#206 Karl Kreder: Grid+ – Unlocking Direct Access to Wholesale Energy Markets

Transcript

[Music] hi welcome to epicenter the show which talks about the technologies projects and startups driving decentralization and the global blockchain revolution my name is Sebastian Joe we will talk to Kyle Cradle co-founder of grid plus plus is a project from consensus that is seeking to reinvent the nature of how energy transactions happen on our lives today car will come to the show thanks for having me guys so before we begin tell us about your

background and how you came to be involved in the blockchain space so I got involved in Bitcoin just kind of buying and as a speculator back in about 2012 timeframe it was also the time frame that I was in grad school doing my PhD on advanced battery materials energy storage and I actually met Alex Miller during my PhD he was one of my classmates he was working on a degree in computational physics and he ended up graduating with a master's degree and went to work for consensus eventually and he started working on

some other energy projects one of which was networking together a swarm of smart batteries and having those batteries have what we call an autonomous agent which would essentially by an arbitrage energy with each other over time and in that project he needed some battery expertise so he called me up and I did some consulting for them as kind of a subject matter expert on that project and then eventually started working full time for consensus in May of this year so your LinkedIn profile says you were like director of energy for consensus what did you do as director of an

so basically consensus has a couple of different business areas one of which is what we call enterprise consulting so it's basically doing project development with energy companies that are looking at using blockchain in some way and having consensus kind of be the technical arm for doing a proof of concept with an implementation of blockchain so there were a couple projects right like the one with the smart batteries there were also some sort of inbound interests but most of

the time that I've been at consensus I've really been focused on grid Plus as a project so what is great bliss is an overview yeah so good+ is going to hopefully be the world's first block chain based electrical utility and what that means is that our customers will be able to buy sell and settle their energy in real time using the blockchain so in an application like that so when I imagine myself like buying electricity it's generally I have a contract with a company and I pay like a like a flat

charge so number of units consumed multiplied by a standard rate per per unit because it comes the meter records and then I pay the particular unit what does blockchain technology have to do here like why is blockchain at all suited to this kind of transaction well so there's a couple sort of factors that are coming together that is making blockchain very interesting for the electricity markets the first of which is just the sort of intrinsic nature of of the markets themselves and electricity markets are interesting because they're a

commodities market but unlike any other commodities market which is typically the contracts that are signed and then settled on a cash basis so they're typically what we would call a futures contract and the electricity markets most of the contracts or would call forwards contracts because unlike futures contracts was for settle it in cash for as contracts are actually settled in the delivery of electricity that's also coupled with the fact that if you look at the electrical grid there's not really a lot of energy storage on the grid so production and consumption essentially happens in real time and these two things always have to be balanced with each other so you have

this this forwards commodities market where the product is being created and destroyed kind of instantaneously so if we have a financial system that requires us to settle not instantaneously we need to have a process of collateralization and segmentation in the markets to essentially mitigate counterparty risk and that's kind of how the markets are currently set up so when people talk about this idea of the utility that they're playing a flat rate the utility is actually buying this energy out of a wholesale market if we're talking about a deregulated market they're then

marking that up paying a distribution charge and then selling that energy at a flat rate to the customer the whole purpose of that intermediate intermediary in this case the utility is to essentially collateralize the risk of their customers of payment such that the other wholesale market participants don't have counterparty risk but if you take a world where the customers themselves can settle for their electricity consumption in real time you can start to reduce the need for that collateralization by the intermediary and in the far-off future you could

actually think about a system where customers would be directly interacting with the wholesale markets so I think a lot of people sort of take for granted the fact that they have a tricity just flowing into their into their homes and you know powering their lights and stoves and you know computers and all these devices that we used and I think for a lot of people that don't don't really fully comprehend so the the journey of an electron that's being produced a nuclear power plant or in a coal-fired power plant or by some renewable energy source and that the journey of that electron to to your house and like into your smartphone charging you can you walk us through that like so say for instance and you

mentioned Texas and a deregulated market like test it Texas who are the different stakeholders or like the different players in this energy supply chain right right so the players in the energy supply can be segmented really into four categories so the first one being generators which are sort of these nuclear power plants these large coal power plants you can also think about ility scale say wind or solar production and those are your generators so they're they're classified as people that are generating more than a megawatt of power that energy is created by the generators and then it's transmitted down the transmission infrastructure and that

transmission are that is basically the movement of electricity over these high-voltage power lines and then that gets to what we call a distribution network which is a lower voltage shorter distance network that you would kind of think about like within a city and and then that goes to the consumer and in the middle of all this you have what we'd call a retailer most people would refer to them as their utility and the utility is actually just this financial intermediary that buys the energy out of these wholesale markets that the generators are selling into then repackages it sells that energy to the customer and then pays a fee to the

transmission and distribution network for removing the electricity okay so I mean you could kind of compare the - you know some sort of a logistics supply chain for you know like any kind of consumer product you've like someone producing the product and then you have logistical you know distribution and then you have retailers at the end who buy that product that product they have to pay for transit up that product right for basically the the shipment and then they sell it to consumers in this case we have the generators we have different levels of distribution so we have the

high capacity lines high voltage lines and then the lower voltage lines sort of in urban areas or in cities and then the retailers who buy that in turn in G wholesale and and then sell it to consumers and markup and try to make a profit on on that service of selling the energy and as you say sort of Collider I stood cauterized the risk and I think it's probably important to point out as well that in most places while generators are typically can be private actors but also public actors that the distribution network is usually public

infrastructure correct yeah so so in in a deregulated market there's there's also one other sort of actor in in the in the market that's called the ISO Independent System Operator and so in Texas they're it's it's hot and the ISO hour or cot is responsible essentially for the reliability and stability of of the network holistically so they're actually the ones that are setting up these wholesale markets and there's there's other markets besides just the wholesale markets there's ancillary services markets there's demand response markets and they basically create these markets and set the amount of

essentially needed generation at any given point in time or the amount of a needed resource such that the other actors in the market can then respond to help sort of keep the grid in balance on the real-time basis so it's a little bit different than the most supply chains and the most apply chains don't have this this sort of instantaneous production consumption dynamic right there's there's some sort of capacitance in the network of supply and and that's that's a dynamic that is sort of really important when we look at the electricity markets and and there's one of the reasons that blockchain is particularly well-suited to potentially acting as the financial settlement

process in that system with with the ISO be responsible for I'm not sure if I'm translating this right but what we would call energy array sment or I'm not sure what so basically in the in in high peak times they would ask for large energy can consumers say for instance in industry industrials and and even consumers you know to reduce their energy consumption as part of their contract and would would offer retribution for that so there's there's there's two different ways that they do that so one is just through this idea of the wholesale market so sort of the rate

is determined by the ISO basically sets the amount of energy that's needed to be produced or at any given point in time and that essentially affects the clearing price in the wholesale market so that's one of these mechanisms that they use another mechanism which I think you're more alluding to is what we call demand response and so in demand response if I'm a commercial entity and and I have some amount of ability to stop my consumption at any given point in time say I have a smelting furnace or I have a refrigerator and I can turn that off for 15 minutes for an hour I

can basically bid my services into this into this demand response market either independently if I'm large enough or in an aggregated way through what we call a qualified scheduling entity if I'm if I'm smaller but essentially they'll pay me to turn off at a given point in time to help in this achieving balance for the grid so so there's these mechanisms either through price or through these these secondary markets that that reward a consumer or a at least large commercial and industrial consumers to essentially be somewhat responsive now for customers customers don't have a really good way

of getting paid to be responsive and that's just because there hasn't been aggregated that kind of we're willing to pass through the price so if you think about your utility or your retail energy provider a retailer like electricity provider as they're called in Texas or RTP they do that they just don't pay their customers for doing it right so they'll sell you say a spot thermostat and they'll turn your electricity off at peak time because they gave you a free smart thermostat but they won't actually pay you for it they'll kind of keep that money and they'll just turn your a/c off whenever they feel like it of course

this is a this is one area I think where blockchains could you know in fact be be interesting to implement to to to have that that real-time payment and also also the traceability so you know I'd start them we've looked at this for industrial actors and one of the problems that the ISOs have is providing is having having the real-time traceability of when the consumption was reduced you know in in the context of an industrial actor and so we had been looking at ways in which you could provide that traceability with watching networks one other thing I'd like to touch on it I think again people sometimes I think would take for granted

is I'd like you to give your thoughts on this is the this notion of you know green energy now so and and how green energy is distributed and sold on on these distribution networks so with the internet you know you can wrap up a packet so I can send a packet from a server and I arrived at a destination however that's not the case for energy and an electron on a network on a distribution network is the same whether it came from a smelter whether it came from a nuclear power plant or whether it came from a solar panel on a solar farm now can you explain how then as a consumer I'm able

to buy for instance green energy from like a green energy retailer and benefit from say tax credits from the government or some other type of subsidy knowing that we can't really differentiate how that where that where those electrons go yeah so the the way the the green energy system currently works is you have something called a renewable energy credit so if I have a solar panel on my home there's an entity in the jurisdiction it could be the I so typically I think it would be the I so for most jurisdictions they basically will give you a credit for excess

production for that that asset so if I produce a kilowatt hour I put it on the grid I get a credit for producing a kilowatt hour of green solar energy and then that credit has some value because either individuals or organizations have a preference and/or a mandate for using electricity from certain sources so they'll end up buying the electricity off the grid which is any old electron it could come from a coal plant it could come from a nuclear plant but in addition to that they'll buy one of these renewable energy credits and in doing that they're essentially

subsidizing or rewarding the production of the electricity from a renewable resource so that's the mechanism of financial pass-through that exists even though the electrons don't necessarily flow from you know the solar panel to the person that's paying for the solar energy so the key idea here is in the supply chain of like generators the wholesale market the retailers that are buying from the wholesale market and the final consumer is the idea of grid plus that you can basically decentralized a retailer or basically

remove that retailing aspect altogether from the supply chain you're you trying to minimize the lack of value-add of the retailer I suppose and you're trying to create a system which allow this more efficient market dynamics to be reflected so one of the interesting things when you talk about solar particularly is the incentive structures that exist right so Solar is great we all love solar what solar creates a problem for the electrical grid and that problem is that it's what we call an intermittent generator right so we can't

control when solar produces it produces when the Sun shines it stops producing when a cloud you know comes overhead or the Sun Goes Down so we don't have essentially control over our solar production and so what that means is that the other actors in the grid the the base loads the the coal-fired power plants the nuclear power plants the ones that aren't intermittent have to respond to make up for the intermittency of solar so there's this this externality of adding solar to the grid and in low sort of percentages a couple percent penetration of solar that's really not a problem but as you get to higher and higher percentages the ability of the other people to respond becomes much

more difficult but also the ability of those people to have operate a financially sustainable cost point because their production is essentially being deprioritized to the green production means that they're going to get lower utilization of their capitalized assets right so you have this sort of technical issue you also have this this sort of economic issue of getting ROI on on investment and and so the the incentive structure is like are relatively misaligned so for example in Austin if I have a solar panel and I put it up on my

home Austin Energy will actually give me a penny more for my solar production than I pay them to consume electricity so they're actually rewarding me because I'm putting this green energy out but they're disincentivizing me to essentially make up or try to put a resource in place that balances out the intermittency of my consumption and that resource would typically be like a battery so if I take a solar panel and I pair it with a battery that battery can essentially level eyes my my production over time so that I'm putting that energy onto the grid when the grid needs

it most and I'm potentially pulling energy out of the grid when there's excess supply and lack of demand so so solar plus a battery is a sustainable system but the economics that exists sort of today don't create these mechanisms of sustainability and we're actually kind of seeing that a lot of places so up in Dallas for example there's a lot of people that have solar panels that are other than that metering and that's fine but the the distribution operator has now added just a flat fixed charge of I think it's $40 a month so even if you're essentially producing more than you're consuming in net they still hate you with this flat rate of 40 bucks a month

to kind of offset some of these externalities that you're creating on the grid and and the fact that you're using the distribution infrastructure but you're not really paying for it based off how solar places are calculated so so correct me if I'm wrong be the the problem is something like this that that during the day there are like hours of peak usage hours of low usage so like the demand is itself fluctuating and then solar itself has a has a fluctuating production characteristic so some parts of the day the sun shining it

will produce a lot other parts of the day it will produce less so if I have a home so and I have solar panels on top of my home the the problem is that I am producing an excess of electricity maybe when there is actually a surplus so I might be supplying electricity to the grid but then I might be supplying it in a time of surplus and at the point where I'm not supplying maybe that is the time that the grid actually needs production yeah yeah so so like it's 7 a.m. and 7 p.m. you'll see kind of these peaks and demand in with solar

production you'll see production peak midday and then fall off you know outside of these you know but you know after it'll ramped up after the morning peak time and fall off before the evening peak time so it's it's doing its most production kind of in midday where you're not getting sort of peak demand and then it goes away when you do have peak demand and so that's that's sort of the mismatch so so basically like when Emma's the solar producer there's this mismatch and even as somebody who's producing more energy than Yoshi consumes through solar panels I I still have to depend on the on on basically the grid like the the distribution grid

and the and the power producers in order to suffer nish me with the electricity when I need electricity but solar is not producing that Alexa T so I am charged for it even though I'm producing like you mean let's say I am using X kilowatt hours of electricity and producing Y and Y is greater than X I still need to pay a charge because they are giving me the facility of consuming electricity when I need it the most and solar is producing correct and you're also using the distribution network and you're also consuming electricity when demand is higher and you're producing it when demand is lower so all of these factors

mean that you should still be paying something to somebody even if X is equal to Y in your scenario like you still are using more resource than you're essentially producing so when I couple it with a battery though I can I can still save more because I can store it set my solar production itself in the form of a battery and then use drain from my battery when in the evening when no solar is being produced but I I myself need a lot of demand yeah so the battery helps smooth out that production versus them to better match demand right so if if the consumers are exposed to essentially the actual rates not flat

rates you know but but the variation in electricity prices over the day they can then be incentivized to store their production and either use it later or sell it later at a higher price and so the battery helps balance supply and demand in a more sort of economically efficient way so it appears to me that the key sort of hypothesis behind Grid pluses that today we have a we have a system in which there's a retailer that gives me a flat rate I am not exposed to the actual variation of energy prices during the day so that's like the

current system and your hypothesis appears to be that if you move to a system where the consumer and consumer is actually exposed to the fluctuation in energy prices during the day then automatically that consumer will end up putting a solar panel and a battery and participating in this market and this can sort of need this switch to need a switch in the market from a current large-scale utility to a solar based sort of the energy economy yeah so so it's it's doing a couple of things one yeah I think that's a pretty good summary right

and so it's basically putting the financial mechanisms in place and the incentives in place to allow us to incremental II move toward a society of renewable distributed electricity electrical grids and and and that's kind of like what we see it at so good+ is trying to bring efficiencies today just through better price points from a retail perspective but then also sort of create the infrastructure necessary to allow better sort of economic renew Mirae ssin of market participants based off the actual sort of resources that

they're providing which if you look at solar panels and batteries they're arguably one of the most efficient mechanisms for producing energy so over time in most markets you're going to incentivize more and more green energy and then you're giving a mechanism for consumers to actually get return on investment and monetize those investments over time so before we get into the specifics of Grid plus could you just give us a you know a few minutes talking about consents consensus energy and what kind of projects have been pushed on there under this this sort of subgroup within consensus yeah so consensus has been working on energy

projects for more than two years the first one was called the Brooklyn micro grid it was a partnership with a company called lo3 and consensus was essentially the technical side of the project and what the brooklyn micro grid was it was the first example or proof of concept of doing electricity exchange between consumers essentially and their neighbors so you had this neighborhood in brooklyn at solar production and essentially those people were then directly selling that solar Chintu people that didn't have solar production and the mechanism for doing the settlement was was via the

blockchain so it was this kind of idea of doing peer-to-peer electricity sales since then we've done the number of other projects another project was something called in OG it was I'm sorry it was called Co tricity which was a joint project with n OG energies one of Germany's largest utilities formerly RWE but what that was was basically a similar sort of variant on the Brooklyn micro grid but there's a slightly larger scale and that we were using aetherium as a mechanism of exchange between this idea of this prosumer or a person that have solar panels on their house and a

local business so then the local business could could buy energy from those consumers directly using the blockchain and then since then we've done a couple more projects one of one one of which i kind of alluded to earlier with this idea of having this these smart batteries networked together and the smart battery is going to essentially then buy sell and trade and arbitrage energy on their own using what we call an autonomous agent so you program the battery you give it access to the etherion blockchain and then it can essentially a buy and sell energy based off the the the prevalent clearing market price and then essentially make

money so the simplest example of that is you can charge up at night when the electricity is really cheap and then it can dispatch that electricity during peak times during the day and it can make money and then there's there's more complicated examples when you when you add solar panels been getting the self consumption but that that was another one of the projects so there's been quite a bit of work that's that's been going on mostly proof of concepts mostly focused on this idea of peer-to-peer energy trading and what we learn from that is that although aetherium is technically capable of creating these peer-to-peer markets if theorem isn't sort of the limitation the limitation is

that we don't have sort of prolific penetration of both solar and batteries so if you don't have batteries you can't really make decisions if you can't really make decisions on this like independent distributed basis then why do you need sort of this distributed financial infrastructure and so we step back and said okay well we can't do this idea of peer-to-peer trading given today's infrastructure what can we do what efficiencies can we bring with the theorem and that's kind of how we arrived on this idea of operating as a retail electricity provider is that we can bring efficiency just on a financial basis with without any different additional infrastructure but then over time by putting that infrastructure of

using the blockchain in place we can then create economic incentives and we can create this responsive financial mechanism that can can evolve over time as more and more smart you know assets are put online and more and more distributed energy resources are put online okay very interesting I mean I I knew the consensus were working on on energy projects like I think a lot of people have heard of transactive grid but had no idea that that had been so many proof of concepts coming from from the company so let's let's move on the grid plus then so and spend a bit of time talking about about that product and some of the technical aspects of grid plus so this is kind of unique I

guess in the blockchain space because most projects in the blockchain space in fact most of the projects that we interview here on the show are software projects and this is this is a hardware project so so the the grid plus smart agent is sort of this little computer it's you know if you know people can look it up it's like this little white it kind of looks like an old it looks like the the very first apple Wi-Fi hubs like back in the early 2000s or whenever that was and and and this this computer has the capacity to you know obviously connect to the if you're in blockchain I'll let you get into the details but talk you know do these computations to figure out you know what what price they

should be buying and selling electricity at and then also sign transaction I presume there's a trusted execution environment in there that protects your keys and such so you know tell us about about this product what what it's capable of doing and and how how how it will sort of play out in the secret system that you've been describing earlier yes so when we was started looking I mean we've we've done a lot of work in these proof of concepts where we can we can interface a system with the if they're in blockchain you don't need sort of any specialized hardware to do it but but that's really on a proof-of-concept basis if you're looking at creating a secure topology where you

have this this computer that has access to private keys that can make signatures and it exists and always online environment it has this this sort of very high attack surface so the question is how can you design a system architecture where you can deploy these things sort of into the wild without you know technically competent people essentially managing them but yet ensure that they can be used in a secure way over time and so that kind of necessitates the idea of this dual software hardware stack the key piece being as you alluded to what we call our smart energy agent so the smart energy

agent is this general computing environment it is where the decisions are made in terms of buying and selling energy so we'll give it you know market data it'll use data that it collects from customers habits as well as say from their smartphone GPS location calendar data to help predict future energy use and then decide how to buy energy out of the wholesale markets and then the other piece that we were talking about is that it needs access to these private keys so it has it will have a secure computing environment as well as a secure signing Enclave the keys exist in the secure Enclave

essentially account permissioning and whitelisting is done by the secure computing environment and then all the sort of the the macro decisions about how to buy sell and protect energy usage are done in this general computing environment and and that topology in a multi signature wallet setup essentially allows us to have a system that is secure from software attacks as well as Hardware attacks as well as physical attacks against essentially the private keys and so that's sort of the function I guess of the agent is this something that someone could potentially put together like say is the software gonna

be open source where like if I've got like a Raspberry Pi and you know I wanna hook up like a te on there and have my my own setup is that feasible so at the current stage we haven't fully implemented the the secure signing Enclave in the system that's still under development so you can simulate an aging on sort of any general-purpose computing device but the management of the the private keys and the the whitelisting and account permissioning mojo elements like that happening in a secure environment is really what you need to

sort of ensure that this works securely over time so there was actually a student group that got interested and they actually kind of like made a variation or a prototype that that we put together and demonstrated at one of these tech demos and Dallas last month so that you can definitely kind of like hack one of these things together but the production one is gonna have what you wouldn't be able to hack together in it's an offer security that you wouldn't be able to get from just having a Raspberry Pi okay so in the white paper there you sort of described where this device sits within the broader I guess

ecosystem of you know to fight other devices in your home smart meters and like things like nest stats and then that device connecting to the etherium blockchain and to the electricity market can you explain sort of where this device sits in this brother euchre system what interactions it has with other IOT devices the blockchain and and in the electricity market yeah so so if we if we think about what we what we're creating with the aging is that you have this general computing environment and hooked up with the secure computing environment signing Enclave which is there's one piece of this system that essentially allows this 24/7 online

environment to securely interact with the ethereum blockchain now electricity in it of itself is actually just one use case you can really think of the smart energy gateway as a generic secure gateway for IOT to get to the etherium blockchain it just happens that we're using the first application is electricity and we're purposing it for that but over time we could envision other applications taking advantage of it so if you think about this idea of IOT devices using a blockchain to do machine-to-machine transactions you don't really have a good security

apology if you're assuming that each one of these devices will implement some form of software hardware stack and then having to sort of manage these accounts on all the individual devices and having that sort of be a reliable secure topology so what we envision is that as we move past sort of version one of this agent we'll open up our agent to an API that other devices could use so you could just have a very generic trust relationship set up with another IOT device be a simple say say RSA signature and that device could then request transactions from the aging and as long as those transactions are with ins or

the account limits and permissions that the user sets up that exists on the asian the agent could then broadcast those transact chins to the blockchain on behalf of the other iot devices so it's this like centralized gateway such that say in the future your fridge if it wanted to buy milk instead of having to have an aetherium wallet on your fridge the all your aetherium wallets and permissions would exist on this this device the agent device and then your fridge would just make an nice request to the agent saying hey I'd like to buy some milk and then the agent would essentially sign a broadcast ID transaction it's sort of the trusted X unit shouldn't exact environment for IOT in your home yeah

this is the way I kind of thought of it when I when I first learned about this and you know like one other use case it could be it could be the other way around too you know your this device could for instance be connected to your smart locks right and an accept payment for say like an Airbnb or something like that and if the payment hasn't been Mayo the locks don't don't don't let the the renter's in you know you could sort of build like a slaw cat type model on something like this yeah so I mean in that example you're kind of getting to this other use case that that in some ways the agent can be thought of as like secure in-home crypto banking because the the system architecture at actually

isn't just the agent itself it has to do it it's it's one piece and what we call two of three blind key multi signature security so there's actually only one key that's on the agent device and it's it's what we call a blind key which means it's unknown and it's not discoverable to even the user and then the other two keys exist one with grid plus one in a smartphone app and what that basically allows is that there's no single point of software failure but there's also no single point of hardware failure and there's no single point of physical attack so somebody comes into your house and says wants to try to steal your your funds they can't just steal the agent they can't just steal

the smartphone and they have to steal the agent a smartphone and more importantly they have to get a pin so they would actually have to say course a pin from you as well as stealing one or multiple devices and back so it creates a sort of a robust architecture for all these things which means that it would actually be a good way to you know store more money in an accessible way in your home and and that's kind of where you're going with this idea of slok it and that i could have my generalized accounts beyond that agent he can then programmatically be responsive to say a lock and it can sort of manage and adjudicate payments and then control that lock in some way so

all of these things okay so coming back to the energy use case can you talk about the the interactions so you know when when when you buy energy with this thing where is a gathering data from what types of devices in your home is a gathering data or producing in to whom is it sending data how does that how does that play out so in this most generic sort of implementation there the simplest implementation all that the agent does is it reads data from your smart meter I think it's market data from us it basically looks at your consumption looks at that market data and then

creates a payment based off the amount of usage that's happened in the last 15 minutes and then it will initiate a transaction by sending a transaction to us with its key and then we'd cosign that a transaction with our key and then we would get paid and then we can do the reverse if say the person is producing electricity we get smart meter data through the ISO via the GSM network so we also have smart meter data so then we could put together a payment sign it and then sent it to the agent they could go sign it and finalize it and so there's this this two-way flow they can exist now I do have to mention that we're going to be leveraging state channels so

we won't actually be broadcasting all these payments to the etherium chain as they're happening instead the topology would look like the agent opens up a state channel on a periodic basis say you know once every few weeks once every month and then it basically instead of having to broadcast the transactions every time we can essentially sigh our sign messages and send them back and forth basically as many as we want for literally zero cost at any point in time either one of either us or them could decide to close the state channel and then at that point we can broadcast the the most senior transaction message to

the chain and get our funds so we don't have this sort of like open counterparty risk because any one of us can collapse the state channel at any point in time so what that means then is from essentially like gas fees you know maybe 20 cents a month and having to actually pay fees on the etherium Network so what's the current status of this hardware device do you already have it made so we have a prototype of the device and you can kind of see that our whitepaper we're in the process of implementing the the secure signing environment so that's that's still ongoing but the the generic hardware from in computing environment

and the software and the state channels we actually had a demo Alex Miller set that up to show kind of what a virtualized agent does and that can be done on the current hardware device it's just the the signing Enclave isn't is it fully implemented so it's not in a like a secure production state of deployment at this point but that's what we're hoping to finish up in the next six months or so and like what what does your roadmap look look like if you have these three different eras right like Edison era Tesla and mascara so tell us like about how this project is going to evolve post token say so so the

different this sort of the different epochs as we call them are essentially us putting this into you know production and kind of getting it ramped up to what you would call scale and then scaling it right so the the Edison era is basically us getting to the point of a production agent getting through the process of getting a license as a retail electricity provider and then signing up and deploying you know the first couple thousand of these agents with customers and then sort of figuring out the problems that we know we're going to neva t have over time and then as we move from Edison onto Tesla that's when we start kind of scaling up the roadmap

in terms of increasing to sort of a general just customer base when you say getting a license as a retailer what kind of regulatory hurdles do you think you might run into if any so the whole system as we're designing it is meant to fit within the current sort of regulatory constructs that exist so we don't think that we need any sort of changes to the rules as they exist to one get a license and then to operate has on the etherion blockchain the process for for doing this should take

roughly 90 days and the biggest issues besides you know showing the team showing the experience is collateralization of assets so there's a couple million bucks that has to be put up essentially to be able to interact with the wholesale markets so we don't anticipate issues but you know we have been working with a number of law firms so if those two come up we'll flip the works through so I mean so basically like once this smart agent prototype is is is sort of ready and you you'll sell

this these agents in retail right like people like people like me can go and buy and presumably like I can go and buy this smart agent and like hook it up to a solar panel and is it like is that it is is that enough is it like plug and play out of the box I have a solar panel I have this agent and I start participating in this economy or do I need to be in a specific place yeah so so there's the the the initial functionality of of the smart agent will be you know it's going to expand over time so the initial functionality is

that it will be able to buy your electricity on the etherion blockchain in real time so from a customer standpoint what that looks like is that when you sign up with a grid plus you'll get a box if I have the agent in it you plug the agent in you've got up to your Wi-Fi you download a smartphone app and then you just basically fund your account and then it'll start buying and selling energy for you as you have more devices and we start supporting more devices the ones that were most focused on right now just from prevalence and sort of cost of entry point are the nest and the test the chargers will will be able to will want will add the functionality of be able to to interact

with those devices and then as more time goes on then we'll look to add devices for commonly used solar inverters and batteries such that you can have better internal control of your home as sort of this generalized energy management system so it's it's it's an incremental roadmap but and in terms of region initially will be operating in the competitive markets of Texas which are about 85 percent of the households in Texas and that's pretty much the only place we plan to operate for next year we're just kind of focusing on that one market there's a number of conversations

we've been having with some large utilities around the world I don't know if you guys saw the coin desk article last week we have an MoU with TEPCO which is Japan and largest electricity company and we're basically working with them as we're developing this this agent and the software stack such that hopefully once we prove it out next year in the Texas market and get it to that production scale that they would be interested in specially licensing it in their home markets so we would be looking at expanding in other markets throughout

the world hopefully through this idea of Licensing and potentially addressing other competitive markets in the u.s. either by ourselves or through licensing so like what is the first utility that I get when I like have this device so if I'm in Texas I have a homeowner and I have a solar panel I get this device so it's even simpler than that you're you're in Texas you're homeowner you have no solar panel you get this device your electricity bill gets cheaper and so we think we can save 30 to 40 percent over a comparative elect retail

electricity provider so that's your first utility is just cheaper electricity straight away and then also straight away you also have this idea of you also have secure crypto banking and you can pay for your electricity using aetherium if you want to so that's that's pretty cool too and then sort of the next sort of incremental thing again as as we're focusing on is to support the nest and the Tesla so if you get your nest now this agent is responsive to market pricing and can control your house in a smart way based off you know where you are where you're gonna be it can it can predict your energy usage better and that's part of what plays into getting you cheaper electricity is that it knows

more than a normal retail electricity provider because it's it's essentially predicting and buying on a bespoke individual basis not this sort of generalized aggregate predictive basis so that's your initial benefit then as we add functionality over and then you get into your solar panels you get your batteries you you have the utility of essentially getting proper financial renew Mauritian for having those assets cool there's sound bits are interesting so I think one of the final things you'd like to cover is that you have you have in your system multiple different tokens right so there's like

walk us through walk us through these the bolt token the grid token yeah so one of the issues that we came up with when we were trying to address how do you bring efficiencies that's okay like how do you do blockchain at scale is that you have to be able to do it with naive users right so the whole idea is most of our customers won't even know that they're using a blockchain that's kind of why we had to design the system the way we we designed it in terms of the the smart energy agent the signing Enclave the two of three key multi-sig and so on but one of the issues that

still exists is that you have 4x risk with aetherium right so if you hold aetherium relative to the dollars that most people think in currently you have to understand that there's there's a foreign exchange risk with that right the price of theorem goes up the price of time goes down so if we're gonna create a system that the average person doesn't need to know anything about crypto currencies we have to have a token that doesn't have that 4x risk and so for customers that don't want to know anything about blockchain or use it we have what we call the bolt token and essentially what that is is a customer makes deposit with us we create the bolt token and then send it to them so we're

essentially selling them the bolt token and then that bull token then sits on their agent and then it's spent down over time so the bolt token is a $1 USD stable token it's backed by the deposits which we use to create the bolt and then when they send us the bolt back we then destroy and we move that money from the deposit account into essentially the payments account that we need to go pay off the wholesale and the distribution guys and so that's the bolt token the other token that exists is what we call the grid token and the grid token is going to be redeemable to remove markup on 500

kilowatt hours of electricity so if you think about the the cost to us say average wholesale cost less distribution cost is six and a half cents for a customer that doesn't redeem grid will charge them a 30-round a thirty percent markup on that so maybe they'll pay seven point eight to eight cents or something like that and so that's kind of like our markup to operate as a retail electricity provider but a few bird emic grid instead of paying markup you would just pay costs so you would get your energy for 500 kilowatt hours at the wholesale plus distribution cost rate so instead of paying like the eight

cents you pay the sixth sense and so that's essentially the value of the grid token and so we're doing a a token sale we've done a pre-sale already it closed earlier this month and we're doing a public token sale on October 30th for the remainder with the grid tokens cool so for for each grid token you can basically like save on the mark-up cost which might be like like two cents a kilowatt hour and you can save them on on like 50 500 kilowatt hours correct so so yeah so maybe so each token can give you say ten or fifteen dollars worth of

benefit once you are operating in this grid plus goodness system yeah so I mean that's that's roughly I would say a fair assessment it depends again on the price of electricity it depends on the region's we're operating in at least initially in Texas using the current average price that that's roughly a fair assessment so when does the token sail uh October 30th okay and how long will it run for hopefully two blocks so it's time limited to two weeks but either when it when it sells out or two weeks all right well good luck with the with good luck

with the crowd sale and also looking forward to to the the smart agent being available do do we have a price point for this device personally so initially we're focusing on delivering it to our customers and we're looking at doing that at cost and in small volumes for targeting a fifty dollar cost point we think we can drive that down over time but we haven't kind of like figured out what we would sell it to outside of the customer base because because it has you the the agent itself has utility beyond just being an electricity customer so at

some point if we get ahead of the production curve we would just sell them kind of generally as these these hardware wallet systems yeah and and so I wonder if you know if if this could become you know and then in this age of Amazon Alexa and all these you know smart devices in your home if this could become sort of the you know the the transactional device that sort of powers your entire connected yeah that's that's I guess our our long-term vision which would be that that that's what that is yeah fascinating well thank you very much for coming on the show I look forward to hearing more about grid plus and look for to you well hopefully a successful crowd sell a few weeks well

cool thanks Sebastian thanks mayor appreciate it and thank you for to our listeners for once again tuning in epicenter is part of the let's stock baked corn Network you can find this show and lots of other great shows ahead let's talk Bitcoin comm if you want to support the show there's lots of ways you can do that you can leave as nitrogens review it always helps and people find the show and it's always great to get the feedback and you can also leave a tip in the TV address will be in the show description so thanks so much for being back next week [Music] [Music]