Financial incentive is the strongest force in the universe
There’s an old saying, sometimes attributed to Albert Einstein:
Compounding interest is the strongest force in the universe.
Powerweave was founded to accelerate the world’s transition to sustainable energy. This is no small task: the entire world has been running unsustainably since the Industrial Revolution almost 200 years ago. To achieve our goal, we must use the strongest forces in the universe. Can we use something other than compounding interests somehow?
To get an idea, we just asked people. Most conversations can be summarized thusly:
How important are actions for a sustainable future to you?
It is very important to me, although I wish I did more.
Why are you not doing as much as you want?
Climate actions have little impact on my wallet.
We can use people’s wallets to incentivize them to do… what they wanted to do in the first place!
Using financial incentives to encourage citizens and businesses is old news. The U.S. Federal Government offers tax credits for electric vehicles and behind-the-meter renewable energy installations, for example.
However, most of the time, this is not as easy as it sounds. In the wake of the COVID-19 pandemic and high inflation, we must carefully engineer financial incentives which do not raise costs and taxes for the average person. Consider the proposed congestion pricing in New York City: it would not make much sense without quality public transportation to provide an alternative to driving.
Moreover, private enterprises also have wallets, so to speak, and incentives must therefore be aligned for citizens and businesses alike. Otherwise, a misalignment between a company and its customers can lead to some strange situations. Have you heard the saying “if you’re not paying, you’re the product, not the customer“?
Powerweave’s target customers are electric utilities and other energy service providers, such as community choice aggregations and independent microgrids. These energy service providers are facing increased pressure from increased electricity consumption per capita. This pressure translates to the need for power infrastructure upgrades: more power stations, more transmission lines, etc.
Demand and supply of electricity must always be matched; otherwise, you get blackouts. This is particularly problematic during peak load times, such as weekday evenings, heat waves, etc. This requirement to match demand and supply leads to one key challenge of power infrastructure: costs grow with peak demand, not average demand. Some power plants are built to only run a few days a year! This is an extremely inefficient use of capital.
How can Powerweave align the incentives of energy service providers and their ratepayers? The answer is simple: local electricity markets. These markets are a way for ratepayers and their energy service provider to coordinate using regular auctions for services. Local electricity markets are a way to incentivize ratepayers to be more sustainable, since the price of services is now based on supply/demand dynamics.
Through local electricity markets, Powerweave incentivizes ratepayers to be more energy efficient and invest in behind-the-meter distributed energy resources (DER). Ratepayers without DERs can save a lot on their energy bill by judiciously cutting back on energy usage when it is scarce, while ratepayers with DERs can contribute to the energy supply and significantly shorten the payback period of their DER investments!
In turn, increased energy supply and lower demand helps energy service providers delay (and reduce the scope of) costly infrastructure upgrades. Other grid services can also be provided, such as local flexibility, which helps energy service providers keep the grid stable for minimal costs.
Finally, Powerweave is incentivized to bring this technology to as many people as possible. And since we are experts at automation, we can expand our operations quickly, cheaply, and efficiently.
This is not some fantasy; this is exactly how wholesale electricity markets have been working for the past 20 years. Powerweave’s innovation is providing efficient technology and comprehensive automation capabilities to help make this paradigm shift easy for everyone.
Powerweave’s software aligns financial incentives for a variety of players. Ratepayers, energy service providers, even Powerweave itself — the financial incentives are aligned with the fight against climate change. Hence, at Powerweave, we say that financial incentive is the strongest force in the universe.
Powerweave is looking for partners to showcase our technology in North America.
Interested? Contact us today