Peer to Peer Energy Trading: Activating Renewables

By: Avery Smith

The traditional idea of a singular energy utility company distributing energy is an under-engineered and inefficient way to distribute energy in a marketplace beginning to be dominated by renewables. Renewables are plagued by inconsistency, often depending on weather and location. In this sense, even as renewable electricity has begun to be generated at the same scale as traditional methods, the real breakthrough in widespread adoption will follow the appearance of a real method to store and distribute variably-generated sources of energy.

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Blockchains have arisen as a solution to solve this market inefficiency. A blockchain is a digital, public ledger in which records can be stored and transactions can be executed and validated between individuals. In the conventional sense, blockchains have allowed consumers to execute simple monetary transactions: a user attempts to send money to another user, and the participating community verifies the validity (i.e. ensures the sender has available balance, ensures the sender is real). However, the recent development of "smart-contract" based blockchain solutions has allowed the technology to evolve far beyond peer-to-peer payments. A smart contract can be defined as a program which leverages the computing power of a blockchain to validate a contract. Contributing peers can all publicly view the terms of the contract and execute a transaction under a given set of conditions. For example, smart contracts can be used to manage employment agreements, ensuring that employees are paid fairly and transparently.

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The complexity of these "smart contracts" is not limited to simple applications. Energy startups have already begun to see blockchains as a venue to eliminate the middleman of a utility company, allowing users to trade energy between each other at a dynamic price. The application of this trading has already been fleshed out by several startups. For example, startup P2PEP explains in their whitepaper: “All you have do to is download our DApp and start trading renewable energy. For large scale renewable energy producers, this is extremely appealing since there are a lot of users on the network that are tired of the environmentally unfriendly energy they are forced to use today and are craving for someone to sell them greenenergy at a decent price.” The execution of contracts directly between producers and consumers will avoid the mispricing of the underlying asset. Instead, pricing would be flexible and based not on the thoughts of some arbitrary central planner, but rather on supply and demand. This will allow renewables to flourish in that it will incentivize individual producers of electricity (e.g. households with solar panels) to sell energy to network peers at a rate higher than that paid by a utility company, given an increased demand. 


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For example, in New York City, LO3 energy has begun its "Brooklyn Microgrid" project. Here, consumers and producers were able to set a minimum and maximum purchase price for electricity. Then, on top of a blockchain, energy was distributed in more efficient manner. Although it has not been analyzed from an academic perspective, LO3 claims that this method of distribution has increased security and efficiency in the local grid. Further, energy startup Grid+ has leveraged the Ethereum blockchain in order to attempt pass wholesale pricing to consumers. Although this project has not yet been implemented on a large scale, it has raised $40 MM in an initial round of funding.

Although it remains to be conclusively proven, these blockchain powered energy distribution methods, and all smarter forms of grid technology for that matter, will provide the necessary infrastructure for renewable energy to freely move through the marketplace. This will not only drive usage and lower cost, but finally provide the venue for unsubsidized renewables to truly jump the hurdle and become a dominate force in the market.

Modernizing the Not-Yet-Modernized: Africa’s Solar Cell Phone Kiosks

By Melissa Marketos

To this day, Africa suffers from an immense energy poverty: more than 30% of the continent’s populace does not have access to electricity; sub-Saharan Africa generates the lowest amount of electricity in the world; citizens experience constant power cuts throughout the year. Africa’s energy problem has been soaring for decades, despite the fact that its lands possess an abundance of available natural resources. In fact, the continent is endowed with the highest number of available solar resources in the world because it is the sunniest continent on earth.

The technological advancements and applications of renewable energy in Africa has the potential to greatly reduce the continent’s energy poverty, especially in rural areas, as well as  improving the lives of many in the continent. Major sectors such as agriculture, education, communication, and technology all require consistent and cost-effective energy to spur the much-needed development of the continent. Indeed, many African nations today have already adopted solar, wind, and geothermal plants that provide energy in rural areas. Many small-scale companies and startups have ventured into provision of renewable energy in the continent, one being Mobile Solar Cell Phone Kiosk.

Henri Nyakarundi, a Rwandese entrepreneur, fabricates and distributes solar-powered mobile kiosks that charge cell phones in Rwanda. This innovative concept is not only convenient but also essential to connect the country's population: the World Bank estimates that over 70% of the population in Rwanda own a cell phone; however, less than 25% of its population has access to electricity.

The solar-powered kiosks, with the capacity to charge up to 80 phones simultaneously, are positioned on bicycles and leased to individuals in the country. The micro-franchisees profit from mobile charging, mobile credit add-ons, and prepaid electricity sales. Nyakarundi cleverly states that his idea is “a business in a box.”

This Rwandese innovation is beginning to become recognized internationally. For instance, Rwanda Red Cross refugee campus housing Burundi immigrants have begun using the charging stations. With these stations, refugees are trained to work as operators to earn their own income. 

Investing in the Electric Vehicle Space

By Pranav Srinath

According to the Bloomberg New Energy Finance forecast, the cost of manufacturing electric vehicles is decreasing quicker than previously anticipated. Lithium-ion batteries, key components of electric vehicles, make up a large percentage of the total cost of the car and the price of these batteries have been observed to fall due to increased production and a possible over-supply. Bloomberg predicts the prices of electric vehicles to be competitive without subsidies by 2025 and that a third of the auto market will be occupied by electric vehicles by 2040. This is further supported by the economic benefits offered by the low cost of charging electric vehicles and incentives provided by governments and companies.

Hence, the electric vehicle market can be seen as a sensible space to invest in. With prices perceived to be drop rapidly and demand to increase steadily, one may desire to take advantage of the increased production of these vehicles. One may choose to invest in particular companies and conduct their own due diligence by looking at a particular manufacturer’s balance sheets and management. Another option could be to invest in unit trusts and open-ended investment companies and let a professional fund manager manage your investments for you. However, one must not only keep in mind the volatility and cyclical nature of the technology sector but also the risks associated specifically with the electric vehicle market.

Firstly, electric vehicles are not as economically viable as they may seem. Currently, electric vehicles are only $6000-$14000 more expensive than regular internal combustion engine vehicles. However, this estimate takes into consideration subsidies provided by the government. The cost difference without subsidies ranges from $13000-$19000. Furthermore, these differences could increase if companies decide to revert to normal corporate profitability.

The next difference between perception and reality has to do with the batteries used in these vehicles. While the battery cell may seem to be decreasing in price, the battery packs used in vehicles consisting of cells and mechanical parts will not drop much due to the relatively fixed cost of mechanical parts. Subsidies provided by the government might appear beneficial in the short run. However, the high costs to manufacturers and low profitability can lead to decreased innovation and reduced investment in research and development. This would have the direct opposite effect to what is generally expected of the electric vehicle market.

It should also be noted that a high percentage of government revenue is generated from carbon and gasoline taxes. Once there is a decline in consumption of these taxable goods, there will be a decrease in revenue and the government may no longer be able to provide subsidies to the Electric vehicle industry. This would also be accompanied by increased costs in raw materials used in the production of batteries, mining and the source for electricity production.

Consumers will only be interested in going green and adopting electric vehicles as long as they see an economic benefit. Once the economic benefit starts to decrease and costs to the consumer increase, the future of electric vehicles being projected might not appear as bright as it currently does. Hence, one must understand the potential risks of investing in this space. With companies like Tesla burning large amounts of cash on a daily basis with the promise of returning investments in the future, one might be tempted to enter this space. However, it would only be sensible to take into account all the potential risks associated with making the decision to invest.

Dawn of The Electric Cars, Is America Ready For The Change?

By Jeong Doo Cho

In the past decade the automotive industry has been undergoing a slow but sure transformation away from the internal combustion engine that it had for so long favored. Drastic developments in battery technology in the past decade, backed by strong governmental push on environmentalism has seen the rapid rise of electric automobiles. Early models of the electric car date back to as far as 1894. However, they never made it to the production lines, largely because of their limited range and efficiency. Today’s electric cars, powered by lithium-ion batteries, can do much better. Chevrolet Bolt has a range of 383 km; Tesla’s Model S more than 1,000km on a single charge. Adding to the electric vehicles meteoric rise is a drastic increase in cost efficiency-the cost per kilowatt-hour of electric batteries has fallen from $1,000 in 2010 to $130-200 in 2018. Such has led to predictions that the “total cost of ownership” of an electric car will in 2018 reach parity with a petrol car. Certainly, the market for electric cars is looking very optimistic with a projected market share of 14% of global car sales by 2025, up from 1% today. Regulations are backing the electric car movement too. As of September 2017, an upwards of 13 countries are committed to a lengthening list of zero emission automobile countries pledging to ban petrol powered cars by as early as 2030.

But is the world really ready for electric cars?

One large issue lies in lagging charging infrastructure. Currently, with over 44,000 public charging stations across the nation electric car owners in the US have little problem finding a place to charge their cars. But it's important to take into account that in 2017, electric cars represent only about 1% of cars sold in the U.S, and 0.2% of all cars on the road. Scaling up electric vehicle usage to a nation level presents questions about the feasibility of building an accessible power infrastructure to support it.  

“You see models that say, ‘We’ll sell a million EVs this year, then two, then four and so on,’ but I have concerns about the practicalities of this transition,” says Francis O’Sullivan, director of research for the MIT Energy Initiative.

 Research shows that most EV owners charge their cars in their garages, and existing power stations are found in businesses cities and wealthy suburbs where most deep pocketed early adopters reside. However, the state of the current charging infrastructure fails to account for a larger pool of the general public that a large scale adoption of EV’s could call for: everyday city dwellers who lack garages.

All said and done, the electric vehicle industry is only in its early dawn. “All things cannot be sorted before the industry starts,” says Pasquale Romano, chief executive of ChargePoint, which controls the largest U.S. network of charging stations. Only time will tell if cities and nations will be able to implement the necessary infrastructure to sustain the rapidly growing EV industry.






Energy 101: Renewables v. The Grid Event Summary

Our own Thomas Lee led the latest installment in Wharton Energy’s Energy 101: Renewables vs. The Grid. The future of renewable energy is limited not so much by generation capacity, but more so by complicated aspects like transmission, storage, and dispatchability. As Thomas pointed out, there has actually been a rapid expansion of renewable capacity, driven by fallen costs, generous policies, and advances in financing. In some political spheres there are exceptionally ambitious targets for renewable production: Austria, Denmark, and Nicaragua are all international examples while the state of Hawaii and the Sanders campaign’s national platform are domestic ones. While this may seem rosy for the more environmentally conscious, such boons are only problems to come for the cynically minded. The argument is that the grid as it currently exists may not be ready for the new cycles and strains presented by renewable sources of electricity. While the incident was not related to renewables, the 2003 Northeast Blackout, which impacted 45 million Americans in 8 states, as well as 10 million in Ontario, was presented as an example of how exceptionally the grid can fail when subjected to excess stress. In response, Thomas proposed that there must be a diverse portfolio of energy sources to meet total demand, broken down into baseload, dispatchable, and renewable. The final, parting lesson was that additional renewable capacity does not necessarily guarantee a decrease in reliability or a specific change in price, as was proven by Germany’s Energiewende (Energy Transition), which has shifted national electricity generation towards renewables and has seen a 38% increase in grid reliability, a decrease in wholesale electricity prices, and an increase in price at the retail level. Thanks to all those who joined us and to Thomas for an incredible presentation. Be sure to join us for our final Energy 101 on Tuesday, April 12: Energy Storage and Fuel Cells. 

Vicky Bailey Event Summary

On March 16, the Wharton Undergraduate Energy Group had the privilege of hosting Vicky Bailey, who shared tales and nuggets of wisdom from her incredible career in both the private and public sectors of energy. Born and raised in Indianapolis, Indiana, and the holder of a bachelor’s degree from the Krannert School of Management at Purdue University, Ms. Bailey began her career working out-of-state for a glass manufacturer. Upon returning to Indiana, she became aware of what was the Public Service Commission (and is now called the Indiana Utility Regulatory Commission); she would serve as commissioner from 1986-1993 after being appointed by Governor Bob Ore. in 1993 President Bill Clinton chose her to be Commissioner of the Federal Regulatory Comission, a position which she held until 2000. Ms. Bailey described Order No. 888, 889 as the landmark decisions in her career as FERC Commissioner, which were effectively watersheds for the opening up of electricity markets. This was accomplished by the unbundling of transmission lines and removing barriers to entry. Before joining the Bush administration, she spent time in corporate America, joining Cinergy Corp., which is now Duke Energy, and PSI Energy, Inc.. Under President Bush, Ms. Bailey was the first person ever appointed to be Assistant Secretary of the Department of Energy for both Policy and International Affairs. During that tenure, she had to respond to 9/11, which reinforced to her how interconnected/dependent the world is as well as the importance of energy and data security. Dealings with Brazil, Russia, India, and China cemented her belief in the effect of their energy demand on worldwide production, and indirectly general economic stimulation. Since her time spent in the federal government, she has held many positions including her membership on the Blue Ribbon Commission on America’s Nuclear Future, her seat on the boards of Cheniere Energy and the Batelle Memorial Institute (which oversees the National Laboratories), as well as her appointment to the Presidential Commission for the National Museum of African American History and Culture. Given her lifetime of experience in energy, from both the public and private perspectives, I would recommend paying attention to these gems she left us with:

  • It is important to remember that in much of the world access to energy is not guaranteed. This has educational, technological, economic, and health impacts.
  • She believes in a diverse energy portfolio.
  • In her career and in many others, critical thinking and constant learning are key.
  • Ethics can’t be taught or bought, but they are important to know. It is also important to be authentic and true to yourself; it’s easy to get lost as to why decisions are being made in political and business environments.
  • Recommended reading: The Prize by Dan Yergin; Energy Primer, a staff document from FERC, World Energy Outlook from the IEA, and Lights Out by Ted Koppel
  • Relationships are important; every year, around Christmas, the Bailey FERC team goes to lunch.
  • “We have to be good stewards of the environment.”
  • “Public health and safety are key issues, they’re not going to go away.” 

Energy 101: Power Markets Event Summary

The Wharton Undergraduate Energy Group hosted another edition of its popular Energy 101 series on February 22, this time focusing on Power Markets. The main attraction was in fact not the catered Wishbone, but rather Professor Andrew Huemmler from the School of Engineering, a WUEG staple known for courses like “Electricity Systems and Policy” and “Energy Systems and Policy.” In addition to his academic background, he brings over 20 years of experience in the utility industry with PECO. On this night, Professor Huemmler chose to talk about trends in oil, natural gas, and renewables, and how they will affect electricity prices, as well as how public policy factors in and what is to come. For those keeping tabs, these are the professor’s predictions: oil prices will be flat in the foreseeable future, as will natural gas, while residential solar is “virtually unstoppable” and “awesome” thanks to improving technology and corporate efficiency, as well as a bevy of subsidies and beneficial government policies. He demonstrated the potential conflict between solar and nuclear plants, as well as the reason why natural gas plants will be the greatest portion of new capacity. He also showed the audience several graphs specific to the power industry, the dispatch curve and the duck curve, which show electricity generation and consumption, respectively. In the end, Professor Huemmler’s talk was an engaging, informative, and successful event and in addition to the hard hat we gave him as a token of our gratitude, we would like to thank him here for taking the time to speak with us. We at WUEG would also like to thank everyone who came out for the event and encourage them to spread the word and stay on the lookout for more events to come.

Gogoro: The Smart Scooter & the Future of Mobile Energy

Gogoro: The Smart Scooter & the Future of Mobile Energy

Discussions about energy often get caught up in the current events – solar subsidies, OPEC, and oil spills – but how about the future? Look to Gogoro: they’ve made an electric scooter that can excite consumers and drastically reduce emissions simultaneously, by helping reshape how energy is used in ultra-dense urban cities.