Is It Time To Invest In Smart Energy Tech?

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By Alex Kimani

In a virtual climate summit with 41 world leaders last month, President Joe Biden unveiled an ambitious ten-year Climate Plan that has proposed cutting U.S. greenhouse gas emissions by 50-52% by 2030. That represents a near-doubling of the U.S. commitment of a 26-28% cut under the Obama administration following the Paris Agreement of 2015.

Biden, the convener of the summit, intended to use the meeting to coax emerging countries to become more aggressive with their emissions reduction goals. Or maybe he was trying to one-up a key figure at the meeting—China’s President Xi Jinping who last year announced that the country had set a goal to become carbon neutral by 2060.

Consequently, there’s a palpable shift towards efficient energy technologies, including growing investments in smart grid technologies and distributed energy.

Indeed, Allied Market Research has forecast the smart energy sector to grow at a brisk 9.6% CAGR to $253 billion by 2027.

Here are 3 smart energy startups at the forefront of the smart energy momentum.

#1. Power Ledger: Peer-to-Peer (P2P) Energy Trading 

Peer-to-Peer (P2P) energy trading is a pretty novel paradigm of power system operation whereby people generate their own energy from renewable sources in factories, dwellings, and offices and share it with each other locally.

Peer-to-peer energy trading has been around for quite some time now. However, traditional P2P has a major drawback: It requires a central entity, usually a utility company, to facilitate energy transfer from prosumers to buyers.

Thankfully, blockchain technology is radically changing the P2P energy trading model by cutting out the middleman and allowing prosumers to trade directly with each other. This new model is particularly attractive to people who generate their own renewable power.

Australian Power Ledger is championing the new, middleman-less P2P energy trading model by organizing local communities into the so-called “microgrids”–essentially local power grids almost fully autonomous and independent of the national electricity grid.

Another company doing this is Grid+, a US startup that has developed an Ethereum-powered blockchain platform that allows consumers to cut out the energy retailer and buy energy directly from producers.

#2. WePower: Selling Renewable Energy to Corporates

Whereas many energy and tech companies have been generating their own renewable energy, the majority typically buy their renewable energy from a renewable producer through a formal Power Purchase Agreement (PPA).

PPAs usually involve a set amount of electricity for a fixed period, frequently several years. However, as is the case with many current power purchase arrangements, PPAs have shortcomings: What happens when the company moves mid-contract? This points to a glaring lack of flexibility by PPAs.

WePower is an Australian-based blockchain startup backed by Japan’s Marubeni that connects energy buyers (end users and investors) directly with the green energy producers and creates an opportunity to purchase energy upfront at below market rates.

WePower has developed Ethereum Smart Energy contract tokens that it sells to consumers in a typical e-commerce experience. The company’s tokens are used to standardize, simplify, and fractionalize renewable energy such that corporates can not only buy exactly what they need but can also resell their excess capacity.

#3. Acciona: Green Hydrogen Tracking

After decades of stagnation and multiple false dawns, the hydrogen economy now appears primed for a major takeoff. A growing number of countries and industries are proactively investing in hydrogen technologies, with hydrogen being touted as the ‘fuel of the future.’ Meanwhile, industry experts are predicting that hydrogen could become a globally traded energy source, just like oil and gas, while the Bank of America says the industry is at a tipping point and set to explode into an $11 trillion marketplace.

At the center of all this is green hydrogen, or hydrogen generated from 100% zero-carbon sources due to its superior green credentials.

The world’s green hydrogen leaders have joined hands with an ambitious goal to drive a 50-fold scale-up in green hydrogen production over the next six years.

The Green Hydrogen Catapult Initiative aims to drive a 50-fold increase in green hydrogen to 25GW by 2026, a scale that could significantly drive down hydrogen costs to below $2/kg, thus making the fuel source competitive with fossil fuels in power generation.

But how can end-users be sure that the hydrogen they are buying is strictly the green type and not, say, gray hydrogen made from cracking natural gas?

Luckily, Spanish multinational Acciona has developed the first platform to guarantee the renewable origin of green hydrogen.

GreenH2chain is a blockchain platform that will enable customers from anywhere in the world to verify and visualize the entire green hydrogen value chain in real time.

The blockchain platform will allow renewable hydrogen consumers to monitor the entire decarbonization process of their own energy supply and also verify the transportation and delivery process.

Similarly, Norway’s Hydro, in conjunction with DNV, has developed a blockchain-based platform for the provenance of metal products along its supply chain. Dubbed Tag. Trace. Trust., the platform allows anyone to instantly check the validity, data, and authenticity of the product’s environmental profile.

Publicly traded smart energy companies

The smart energy market is mainly dominated by private companies working in Distributed Energy Resource Management,  Peer-to-Peer (P2P) Energy Trading and Home Energy Monitoring Systems, among others. Many of these are early-stage companies, meaning only VCs, angel investors and well-heeled private investors get to invest.

Fortunately, there’s no shortage of publicly-listed companies with sizable smart energy segments. Top picks include:

  • Johnson Controls International Plc.
  • Eaton Corp Plc.
  • ABB Ltd
  • Schneider Electric SE
  • Aptiv Plc.

For investors who would like to diversify their smart energy portfolio, the First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) is a great choice. GRID boasts a 52-week return of 87%.

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