Hive Power - Egalitarian Future of Electrical Grids
Today we'll bring into spotlight various difficulties related to coordination between individual energy producers and the electrical grid. For starters, the way they were initially planned and implemented, electrical grids were never designed to work in two directions, like, both supplying consumers with electricity and receiving electricity from them when they produce more than they consume from the grid. For example, if I install solar panels on my roof, it'll give me a partial autonomy from my energy provider, but I still want to be sure that I won't have power outages during long stretches of bad weather when the sun doesn't shine, and naturally my installation doesn't produce any energy. So I stay connected to the grid, but try to rely on my own power source whenever possible, resorting to tapping into centralized energy system only when I don't have a choice. On the other hand, sometimes when the sun shines brightly, the weather is good and all that, my batteries might generate more electrical power than I can use, and this makes me think about selling extra energy back to the grid. Actually, considering my now complex relationship with power supplier, I cannot even say that I'm an electricity consumer, rather I'm something in between of energy producer and energy consumer, and as this style of interaction between the power grid and its customers is getting more and more common there was invented a new term for it: Energy prosumer. Energy prosumer is somebody who's still connected to the grid but also generates his or her own electricity. The key objective is to be dependent on the central electricity provider as little as possible. The emphasis here is on the ecologically sustainable energy production. In other words, centralized nationwide energy producers mostly generate electricity by burning fossil fuels. It's somewhat inevitable, considering the scale on which they need to operate. While it's an incredibly challenging task to switch electricity production to ecologically friendly methods on a grand scale, a distributed network of small producers, who generate electric power mostly for self-consumption, is a much more viable alternative.
Taking into consideration the problem of climate change and the fact that many countries are examining all the possible measures that could possibly reduce carbon dioxide emissions, such individual energy production scheme gains popularity, particularly in EU where legislators work on establishing a legal framework within which such system can operate more smoothly. The potential problems with such distributed system partly have economic nature. For example, energy producers depend on the current scale of electricity consumption. With millions of customers, using a substantial amount of electricity, electric companies' revenues are big enough to keep prices low. When a significant number of consumers switches to generating their own electricity and becomes less dependent on the centralized grid, this decrease in consumption will lead big electric companies to shift the economic burden on those who don't have their own energy sources. In other words, electricity prices will rise, putting at a disadvantage those consumers who rely more on the electric grid. Another class of problems is organizational and infrastructural. First, it's not always possible for individual consumers to install necessary equipment, like solar panels. For example, they might not own a separate house with the roof suitable for such installation. Or the roof might have a wrong slope facing the wrong direction. People living in apartment buildings don't have any means to organize self-sustainable energy production whatsoever. Plus, installing solar panels is not cheap, and many just don't have resources or free time to get into all this hassle. On the other hand, small organizations and communities can tackle this problem more efficiently. For example, while individual residents of a condominium project cannot install electricity generating equipment on their own, an administrative counsel or committee representing condominium as a whole have much more resources and options, including an ability to rent vacant spaces and roofs for installing solar panels, plus money and administrative resource to maintain the relations with electric companies. For the electric companies, it's also more convenient since they don't need to deal with each electricity generating consumer separately.
Speaking of which, there is another problem related to electrical networks that include active participants, producing their own electricity. First, it's still unclear how to compensate those who return electrical power to the grid. Normally, if I produce more electricity than I consume, I'd be thinking about selling surpluses. The most obvious way to do that is to feed excess electricity to the grid and get monetary compensation from the electric company, maintaining this grid. Apart from the technical difficulty of implementing such mechanism within the existing electrical infrastructure, electric companies will have to deal with sporadic and unpredictable schedules of those energy inflows. If in the centralized systems peaks and dips of electricity consumption are forecasted in advance, with electric companies adjusting their output during the periods of extra demand, the network including self-sustainable producers adds a big deal of uncertainty to the forecasts. And, at the same time, the unpredictability of consumption makes pricing more difficult. It's especially hard to assess the economic value of consumer-generated electricity, supplied at random times. Currently, one of the key principles electric companies established, regarding this situation, is that they normally buy energy surpluses from consumers at lower prices than that they sell electricity for. It helps to maintain a certain economic equilibrium in the system, which is based on the incentive for active participants to mostly use the energy they produce for their own consumption. Plus, here again, it's much easier for electric companies to work with organized groups of prosumers (electricity consumers who also produce their own electricity) than with individual prosumers.
This leads us to the main point of our conversation. A network, including active participants, has to be predictable and organized in some way. Ideally, it needs some sort of self-organization with implemented mechanisms of controlling and predicting the amounts of electricity the network produces/consumes as well as facilitating monetary settlements between network participants. In this case, a grid of active electricity consumers (prosumers) interacts with the main grid as a single unit. Outlining this principle eventually brings us to the concept of Hive Power project.
Ok, the Hive Power project offers an infrastructure, consisting of active electricity consumers (prosumers), organized in a sort of a hive. In fact, structural organization of this platform is really similar to that of a hive with individual units, Workers, representing particular prosumers, and the Queen, a central unit, coordinating all the processes in the hive. From the technical point of view, Workers are smart meters installed in homes of hive participants, which supply a consistent stream of information, regarding energy production and consumption, as well as forecasts of the amount of electricity a prosumer is planning to spend or to supply to the grid. The Queen represents the hive as a whole and serves as a link between the hive and electric grid. Using the information from individual units, the Queen unit calculates the overall performance of a hive and allocates monetary resources for settlements with electricity provider. Another responsibility of this unit is to make reliable forecasts of hive's future energy consumption and provide electric company with reliable information. The manual control of the hive is conducted by the Hive Administrator. It's an operator in charge of hive operations, and its interactions with the electric grid. The Hive provides mechanisms for money settlements between its participants. This makes it easier for electric company to deal with the hive since it doesn't need to track all its participants separately. The central unit (the Queen) provides aggregated information and conducts money settlements with the provider, for example, if at certain times hive supplies more electricity to the grid than it consumes, the Queen is in charge of receiving the monetary compensation from energy provider and its fair distribution among the hive participants who contributed to that surplus. The project is based on the blockchain and is planning to use two types of tokens for its operations. The first one, HVT, is a standard Ethereum utility token, serving as a mechanism for onboarding new platform's members. The value of this token is going to be defined by the market and may vary according to the platform's popularity and performance. Normally, with limited token supply and growing capitalization of a project such market-driven tokens tend to grow in value, serving implicitly as a tool for investment, although they are not formally considered an investment mechanism like company shares or securities, for example, since they usually also have additional functions on the platform: as a means of exchange, giving platform participants right to vote, etc. Another type of token is going to be pegged to fiat currency to avoid volatility. High level of volatility is something normal for cryptocurrencies and tokens because their holders regard them as investments and see those price fluctuations as gains and losses on their investment. This factor though makes it impossible to use such tokens as a means of exchange. Hive Power project's platform will need a token to conduct monetary settlements with its participants, including receiving money for electricity and paying those who supply energy to the grid. In order to facilitate that, the platform needs a token with a stable predictable value, which is achievable by pegging its value to the existing stable fiat currency. It also implies that the company has sufficient liquidity to buy back all the utility tokens for fiat without the former losing its nominal value, in other words, without losses for token holders.
To maintain hive organization and operations, including onboarding new members (Workers), the system will use two types of smart contracts: Beekeeper and The Hive that will contain a general set of rules, according to which the system will operate. In this sense Hive Power project is a form of DAO (Distributed Autonomous Organization), a self-governing structure with predefined and pre-programmed laws. Although part of the decisions are made by the Hive Administrator, the key principles and rules will be ingrained into the system from the beginning and will be impossible to ignore or change on a whim. These rules will define rights and responsibilities of hive members, as well as methods and incentives, motivating their desirable behavior. For example, each hive member is responsible for forecasting his(her) future energy production or consumption. It's probably the most sensible way of approaching this matter since electricity consumption can vary significantly from individual to individual and can depend on a multitude of different factors. To motivate participants to provide accurate information, the platform will include a system of incentives and penalties, rewarding reliable forecasts and penalizing misinformation. The rules will be written in smart contracts, which will make the whole system impartial and transparent for all platform members, in other words, each platform's member will know when and why certain rules are applied.
From the point of view of energy companies, the Hive presents a convenient way to work with prosumers. The hive is a self-organized structure that takes care of a significant number of issues related to monetary settlements, energy consumption predictions, etc. At the same time, the Hive can make it more convenient and easy for electricity consumers to upgrade to active electricity consumers (prosumers), taking care of the convoluted relations with electric companies, and making the whole system more transparent and comprehensible. On the whole, in the context of existing problems with integration of individual electricity producers into the electric grid, the concept of Hive Power project addresses real issues, offers sensible solutions and, in general, makes sense.
From June 12 until June 30, 2018, Hive Power will conduct a token sale, aiming to distribute 54% of its total supply of 100,000,000 HVT tokens. The hard cap of the sale is 11.75M USD
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