Forget Cryptocurrency, It’s All About Energy as Currency
- Posted on July 13, 2018
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Cryptocurrency has been all over the news in recent months. From Bitcoin to blockchain, the concept and the technology enabling it has touched a global nerve in terms of an appetite for a new, decentralized form of currency. Despite what your thoughts might be on the volatility or potential unintended consequences, there is no doubt that there is an appetite for new kinds of investment vehicles.
Recently, Forbes’s energy reporter Christopher Helman and others reported on a PwC report by blockchain analyst Alex de Vries, in which de Vries estimates that the Bitcoin network currently consumes 2.55 GW worth of electricity, nearly as much as the country of Ireland (3.1 GW).
As someone who straddled the finance and renewable energy markets for the last decade, working to introduce new financing vehicles that are accelerating massive returns from energy sources like solar, the irony was not lost on me, and it got me thinking about the ongoing image problem - and lack of Bitcoin-level sex appeal - that faces the electricity industry, specifically energy efficiency.
Energy efficiency has always been grounded in this idea of reducing energy consumption and lowering your carbon footprint, and yes, that is in fact a huge part of what makes energy efficiency important and significant for today’s world and future generations.
And while cryptocurrency is arguably buzzworthy and significant in its own right, energy efficiency, in many ways, acts as its own currency, and creates real value with the potential to impact how we live our lives every day.
Energy efficiency was once just a concept on the drawing board, an idea that can be traced back to California in the 1970s, give or take a few years. It took decades for the idea to catch on, only really becoming a concrete, mainstream movement in the last 20 years.
Technological advances and general public awareness have evolved by leaps and bounds over that period. Now, we can accurately measure and control our energy consumption at home from almost any web-connected device. From smart thermostats like Nest to Tesla’s Powerwall, energy efficiency is an increasingly powerful mechanism quietly unlocking huge ROI in energy savings.
This idea is built off the back of the Internet-of-Things, which makes these devices and other assets like your thermostat at home or the HVAC and lighting in your office building "predictable". In terms of their energy usage, energy efficiency is now moving into a new phase in which the data we’re receiving from these assets can be utilized to enable something we’ve never had the ability to do: asset forecasting.
For a finance veteran like myself, this is a turning point for the industry and, frankly, the world. These asset profiles – enabled by our new ability to understand and predict, based on actual data, how much energy small and massive-scale assets will consume – are changing the game and heralding an Internet-of-Power era.
While individual devices and appliances are powered by the IoT, specifically the granular disaggregation of energy consumption enabled by the IoP takes it a step beyond. The IoP empowers people and businesses to access heretofore unavailable detailed energy use data in order to validate savings and unlock new value streams. In essence, it uses new technology and analytics to unlock data and metrics to analyze where that energy efficiency can be improved, and then brings owners the benefit from the saved cost.
These new advances in IoP allow easy visibility and transparency using this data and metrics for how energy is being consumed, where it’s being used most, and by whom, creating profiles of measurable savings. Consequently, this translates into real, actual dollars and cents.
This visibility extends not only to the everyday American household, but it also applies to the real estate industry with housing developments, new apartments and condominiums projects, as well as the hospitality industry with hotels, motels and expansive resorts. Just last fall, Marriott and Samsung launched the industry’s first IoT hotel room.
But the real sex appeal of this new IoP era becomes clear when you take a look at the massive levels of wasted energy across what most of us already recognized as the highest sector that consumes energy - the built environment, and more specifically, commercial buildings. It’s here that building owners, CFOs and CIOs can measure the performance of their energy assets and the concept of energy savings as currency really plays out.
The real power of the EaaS concept is in converting building portfolios from cost centers, which historically cannot predict or effectively measure their massive levels of energy consumption, into profit centers of energy savings, as currency. Instead of viewing outdated lighting or HVAC equipment as a negative carry, these assets can be seen as opportunities for operational savings. That’s the definition of efficiency. As a result, cash flow asset profiles can now be based on energy savings and that savings can be invested back into other areas of the company.
In de Vries’s report, he estimates Bitcoin’s reliance on energy could reach as high as 7.67 GW in the near future, as soon as the end of this year, which translates to 0.5 percent of the world’s electricity.
In the end, while the jury is still out on whether cryptocurrency will have its place in today’s world, there’s no denying that energy efficiency provides real value. Not only are we targeting the single biggest source of carbon pollution in US cities, but companies with data centers, manufacturing plants and many others, are seeing real cost savings. That is true currency, and a win-win for everyone.
Energy efficiency-as-a-service companies such as, Redaptive, the one that I manage, are beginning to take innovative approaches to commoditizing energy efficiency and support these types of win-win situations.