put it in one thing and then now energy is sort of the company for the futur is that about right yeah absolutely so basically the the story for the um investor communities also now investors have two portfolios and they can choose whether they would like to invest in a company that's producing energy or if they would like to invest in a company the new energy that basically has a renewable portfolio the grid and the retail customers more future oriented absolutely so uh energy is also the grid operator in Germany yeah so um the git business is different in different

countries and in Germany it's very inhomogeneous I think we have around 700 different grid operators most of them are very small on a municipality level and so energy is the biggest grid operator here in Germany and we have um 8 million customers which is for Germany quite a bit and we are operating yeah huge part of the distribution grid that's really that's really interesting because I'm I'm in France and here in France there is sort of one uh grid operator and they have this sort of DEA facto Monopoly on the grid and metering uh aspects of energy distribution I wasn't aware that Germany

had so many grid operators yeah that's that's that's the key difference among all the different countries and what's also nice from a business model perspective because the grid business is pretty much regulated which means it's a cost plus you can say it's a Cost Plus model a regulator comes in measures the costs allows the um utility to put a margin on top of it and then the the sum of Cost Plus margin that's basically the Baseline to device the the prices for the grid customers and yeah that's regulated business and you can kind of work around with the costs and of course is there's a lot of pressure a lot of different grid operators you have benchmarks and um yeah that's that's

what we have here in Germany also some competitive pressure even if the grid business is a regulated business rwe I I think or maybe uh tell me how exactly that works but my own understanding has about 70,000 employees so are those now in energy mostly or those still mostly in in the old rwe so right now um the majority of the employees are in energy and um as I mentioned the grid so we have a field Force for example to maintain the grid to um operate the grid to deploy new grid infrastructure and there there a huge fieldforce there and um yeah the rest is then in the old R I think we can

say um I don't know the exact numbers maybe it's around 30,000 um in in the old RB and a bit less than 40,000 in the in inoy okay and so how did you hear about blockchain how did you become interested in blockchain and how was it you know working with this topic in in the context of you know a very old traditional company but a company that's at the same time is going through a tremendous amount of change and disruption of of its you know business model and of its existence really as well basically the idea was to invent to Uber for energy everyone wants to have

the Uber for something so one of our board members in the Netherlands said I would like to invents Uber for energy he basically asked um Mark dman um at this time he was a freelancer working for our Dutch business to come up with an idea how to do Uber for energy and Mark basically said yes yes I can do this and he posted Because he believes in open Innovation and collaborative approaches to Innovation he posted on LinkedIn so who can help me to um come up with an Uber for energy and then there was another guy Yus Bon and he was basically part of the more kind of the extended ethereum go ecosystem in Amsterdam and he proposed to do it via Smart contracts and have a

look in um yeah a proposition doing peer-to-peer energy trading on the blockchain and um yeah this is basically how we um came to the topic of blockchain a little bit by coincidence so one guy at rwe in Holland was kind of given a task created Uber for energy he found some yoris uh who yeah I know a little bit as well and then and then how did that did you become interested in that point as well when they kind of that this idea come up orw is going to create the Uber of energy using blockchain and he said like okay what what is that so what what's your personal story with this now basically I engaged with a team um I was curious to learn about um energy

blockchain and um yeah these kind of propositions and um at the beginning I worked with with with with Yus to put some um ideas into place so how can it work yeah so what does it mean if I have a smart meter and connected to the blockchain so what does it mean in terms of transactions in terms of um putting a peer-to-peer trading engine in place on the blockchain and we basically worked from a technical perspective how can such an architecture work so in addition of course we also looked in the kind of business model implications because in the end so um P2P eny trading is not new um so in a couple of countries and even in the US we have co-ops energy

cooperatives or we have smaller energy kind of um entities and um I think it's very natural if we have a co-op a Cooperative where people kind of trade energy among each other or they're buying energy on bulk um for themselves or selling energy to wholesale Market basically it's pretty much straightforward um to think about putting this on the blockchain and this was basically our project what we' have done together um coming up with a tank solution and some um the process and business model Solutions how to do peer top energy trading on the blockchain and what's very interesting to understand because in the end I can do my PE top energy trading yeah among

couple of people um yeah that are close to each other uh on the other hand I need to aggregate what the people are doing that's called building a balance group and the balance group is basically a simple sum over time saying that's the energy being produced um by a pi Community that's the energy being consumed and it's a Delta I have even a Time series for Delta that's called a skle and and of course there's either excess energy I can sell on a wholesale Market or there's a gap in energy that I need to buy from the wholesale market and especially this aggregation is where a peer-to-peer Community um doing trading on the blockchain needs to intersect with the real world because

suddenly they have to um yeah send Skittles to a grid operator or to buy or sell energy to wholesale market and that's pretty interesting because then you can think about what's the role of utility in this type of world it's basically World in transition we have decentralized kind of peer communities doing energy trading and the world we have existing um players in the um energy business such as wholesale and git and basically in this world there needs to be an aggregator that's aggregating the the energy consumed and produced and basically acting as the interface to um yeah wholesale markets into the grid and this is basically a

role of a utility um that's coming on top of the um PP energy trading it's a very slim lean role because it's basically making sure we have a legal entity um around the pp energy trading community and in addition so we can serve and fulfill um existing processes to interact with um yeah wholesale Market participants cool well that's uh there's a lot there and we already kind of went into one of one of the topics we wanted to to dive into which which is the the energy trading but maybe before we go a little bit deeper there uh let's let's kind of stay on on a high level first you know blockchain and and some of those new ideas in the context of you

know old company changing rapidly so first of all Innovation is a term that you know people are always uh so interested in right they're trying to figure out how to do it I was you know in here in Berlin I would get contacted quite often from uh this kind of bizarre thing I mean it's kind of bizarre kind of interesting where you have like some old school company that's sending like 15 of their ex executive to go to like Berlin on a Innovation trip right where they meet like like five different companies and like it's almost like a school trip know so I think the term Innovation right and this this concept is such a big topic but so H how do you actually

do it like how does one actually change uh and and get Innovation into um established company so there's little bit of a story to explain before because our CEO pet theum he made a decision first to do cost cutting second to run a huge change program across the whole group and in this change programs was basically bottom bottom up and top down the uh the top 300 managers the middle management and even ordinary employees a lot of them participate in the change program because many corporates have a couple of systemic issues and the systemic issues are Silo thinking power distance control

hierarchy and if you have this systemic issues there is no chance at all to come up with Innovation from inside a company so um that's the reason why Peter tum first did the cost cutting the change program and after this was done he launched an innovation program and in Innovation we have a couple of um operating principles and one is so we looking for business models business model Innovation so we are working with external Partners external networks um we would like to do it fast by applying a lot of innovation methodologies such as Lean Startup design thinking and we we put our teams in scarcity to come up with Solutions um

with rapid prototyping very fast to test it with customers that's the other principle that we always testing stuff with customers it's customer Centric we always have the customer in mind and the last principle is that we have Focus topics we don't do everything because the Innovation world it's very yeah like Ellis and Wonderland you can do a lot of interesting stuff and in the F Focus topics we have Smart connected so smart connected Home Smart connected cars then the next Focus topic is digital disruption um that the idea of all kind of digital business models that change the um yeah the energy landscape then we have big data of course um to do have data driven insights on the retail side

for new business models but also to improve the effectiveness of operations for example in fields such as predictive maintenance and then we have something very interesting it's called Urban Solutions because utilities are the center of cities and the center of the Cities let's say they operate the grid then they have infrastructure connecting every household they even know every household customer they know the bottlenecks they know the um decision makers the government bodies they know the local infrastructure and that puts Utilities in a very nice um sweet spot to understand local needs of the community and to come up with Solutions and Innovative um yeah business models

to address the needs especially when all technology around us is changing with drones drones taxis and Fleet of autonomous cars and um sensors everywhere and Laura so a lot of opportunities um for yeah business model Innovation um in the city last but not least we established a lighthouse called machine economy and this is where I'm working and in the machine economy we are looking into propositions that are um Tak into consideration that we see machine as future customers that we see that there are transactions among machines that there are machine to machine transactions um it's a lot about iot

it's a lot about physical deliveries the utility business is a very physical business which means we deliver energy we deliver Logistics we produce stuff and um yeah so that's our main focus in the machine economy now you can say okay it's just let's say iot machines it we are not looking into any Central solution because we we know there a lot of people and big corporates pushing Central Solutions forward such as GE with predic and systems from Bosch from BMW everyone comes up with Central Solutions and our thinking is that we only combine iot machines with decentralized platforms because um yeah

there's a lot of space to come up with new Solutions business models and that's our our main um thing thinking there and we are looking at a couple of Industries it's of course energy its mobility and its manufacturing supply chain yeah that's uh interesting to see that and sort of encouraging to see that uh within your organization there there has been really that organizational shift from the top down and from the bottom up as you said uh because you know I when when when I talk to large corporates um it could be in the energy space or you know like uh in any type of Industry uh a lot of times what what we see is innovation departments really interested

in you know CIO is really interested in this type of new technology and the and the prospects that uh and the sort of new use cases and and disruption that they can bring uh but then what happens is what sometimes happens is um you're then stuck after doing some sort of experimentation with that Innovation Department trying to sell that Innovation or trying to sell that project to uh an industry line within that company uh if the I think that you know if if the the the company itself um is uh sort of organizationally set up so the Innovation and uh and you know the sort of Lean Startup and and that you

mentioned approach um is is really integral to the organization then we can really start getting Innovation at all levels um so yeah I think that's that's really that's really interesting and and and encouraging to see that uh a historical player like rwe can rethink itself you know 120 odd years after its uh you know after its creation you know companies in the past were um built on this idea of accumulating power and accumulating monopolies and that was certainly the case and certainly is sort of the case still for a lot of traditional utility companies in in European countries um you know if we start building decentral ized platforms and uh really taking away

their their Central monopolistic power um that really goes against uh their their business models and the interests of their shareholders um what do you think that this Evolution uh towards decentralized platforms uh means for a company like rwe uh and energy yeah first of all of course the um decentralization is disrupting our existing business models for example especially in the retail business on the other hand um so we can come up with new business models that can extend our current retail business portfolio um so if we look into current of the um business economics of

decentralized platforms so our thinking is that will be um zero marginal so we don't believe um that you I personally don't believe that you can make a decent mark from based transactions I mean people who are using a decentralized platform for energy Mobility or other Industries so if there transactions and let's say a corporate or Consortium are operating the platform I don't believe that a Consortium um can take huge margins um to grow a decent big business and that's that's a kind of challenge just on that I think that's a extremely interesting point I I would love to say a bit on that can you explain why you think you think that's

the case so I personally think because decentralized platforms are built upon distributed ownership which means everyone can join a platform everyone can contribute to it and um if then let's say a small Consortium is trying to dominate an industry a principle it can be possible but I personally think if someone was trying to to dominate an industry then the consor will be replaced by someone else who's much more open I think my view would be whether you're right or not is going to depend a lot on kind of the network effects and how you know how stable are these consortiums

right because if you have one and it's in place and well you have to use that one well they should probably be able to use uh you know charge a big decent amount of transaction fees and you know if then iwe owns 20% of the Consortium or something right then well they can maybe we make a big margin but if it's easy for them to say well we're just going to spin up another chain and and that one's going to charge a third as much and so now people switch to that um yeah then then you might have this drive towards a a zero transaction fee environment and what what I think is especially interesting is that kind of translates over to the public blockchain space as well right when when you have

something like let's say ethereum you know there's a question if if etherum keeps improving with the technology at a rapid rate and you can handle way way way more transactions and then the transaction fees collapse right at at a faster rate maybe that then even demand increases maybe there's not so much of a case that you you say that you know the ether price is going to increase a lot because ethereum is a success right you could have the case that ethereum is a big success a lot of applications run on top of etherum people use etherum but that doesn't mean that ethereum looked at as sort of a business actually was a success do would you agree with that

kind of direction of thinking so I first agree that um yeah blockchain is software so if someone would like to introduce the transaction fees I think there will be someone else um doing a different version of the software reducing the transaction fees and that's what we say it's a race to zero so we are pretty sure there will be other players who reduce transaction fees transaction margins and it's probably similar to Google search Google searches for free and that's the reason why I personally expect that um transactions on the blockchain will be almost for free um in the long term um in terms of the consort here um I think today a couple of consortiums are considering

let's say um an Ico Consortium Ico it's maybe just a sort experiment no one has done it a couple of consort are thinking about gas um yeah making revenues and margins via gas and a couple of them are also looking into putting transaction margins into smart contracts but if if you just reconsider that blockchain is software it can be easily copied someone else can be able to reduce the transaction margins and that's the reason why we think it's a race to zero and our at least my conclusion is if it's a race to zero then there will be almost no monetization at the core of a decentralized platform so that's what we call we have monetization at the edges

of the decentralized platform for example system integration um revenues to integrate existing infrastructure into a blockchain or value added Services um to basically aggregate assets to to drive a value out of this or even personalization Services if someone has a personal need I probably have to understand the need on an algorithmic level I need to connect it with um yeah transactions on the blockchains with assets with um offers and basically I can monetize um yeah this personalized service and that's kind of an extreme in terms of the blockchain that people can expect um there will be zero monetization

potential at the core but there will be monetization potential at the edge of the platform okay so if if I summarize then what what you're saying is that no longer longer do these monopolistic um historical actors uh will they be able to monetize the networks themselves uh the networks become sort of a public commodity that anybody can use uh that anyone can use for basically free and then you open up those networks uh to competition for creating value added services at the edges and and something

like a blockchain enables for those for the you know for that ecosystem to build those applications on top of that existing Network there yeah that's a very nice summary of um the hypothesis I have yeah and just to kind of reemphasize that point which I think is a very interesting point and I think it's a very uh it's a very good perspective that's underere explored I mean I don't think we really explored that perspective I think the same thing if it's true for consortion blockchains I think the same thing is going to be true for public blockchains too yeah so yes absolutely because I think Consortium blockchain for me it's a little bit of a transition so today we have public blockchains if you would

like to put scaled transactions on them they're too slow they don't scale right now there also some privacy issues that's the reason I expect of course there will be Consortium change for industry specific use cases and domains and um on the other hand um so this Consortium chains needs to open to get all the network effects and the um Innovation on top of it and in the end they will be transformed in a kind of public blockchain again let's take a short break to talk about ja Jax is your wallet your complete user interface to cover all your blockchain needs I've been using it and I've been loving it now Jack supports a lot of different cryptocurrencies suppos Bitcoin ether Litecoin ethereum classic zcash or rep

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all the change that's coming with the disruption with blockchain AI Etc you know that's going to destroy tons of jobs how do you think about this problematic is it a topic at uh at energy and and what's what are your personal views yeah first of all it's a topic of at enery because you would like to be responsible leaders um to take um also the disadvantages of new technologies into consideration and um yeah to make sure we're good corporate citizen so in addition we are pretty much engag enged in the world economic forum and that's also Worth to mention the global future Council of the world economic Forum when

I was there last time in Dubai last year uh 700 people attended the global future Council and there a couple of um let's say technology councils it's blockchain AI 3D printing drones future of computing Quantum Computing kast space technology biotechnology you name it in addition there a couple of people looking into more the kind of the bigger societal problems such as human migration or um development in Africa in Asia and in the end um I think it was a shared belief of all the people in Dubai when we met last time is that all the Technologies at the Tipping Point right

now there's a huge tsunami um yeah approaching us approaching our societies and um there a lot of benefits but of course a lot of risks and for the risks no one has an answer and regardless of blockchain it was a consistent theme that everyone was asking for and even crying for governance for ethics for standards to take to make sure that the technology is not harming our sociey so it's providing um or helping for the good of society and on the other hand you can even say some of the initiatives of um world economic Forum to um establish responsible leadership to take

care about the impact of jobs Society the um digital divide and um human migration all this kind of stuff but I think the reality is that we have Trump erdogan May um yeah Putin and a couple of other leaders and with those leaders in charge it's impossible to solve the governance and ethics issues today which means in the end everyone and um draws a conclusion okay it's America first it's my my home country first it's my my company first which means people start kind of um yeah looking for their own to monetize stuff and um to um benefit from all the the big technology changes that are coming soon and um I don't see any

kind of um huge group pushing forward real solutions to sort out all the risks for our societies and that's yeah that's a little bit to chall and we could have a whole a whole discussion a whole show about that uh that whole you know bag of worms um so let's then move on to some more uh some more uh interesting topics uh so yeah so um let's let's let's take the conversation then to uh blockchain and energy there's a lot of hype around this um I was telling Brian earlier it seems like every couple weeks there's another conference there's another event uh talking about blockchain and energy and

people describing all the use cases that are possible with uh um the uh joining of these two types of Technologies and um there's a lot of there's a lot of discussion around use cases uh we're talking about smart grids we're talking about Mobility we're talking about um traceability and energy credits uh this sort of thing uh but you know not a lot of experimentations yet there have been some uh and you you'll talk to us about one of those uh but so far you know about a handful of pox and sort of pilot programs uh that have any you know sort of any value um at a at scale so could you

first let's before we go into that um perhaps you know describe what an energy grid looks like um a traditional energy grid and then contrast that with sort of where we're going in this idea of smart grids so TR traditional energy grid is consisting um of huge power plants Coal Fired nuclear fired hydroelectric power plants and then we have a transmission system operator that's basically high voltage grid to transport energy over long distances um so in addition so have a distribution system operator that's

basically Distributing the energy in the city to the different households and yeah then we have the consumers consuming energy and there's one element missing from a technical perspective there's also a grid Control Center and that has a very important task because the grid control center is making sure that the energy that's consumed by the households or by the businesses is exactly the same amount of energy that's fed into the energy system so that there's a real time balance um of energy being fed into the system and energy being consumed and the grid control center is basically controlling frequency which means for example in

Europe we have a frequency of 50 HZ and they are making sure that the frequency is stable in the grid and on the distribution system operator side distribution system operator they have some leverages to um to control the voltage level um to make sure that we're in a specific range of of the voltage level and that's very interesting because in the end what we need in the energy Market is yeah what we call flexibility or balancing services so if for example the consumption changes then we the grid control center has to react to the changes and either reduce the energy fed in the system or increases the energy since that's being all done in real time and now when it

comes to um first of all to more Renewables in the energy grid we have to understand that Renewables are extremely volatile because if there clouds um that are hiding the sun um or shielding the Sun a bit from the solar cells this has an immediate impact on um yeah the energy that's fed in by the solar cells or if the the wind um flow um is wind energy is changing then our wind turbines are feeding less energy in the grid and there's huge volatility and the extreme is what we call in Germany and that's that's even a term that's used elsewhere as well Dunkle flout which means if at night and there's no wind then the Renewables at

least solar and wind they don't produce any energy for the grid and to make sure that we still have enough energy um yeah to power the consumption we need flexibilities or balancing services so we are kind of um controlling real time the big power plants or and that's what the grid operators are looking into they're looking to find flexibilities in local grids which means basically are there any batteries are there any cold storages because in a cold storage I can uh introduce a lot of energy to cool to deeper temperature or um I can let's say um feed in less energy and then the temperature is going up a little bit but

at least I have some flexibility to play around and to take care about um yeah fluctuations of volatilities in the grid and um then of course we have more and more Renewables solar cell on the rooftops um um some biomass and combined heat and power a lot of decentralized assets that are not controlled by Central Control Center and this is very difficult for the grid operator and for that reason grid operators are really really looking to get hold of flexibilities and to use them to stabilize the grid and of course when we think about the more decentralized grid there's the immediate connection to what um the blockchain is a decentralized

technology and that's the reason why people like to connect decentralized blockchain technology with yeah this with decentralized energy assets and to think about all kind of business models such as peer-to-peer trading such as um local flexibility markets um yeah to take benefit or to take advantage um yeah of of the blockchain and use it for these types of business models when I think of the blockchain in a Smart Energy grid you know I I look at uh if if I were to contrast the two like on the traditional grid side it's very top down so you you know you have cold fire power plants you have nuclear power plants you you know have different maybe

hydro and those uh different energy sources are feeding energy down uh into into the Grid in a very sort of hierarchical you know uh top- down approach um with smart Grid it's the the configuration of the grid itself forget the blockchain but the configuration of the grid itself is much more decentralized so you know you have these sort of you know massive uh sort of traditional uh you know energy production means like the coal far power plants the nuclear the hydro whatever but then you also have some solar arrays that are being operated by um smaller companies or you may have some solar arrays or some uh uh wind turbines being

operated by a local community and and those are feeding energy into the grid as well and if you take the two one thing that's definitely missing there because we have all this iot and all these devices being connected into the grid uh is is a means for data to be flowing um in real time and the traditional grid doesn't have any of that I mean the proof is that when you when you go when you uh about every month or every three months someone has to come to your house and like look at you know the meter uh whereas with the smart grid we have an opportunity there to implement blockchain technologies that would allow for realtime data to flow uh in uh between you know all of

these different devices and and and and um energy providers do do you agree that with this idea that the blockchain sort of provides the the the data and transaction layer that is needed for this new type of grid to exist that that's exactly how we phrase it at well we call the B the the blockchain as the transaction layer for the Future Energy System um which means we can do physical transactions to send energy from A to B but at the same point in time we can do the financial transaction and of course if the transactions are getting smaller smaller and smaller we need a technology that um yeah can do all the settlement and billing and that's a big hope and

the big dream of many people when they look into energy and blockchain um that this can be um yeah delivered by decentralized platform so so earlier I I I sort of talked about this all this hype around uh around blockchains and energy and there seems to be a lot of interest especially from sort of traditional energy grid providers and TR traditional actors at least that's the that's the that's the The View that I have here in France and obviously it's it's true in Germany as well um why do you think that there's so much enthusiasm uh around these Technologies in your opinion and where did all this come from like what was the sort of

pivotal moment where all the cios that like the traditional energy utility companies said oh blockchains are are the wave for the future uh of our industry so for me personally is this what one of the big questions mark I have because um of course a lot of people looked into fintech Innovation with blockchain and then for me the big next wave was that people started looking into energy and blockchain and um there are around 90 startups that are looking into propositions energy on blockchain and um couple of people counted use cases people counted around 200 different use cases for energy and

blockchain it's a pretty well researched field a lot of pox have been done and my personal conclusion is why people immediately jumped from fintech to energy or a lot of them is because I think in Bitcoin we are burning a lot of energy yeah and then what does it mean it means okay Bitcoin is equivalent it's an equivalent to energy it's an equivalent to to money that's a very nice connection and then people immediately draws a conclusion there must be value in combining blockchain and energy and of course the other conclusion is what we just discussed that's a lot of decentralized um assets bottom up solar um wind biomass and of course there must also be value to

establish the transaction layer and that's that's the reason why people jumped on this I think um there was Event Horizon event in Vienna and um I have not been there but I talked with a couple of unfortunately I couldn't go but I talked with a couple of people and they said yes there's huge momentum huge interest in the topic energy and blockchain however almost no one has a business model and that's a kind of challenge because there's not a technology penetration that allows to do all the nice things in terms of the smart meters that are being deployed in many countries there are no smart meters or the wrong smart meters in terms of solar batteries um it's just not deployed it's regulation and the

economics because today I get more money if I uh sell my energy to so-called feed and tariff or under the power purchase agreement because it's subsidized and um there's less money you make selling it to your neighbor the peer top energy trading idea for example um and that's kind of challenged and that was the reason why we started to looking Beyond energy um because I mentioned okay we're interested in physical delivery and blockchain that's the reason why we pretty much looking into other Industries supply chain mobility and that's also the reason why we started immediately with electric vehicle charging because that's something where we think it's an energy related use case it's even going in mobility and it's

possible today because today we have very few charging poles we have very few electric vehicles and we have a standard so there's a global standard it's a ISO 1518 standard it's very nice because in blockchain land a couple of people are are crying for standards and is electric vehicle charging we have a standard and this standard is a perfect fit to what we think um yeah is a electric vehicle charging transaction on the blockchain and yeah so key conclusion we drove it's doable um there's a standard and there's even a business model why shouldn't we go on electric vehicle charging um yeah that's that's what we're currently pushing forward what are you guys

actually building when it comes to electric vehicle charging basically we we worked with or we're still working with locket and it's it's pretty simple simp because we can think about sharing economy you would like to share assets assets such as charging pole and then you think about okay what is um what is lock it doing they have the Smart Lock they're opening closing a Smart Lock so what's happening in the charging pole basically we're switching on and switching off um electric an electrical connection it's pretty similar that's the reason why um we gave slet and call and asked them if we can deploy their yeah their Smart Lock Pock into our charging pole plus to

to extend the technology the functionality by reading out a meter and then doing the billing and settlement of the electric vehicle charging transaction on the blockchain in the end it's pretty easy you have an app you basically locate a charging pole you go to the charging pole you um takes the ID of the charging pole you send a transaction to a Smart contract uh a transaction for example the deposit then the smart contract sees okay there's money and even the charging pool sees there's money which means um as a deposit in the smart contract which means the smart the charging pole can trust that's being paid and of course the electric vehicle or the the driver can also trust because the charging pole

doesn't deliver um yeah it get it get backs the deposit which is very nice so we basically have a notary grade transaction on the ethereum blockchain for electric vehicle charging and of course you can think about putting a peer-to-peer node on ethereum client on other blockchain client in every charging pole that's quite a mess a lot of work and um what we are right now building one of the systems we called share and charge and we are collaborating with a lot of other charge pool providers especially in Europe um big ones um but also in um in North America and the basic idea is um to connect backend system with the

blockchain which means we can put in One Sweep entire fleets of charging poles on the blockchain and it's pretty easy because if you look in the traditional architecture of charging poles um let's say I have thousand charging poles they're connected via a machino machine communication Network to a Central Gateway in the data center and in traditional systems they're coming commercial applications on top of the um communication Gateway and what we are basically doing we are connecting the communication gateway to the blockchain and by establishing this connection we we basically have in one sweep the entire pole of charging po the entire fleet of charging poles um yeah on our

decentralized platform and we are right now really pushing forward to get um an installed base in place which means we're doing a couple of M us a couple of further proof of concepts with people who have relevant assets and we start with charging PS but also we're looking into parking lots and all this kind of stuff because in the end so when we have Mobility transactions on the blockchain when we even have a wallets a blockchain wallet in a car then of course we can think about um providing additional transaction services such as toil collection parking Insurance um yeah and other things and that's kind of the more longer term

Vision to establish a decent platform that can handle Mobility transactions that's what we're pushing forward and we start with um charging and we start with getting an installed base as soon as possible in place however we also aware of privacy issues and scalability issues for that reason we're looking to get the installed base in place but to release the product um only to few um selected extreme users so that we can yeah that we have control and um terms of yeah scalability issues private issues with a small customer group and that we are not kind of yeah uh putting too much pressure on the system but we get all the learnings and it's not only about

the installed base and the technology so we are also um concerned about the user experience and that's the reason why we are pushing forward to kind to hide the blockchain to hide the crypto tokens to offer to offer Euro tokens so basically also um implementing a implementing a payment Gateway which means we are transferring euro into crypto Euro or Euro token uh we are doing this and yeah of course then we have to deal with a couple of legal and financial regulatory issues but in the end our key objective is to have a system that's working end to endend that's hiding the blockchain providing good end user experience automating all

the um underlying processes and that's basically demonstrating that's working for an ordinary customer and of course then The Next Step would be to um yeah to address the the other remaining issues that everyone has terms of scalability and um and privacy but we would like to sync it with the technology advancements in the blockchain field um yeah that that we're all foreseeing in the next months because when you when you're talking about this you're talking about uh this running on public ethereum yeah so right now we we did we did the we did a choice to to start with public ethereum first um to demonstrate that's working however if we so I think connecting andall based

to public eum is easy um but then scaling the users and putting transactions on the on on the blockchain and also taking care about privacy issues a little bit more difficult um for that reason we're starting with a smaller group of um we call it extreme users but um we also we also working on a kind of the next version of the of the of the architecture to take um into account that we need to scale it as well so on a high level when you think as a user we you know normal people are going to be using some of these things you know in normal transactions how far out is that what do you think are the first

things that are going to happen yeah in terms of electric vehicle charging we are offering the solution to normal users yeah so this will happen pretty fast however it's not so if I have an electric car I can I can download the app and I can use it today yeah not today in the next eight weeks that's our objective and so we're basically having an app uh we're connecting the app to our payment Gateway you can you can load your basically we're also providing a wallet you can load your wallet with your credit card your bank account or whatever it is BAS your transfer Euro and then you get crypto euros and with the crypto you can do the

transactions oh wow that's and that's going to be rolled on in Germany first so if I now all I need is to buy a Tesla or something and then I can yeah yeah we call it a we call it a soft launch because we're not naive in terms of all the kind of technical limitations we have so our strategy is to put as many assets on the blockchain to demonstrate it's working and of course also to demonstrate that we have critical mass because if we have 10 charging ports in a blockchain there's no point in it uh and yeah so we would like to we we're working on getting the installed base we're connecting our own back end to the blockchain which means in One Sweep we bring between thousand and 2,000 charge

PS to the blockchain and on the other hand as I said so we have a bit little bit of conservative approach what we call soft launch in terms of um holding it out to um a limited number of users yeah so we we talked about some of the the limitations uh that we may face um in implementing these Technologies and I think using something like ethereum uh is is a good idea for experimentation but in the future I think we mentioned earlier that we may want to move towards some permission sort of public Consortium style blockchains and one of the reasons there is you know obviously for confidential

ity privacy that kind of thing there's some there's some other limitations that i' i' like you to address one one of the major problems or sort of limitations that we face when we're thinking about connecting different grids together uh is this the idea of being able to uh properly Trace electrons and so the the way that I understand it I mean I'm not an engineer but the way that's is being explained to me is you may be able to tr trace a payment or a token on a blockchain but if you're producing energy on a smart grid um through a uh a solar cell and then you're relying on the traditional energy

grid to supply energy when you're in low production the the grid doesn't make the differentiation between sort of that local green energy and the energy being provided by the grid so could you explain to us then perhaps in better terms uh how uh this problem is actually being dealt with or how you know people thinking about this may want to solve that problem um if we are to have sort of this decentralized system with know blockchains managing energy credits uh and and multiple sources of energy coming into our energy grids yeah I think we are very early

stages so people start thinking about it they would like to combine of course blockchain with AI with decentralized um yeah systems that control energy let's say in a cell and um it's a little bit futuristic but what people are doing they're thinking about digital grid routers that's Professor arber from University of Tokyo and with the digital grid routers you can basically say um I can takech an electron I can even say okay I would like to sense the El elron from or the electrons energy from A to B and VI a decentral system I'm managing that only when I'm sending from a that only B is consuming the energy and um of course then you need to to track it you

need to settle it to build it and that's the idea that blockchain and this future digital grid technology can all do this on a decentral level um there are some technical ways to self-regulate the system let's say there's a lot of renewable energy flowing in the system then there are flexibilities in the systems immediately reacting and um yeah making sure more energy is consumed or stored in a battery for example and so when we have all this kind of self-regulating grid cells then of course deite technology can immediately real time automated um to do all the kind of yeah Financial transactions to make sure people are being paid that

dedicate the assets um to uh decentralized git or digital crit router solution cool I I had no idea that these types of Technologies existed or were being were being researched yeah that's what I would like to add that's very cool thing because today we can send IP packages via routers from from IP address A to B and with these types of Technologies we can send energy from A to B and um this is very nice because today we there's a physical flow of energy and a commercial flow and today commercial and physical flow they're completely separated and um so with this type of Technology we can bring commercial and physical flow um in sync again and also

if we think about what does it mean for fintech Innovations when I can send energy from A to B in almost real time I store it at B which that also means I can send money from A to B because there's an equivalence between energy and money and that's um yeah another new kind of topic that's that people can consider yeah because one one of the the the problems when you're dealing with sort of traditional grid and the smart grid so let's say on one hand like you have okay let's take this example like you have a household that household is consuming energy from multiple sources it's consuming energy from like the solar panel on its on you know some local businesses rooftop and it's also

consuming energy from say a c Firepower plant and th those different sources of energy have different costs and perhaps the government is incentivizing the inhabitants to use to better like make better use of their energy so that they're only using that solar energy and and not uh you know not the cold fire power plants and there may be other incentive mechanisms and you know once once you start there's no way of differentiating what's a green electron and what's you know like a dirty electron uh and and that's that's where it starts getting blurry for me is how how do we differentiate those and how can like the blockchain itself doesn't solve this problem um but it

seems like these other Technologies might be no it it it it helps to solve the problem because if I know that behind a smart meter that's measuring the energy is being injected there's a cold fired power plant or let's say a solar cell then I can um Tex the energy basically if at my house um I have a solar cell I'm feeding energy in the grid then the energy that's fed into the grid um at my house and I have a smart metad data I basically can put a renewable energy certificate on the blockchain that's telling that my my household bya the smart meter delivered energy in the grid and by the way this energy package was a green package because um yeah the blockchain knows

because there's a registration uh means in place that the energy of my smart meter is green and the energy of another meter is let's say brown um and then people can start differentiating this and in the end it can mean that my energy is more um valuable than than other energy because it's green and it has the renewable energy certificate you also mentioned another very important topic um from energy perspective that's is uh locality because today businesses who can prove their local community they have they are green they are using green energy can now do this with a local renewable energy certificate and one of the business models in um in energy we are looking into is combining people who

have let's say solar cells with a business that has a complementary load profile and the business in this case can be Supermarket because in summer when the sun is shining and solar cells are producing energy we need a lot of energy to cool down um yeah the cold storage in the supermarket and of course in Vinter or dur night when there's no sun we need less energy so it's a little bit complimentary which means we can connect the power generation of local solar cell house owners with the consumption of the supermarket brings the two together and suddenly we have a local relationship a local business model a local transaction and of course for supermarkets it's very interesting because they can engage with um yeah

with their customers um in the city they can even start thinking about loyalty tokens all kind of other tokens and um so yeah it's pretty huge in retail um to have a local value proposition and to engage with local customers yeah not to mentioned that energy that's being produced locally there's less uh there's less loss uh than energy that is being produced further away so you you also I think I read somewhere that five or six% of all of the energy in the sort the US grid was being lost uh simply over long distances one one thing that you mentioned there that was was really interesting was this idea of loyalty Point systems and incentivizing um this is actually one of the uh one of the objectives of this uh

this project that my company stratum is is working on with bu Leon is is incentivizing inhabitants of an Eco neighborhood uh to use green energy by then providing them you know rewarding them with these uh sort of fidelity points that they'll be able to use in local businesses and this type of thing so we can already start to see so of the new business models emerging and uh incentive models emerging and not necessarily from like the state or government actors but from uh in this case a real estate promoter so um that's this what we also see we do a lot of customer insights we talk to local businesses and they're a

little bit bored when we start when we of course start talking about blockchain new energy contracts but when we mention the term um uh local relationships and local loyalty points local proposition and they immediately um yeah then they immediately wake up and they really like to start engaging with us on these kind of propositions cool well Carson thanks so much for coming on thanks so much for sharing a bit about what you're up to what's going on with energy blockchain and and some of the exciting projects happening on this side actually we were talking about it before Sebastian and I I think you the first person uh that's been on the show that's

kind of you know working for an old school uh old school more or less uh company um so yeah thanks so much for coming on yeah thank you for having me it was a real pleasure and you two guys are real real heroes for me because when I started listening to the first podcast really inspired me to look into further use cases cool thanks so much for that thank you so yeah we're going to look forward to to what's coming with with Carson and and their Innovation actually they there's a nice video uh of block charge which is their electric vehicle um project which we're going to link to in the show notes if you want to check that out and yeah thanks much for the listener for you know once again tuning

in uh we are part of the let Bitcoin Network so you can find this show and other shows on let bitcoin.com and if you want to support the show then please leave us an atun review it helps new people find the show and thanks so much we look forward to being back next [Music] week