Challenge / Goal
The NRGcoin concept is motivated by the following issues in the energy sector:
- Inadequate subsidies for renewables. Too little subsidies lead to slower integration of renewables, while too high support causes stress on the grid infrastructure.
- Risk for policy change. Retroactive changes in support policy undermine the trust of investors and lead to slower adoption of renewables.
- Rising electricity prices. Without proper balance of supply and demand, the grid infrastructure needs to be reinforced to handle peak production and consumption.
- No incentives to consume renewable energy. While renewable production is subsidized, incentives lack to offset the consumption of energy from mixed sources in favor of locally produced green energy.
NRGcoin is related to numerous other concepts, such as demand-side management and peer-to-peer trading, but it is mainly designed to address the above four issues.
- NRGcoin enables you to extract more value from your renewable generators (photovoltaic panels, windmills, etc.) without oversubsidizing those. It helps shorten your return on investment while minimizing the stress on the grid infrastructure.
- The support policy is built in an immutable smart contract, which cannot be changed by the utility or any other individual entity. In other words, the subsidies for your panels are set in stone that no single party can change.
- 1 NRGcoin always equals to 1 kWh green energy, regardless of current electricity price in fiat currency. An NRGcoin that you bought 5 years ago at lower electricity prices is worth exactly the same amount of energy today.
- You spend NRGcoin to pay for renewable energy currently available in your local district. Therefore, NRGcoin ensures that you pay for the actual green energy produced in your district at the time you consumed it.
For every 1kWh of green energy consumers pay 1 NRGcoin directly to the Smart Contract. This ratio (1kWh=1NRGcoin) always holds, regardless the retail value of electricity. The Smart Contract then pays all grid fees and taxes to the DSO from the coins paid by the consumer. The Smart Contract then validates the reported injection of green energy by prosumers using a variety of methods.
If all reports check out, the Smart Contract mints new NRGcoins and rewards prosumers for their injected green energy. Prosumers can then sell those coins on a currency market, or use them to pay for green energy later on. The currency market is where consumers buy their NRGcoins from in order to pay for their consumption. When energy is paid, the associated coins are not destroyed, but remain in circulation. To prevent excessive inflation, the minting rate decreases with time.
Advantages for Prosumers
NRGcoin eliminates the risk of policy change for prosumers. Remuneration for green energy is governed by an immutable Smart Contract that cannot be changed by market actors. Therefore, prosumers have blockchain-level guarantees on their rewards for the energy they inject.
Advantages for Consumers
NRGcoin results in cheaper green energy for consumers. One unit of NRGcoin is always equal to one kilowatt-hour green energy, regardless of the electricity price in fiat currency. When the electricity price rises, 1 NRGcoin bought at a lower price will still buy you 1kWh of energy.
Advantages for Utilities
NRGcoin offers faster cash flow for utilities. Instead of receiving payment for energy once a month, the blockchain-based currency can automatically pay for consumption every 15 minutes at virtually zero overhead costs. Moreover, NRGcoin lowers the costs of utilities, because they do not need to pay prosumers for their energy. Instead, the Smart Contract mints the currency and pays prosumers.
Advantages for Governments
NRGcoin reduces the need for government’s renewable support schemes. The Smart Contract generates new currency and rewards prosumers for their green energy. Thus NRGcoin can save government budget without lowering the incentives for renewables.
Advantages for Grid Operators
Since NRGcoin makes green energy cheaper for consumers, they now have incentives to shift their consumption to periods when green energy is produced. This shift results in lower peak demand which helps stabilize the grid and minimize the stress on the grid infrastructure.
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