Note: the statements in this update are subject to an important legal disclaimer you will find at the end of the update.

We believe we are in the home stretch of achieving a major milestone in our roadmap, namely obtaining a certificate from the Public Utility Commission of Texas (PUCT) to operate a Retail Energy Provider (REP). Once we have this certificate, we will be able to legally sell energy to residents in the region of Texas overseen by the Electric Reliability Council of Texas (ERCOT). We have been working on this process since the start of the year and, although challenges have materialized and obtaining the certificate is still not a certainty, we are confident and excited that our certificate will be granted by June 27, 2018.

Some members of our community have been following along as we work with the PUCT to obtain our REP certificate. You can too by going here and reading through the 20+ filings to see how our application has evolved over time. I will outline the current status, discuss some other headwinds that have materialized, and provide an update on what our software services team and our hardware team have been working on to build a state-of-the-art energy retailer.

On June 1, 2018, the PUCT legal staff made a final recommendation to the PUCT commissioner. You can read the entirety of that filing here. The filing’s summary provides the recommendation, and the remainder of the document discusses the reasoning.

The final recommendation reads as follows:

Staff has reviewed the application and supplemental information filed by GridPlus and as supported by the attached memoranda of Fred Goodwin and Diane Hopingardner of the Commission’s Competitive Markets Division, Staff has determined that the application provides the information required to demonstrate that GridPlus satisfies the requirements of 16 TAC § 25.107 for an Option 1 REP certificate. Therefore, Staff recommends the application be approved.

The joint proposed order between GridPlus and Staff, approving the application, was filed Monday, June 11th and the schedule for consideration of REP application provides that a final order to approve or deny our REP application will be issued by June 27th. We currently do not anticipate any delays beyond that deadline. We are now in the home stretch!

Once we obtain our REP certificate, we anticipate we will need approximately two months to work with ERCOT, the Texas Transmission and Distribution Service Providers (TDSPs) and our vendors to obtain access to the grid and establish customer management and compliance processes. This would likely mean that we would be able to serve customers beginning in the late summer or early fall — initially in a series of alpha tests with a small number of customers from our community.

Grid+ Texas Regulatory Issues

With our REP certificate now in sight, we are working closely with our Texas counsel and Texas management team to evaluate the compatibility of Texas energy regulations with the business model set forth in our Whitepaper. As with most companies that seek to innovate within an established industry — think Uber, Lyft, AirBnB and Tesla to name a few — we have found that laws, rules and regulations that were written some time ago with different factors in mind do not always cleanly plug-and-play with the most advanced technological solutions possible. We at Grid+ understand and appreciate that energy industry regulators and other energy industry participants will have many questions about, and potentially objections to, the impact of our cutting-edge technological energy solutions. However, we are committed to a process of evaluating regulatory issues and seeking to act as good citizens of the energy ecosystem before we deploy potentially controversial solutions. To the extent that the Silicon Valley motto of “move fast and break things” has become a euphemism for violating laws with bold technological solutions and hoping to get big enough to win the ensuing legal battles and pay off the resulting injured parties — that is not our motto.

While our regulatory evaluation is still preliminary and ongoing, there are a few Texas regulations we have identified as potential obstacles to some aspects of our business model. We would like to make you aware of these potential obstacles even though we do not yet completely understand their impact and have not yet decided on a strategy for how we will adapt to them. At the same time, we cannot guarantee that this is a comprehensive summary of all of the regulatory challenges we will face, even in the Texas market alone. Indeed, it stands to reason that we will likely encounter additional challenges as we work through our business model with the Texas energy management team and our local Texas counsel.

One potential issue on our radar is that the Substantive Rules Applicable to Electric Service Providers under the Texas Administrative Code (TAC) set forth detailed regulations on how REPs can bill and accept payments from their customers. These billing/payment regulations do not expressly contemplate any of the following aspects of our business model: (1) payment with cryptocurrency; (2) automated billing/payment via scripts, smart contracts or IoT devices, or (3) billing/payment in realtime. Therefore, we will need to obtain additional clarity in the form of interpretations or waivers of these rules or new rulemaking or legislation before fully implementing these aspects of our business model. In the meantime, it is likely that we will use less ambitious billing/payment methods than are outlined in our Whitepaper, at least for the first series of Beta testers. For example, we may bill via traditional human-readable methods on traditional cycles, manually process cryptocurrency payments and GRID redemptions on a traditional 30-day billing cycle, and offer USD payment options via credit card or ACH alongside the option to pay in cryptocurrency. Our planned stable-coin, “BOLT”, is currently under evaluation — particularly in light of the many other stable-coin projects that are now underway and the significant regulatory challenges to implementing a stable-coin — and we cannot currently estimate when BOLT will be launched or if it will ever be launched. Thus, for the near future, any cryptocurrency payments we accept would likely be in other cryptocurrencies such as BTC or ETH (which, of course, may be paired with GRID in order to receive discounted pricing).

Another potential issue we have recently learned of relates to a complex set of developments in the Texas market. These developments arise from a long running litigation commenced in August 2017 by the PUCT and a consortium of the Texas TDSPs to determine the specifications and regulations that should apply to a new version of the TDSP’s smart metering system, dubbed “SMT 2.0.” This litigation resulted in a settlement agreement which the PUCT embodied in a final order on May 29, 2018.

Among the changes effected by the final order were new clarifications and limits on customer consent for sharing data with REPs and an immediate waiver of a preexisting rule requiring TDSPs to facilitate third-party connections to TDSP-deployed smart meters. As those who have read our Whitepaper will know, one important purpose of the smart agent device we have been developing is to connect to residential smart meters, read household energy usage in real-time, and use that information to achieve real-time billing, payment and pricing solutions that could potentially lead to dramatic efficiencies. Further down the line, we also hoped to make the smart agent capable of using AI-driven predictive algorithms to briefly shut down “dispatchable loads” such as pool pumps and HVAC during micro-peaks in energy pricing. These changes — and the upcoming PUCT rulemaking which is expected to codify them into the TAC rules — initially appear to pose serious challenges to portions of the model set forth in our Whitepaper, at least within the Texas market.

On the other hand, the TDSPs have offered, and the PUCT has approved, certain new functionality as part of “SMT 2.0” that would make some of the same usage data available through the TDSPs internet portal (including via APIs to that portal). Although “SMT 2.0” may not be fully functional until January 2020, and the currently proposed specifications of how often the portal could be polled and how up-to-date the portal’s information would be do not match our real-time billing/payment ambitions, we nevertheless intend to continue exploring what avenues we may have to achieve something as close to our vision as we can in the new context where direct smart meter connectivity may no longer be an option for our smart agent device. In this regard, one possibility we are considering is becoming involved with PUCT rulemakings or lobbying Texas legislators to effect new laws or law changes that would facilitate our model. However, these efforts would be costly, uncertain and time-consuming, and, in the case of legislative efforts, it should be noted that the next Texas Legislative session does not begin until January, 2019.

Although this ruling likely affects our long-term plans for HAN (Home Area Network) connectivity, in the meantime we still intend to push ahead with a series of alpha and beta tests starting in late summer/early fall. In these tests, customers will be able to use cryptocurrency for payment, and redeem GRID tokens for discounted electricity. It is important to note that while the time we have taken to evaluate these regulatory developments has strained our timelines, we still anticipate a late summer/early fall start to alpha testing because our technical development has continued to make steady progress.

Our Path Forward

Although the new regulations currently restrict much of our long-term energy vision and we are thus evaluating whether and how our energy business can be made viable, for now Grid+ still intends to move forward by positioning itself to have the ability to deliver power to consumers and utilize the agent device for payments. As we have discussed extensively, Grid+ views energy as the first application for a crypto-economy which is powered by intelligent blockchain-enabled devices. The first such device is the agent, on which we have made steady progress (see: Updates from the Hardware Team).

In the first version of the agent, which we contemplate to release publicly in Q4 2018, users will be able to schedule automated payments from inside a highly secured hardware wallet. We are able to accomplish this functionality because we are designing the firmware (special software which runs in the secure enclave) to handle permissions and facilitate pre-authorized signature requests (i.e. automated payments). We believe that being able to program rules-based logic inside of a secure enclave will introduce many more use cases for a blockchain-based economy and we hope that seamless, secure energy payments will prove that. While there are currently challenges to implementing automated payments in the energy sector, we anticipate that there will be many other potential applications of the agent’s automated payment functionality. Much more information on this firmware and functionality is soon to come.

Code provided by Alex

Update on the software services team

Most energy-related tasks slated for completion in the near term are dependent on vendor integration (billing portal, enrollment portal, billing integration). We are currently on hold with the full vendor integration while we evaluate the impact of the HAN waiver and other Texas energy regulations on our business model. That said, the team intends to continue to work on a number of tasks from our energy roadmap, and has completed some of these as summarized below.

The software services team has been focused on agent software and software-deployment related tasks. The intention is to solidify the agent software foundation such that we can iterate and deliver more quickly once we have fully evaluated the regulatory challenges to our model. With regards to UX, we began to develop the initial wallet user interfaces prior to starting on the agent energy applications, as there is sufficient clarity on wallet requirements at the moment and few blockers. The intention is to lay down basic project structure and tooling with the wallet applications, and develop the energy applications more quickly, later, as a result.

To date, the following has been completed:

Energy:

Vendor Integration Planning — We completed our first week of integration planning with a prospective energy-services vendor, with good progress. Both sides developed a more clear understanding of the mechanics of how integration would take place, as well as how potential product models would utilize those mechanics. We left with the understanding that once we enter into a definitive agreement with the vendor, the vendor would present us with a project plan with staffing, projected cost, and a Gantt style timeline. We would then spend a second week developing the fine details of this plan.

Initial Data Pipeline — We deployed a barebones and minimal version of our data pipeline, extending from the agent, to our cloud. The purpose of this task was to flesh out the architecture of moving data from agents to our cloud via MQTT. MQTT is a light-weight messaging protocol focused on high latency networks, usable by IoT type devices. Data accumulates in our cloud at our telemetry service. As we don’t yet have meter integration, we’re currently running a mock-meter on our agents.

Billing Site Skeleton & Keycloak Single Sign On Integration — We deployed an initial billing website skeleton, in anticipation of development starting immediately after energy vendor integration. The site has been updated with UX tooling to ensure fast development and adherence to tests. It has been integrated with Keycloak, our single-sign-on provider. Keycloak gives us the ability to unify a number of websites as if they are a single site. It also implements all user and role management functionality, so we don’t have to build our own. The site is deployed in our cloud, with auto-deployments enabled, ready for us to move forward.

Product Data Modeling — We created a DA (Day-Ahead) vs RT (Real-Time) vs DART (Day-Ahead / Real-Time combo) model using both custom Python code and the Jupyter data science notebook platform. The models were created by an external consultant. John Werner now has access to these models and can begin using them to aid in product exploration.

Rainforest EAGLE Data Collection — We had a long-standing, multi-month blocker of not having sample meter data to use as data pipeline test data. Recently, we were able to get two Rainforest EAGLE HAN devices set up at one of our team member’s homes to collect similar data. We stood up a simple API to collect that data in a database in our cloud.

Fax service — We set up a simple fax service to be compliant with PUCT requirements.

MPIM Certificates Received — We completed the simple process to gain access to ERCOT Market Participant sites and services via provided signed certificates.

Agent:

Wallet App UX — We have developed UX designs, tooling, and screens for the mobile and agent wallet apps. Currently, we are roughly 85% complete with the first run through screen implementation of the mobile app, using React-native. We have developed a large amount of reusable tooling, which will speed development of additional apps and sites — including energy apps.

Agent Messaging Infrastructure — We developed the ability to easily send messages to/from services in our cloud and individual services running on agent devices.

Software Updates and Deployment — In order to manage agents in the field and iterate development quickly, we need a sizable amount of deployment infrastructure. Our initial intention was to use resin.io such that this would not have to be developed in-house until later, but the smart IoT module selected by the hardware team is not compatible with that service. We deemed it most beneficial to get ahead of the hardware team and lay down the infrastructure that both teams will need for continuous deployments.

We’ve built the following to support OS, firmware, and application update capabilities:

Nexus Server deployment — We’ve deployed a Nexus server to our cloud which acts as a repository for all categories of software that we will need to update. It allows us to privately share code among our software projects, acts as a secure location to push signed deliverables, and is the location from which our agents will pull those signed deliverables in order to update themselves in the field. It also serves as a repository for OS and Userland applications that we will deploy to agents.

OS Deployment Pipeline — The services team has taken the initial work by the hardware team to build a custom OS that powers the smart IoT module and automated it using our cloud deployment architecture. The deployment pipeline will now automatically perform what were previously manual or nightly build steps, in reaction to a developer pushing code changes to the respective repositories. The work extends the efforts the hardware team made in setting up an in-house, physical build server as we made that same server a worker controlled by our cloud build server — recombining what had become a slightly split and parallel effort.

Secure Deployment Pipeline — We have developed secure signing steps for the above deployment pipelines, as well as future ones (i.e. application updates). This enables the agent to ensure software updates it receives are not forged or fake.

Dev board shot taken by John Boyd

Updates from the Hardware Team

Proof-of-Concept Board

The hardware team has been working on a test board with all the necessary components wired and communicating with one another over a series of message buses. We are happy to announce that the proof-of-concept board is nearing completion and that almost all components are communicating with one another. Although this may not sound very exciting, it is the result of months of engineering effort and the first major milestone on the hardware side.

Firmware

In Q1, Alex wrote a detailed specification for the firmware that will run on the hardware device, but did so in a high-level language (Javascript) both to speed prototyping and to avoid blockages by a board that did not have a stable environment. With this complete, and the hardware nearing a stable state, the hardware team has been working with Alex to translate that specification into a low level language (C), which will run on the production agent device.

It is important to note that this is a very large undertaking and will likely take several months to complete. However, it will not block deployment of alpha-test agents and will be one of the upgrade paths for which early alpha testers will be able to provide valuable feedback. We will be releasing more information on the agent and all of its exciting functionality soon; suffice it to say, we believe the early alpha testers will be a lucky group not just for the lower energy prices, but also for the early access to what we believe will be an important evolution in the future of crypto-industry infrastructure.

Summary

While we are extremely excited with the progress of our REP application, we have also tempered that happiness due to the regulatory challenges we understand we face in implementing our full business model. While it is unclear how this will affect our long-term goals, we are evaluating all possibilities we can offer customers while we seek additional clarity on regulations while moving forward in developing the technologies.

Development continues forward on both energy and hardware, and we will continue to release updates regularly. If you want to follow along with our updates more closely or ask questions of our team or community, please feel free to join our Telegram chat.

Disclaimer