Carl Taylor: Hey, and welcome to the show. I am your host, Carl Taylor, and you are listening to the Future of Humanity Podcast, where we explore just what the future may hold for all of us. I'm really excited because today is episode one of season one. That's right, you are listening to the very first episode of many great discussions. Today we're kicking off with a fascinating topic, around the future of utilities and in particular, distributed power.

Carl Taylor: The current system for power, at least in the Western world, is very centralized. We have our power companies who own various many power stations, a mix of renewables, as well as fossil fuels like coal, and this feeds into a grid that our homes and businesses are then connected to. But today's guest, and his company are working to change things up and create a more distributed power platform through the use of blockchain technology.

Carl Taylor: So, we are joined today by Dave Martin, and Dave is the Co-Founder and Managing Director of PowerLedger, a world leading blockchain energy trading platform. He has nearly 20 years experience in the electricity industry, and he's held executive positions in two Australian state owned electricity utility companies.

Carl Taylor: Now, the reason I really wanted to get Dave on the show is PowerLedger, in my view, is one of the few really practical examples out there right now of what blockchain can truly bring to our society. In this episode, we talk about blockchain, we talk about what PowerLedger is doing, we talk about self-sustaining micro communities, we talk about the future of utilities, in not just electricity power, but what about gas and water? We also talk about transitioning from our current power sources to more environmentally friendly ones, like solar energy.

Carl Taylor: It's a fascinating conversation, and if you're interested in blockchain, or you're interested in renewable energies, or you're just interested to hear more about where distributed technologies might take us, then you'll definitely want to listen to this episode. Let's not delay it, let's get right into it.

Carl Taylor: Welcome. So great to have you, Dave. Excited to dig in. My first question to you, as I understand it, you guys are off to Necker Island to pitch to Richard Branson as part of the Extreme Tech Challenge. Talk to me about that.

Dave Martin: It's a really exciting opportunity for us. The technology we've developed is pretty novel, and the issue we're trying to solve we think is a global challenge. When you look at the scale of the problem we're trying to resolve, the nascency of the market and technology that we're using to provide that solution, it puts us in a pretty good space to be seen as an innovative technology company.

Dave Martin: The company that we're in, with the other two companies that are finalists in the competition, is really humbling. There's some great technologies that are also represented there in the health industry, and in AI, and film. It's going to be a really great opportunity to pitch our technology and our business model to some world leading innovators.

Dave Martin: Not just Sir Richard Branson, it's a bunch of CEOs from other tech companies, I understand, that are on the selection panel. It'll be a rigorous challenge around technology that we're using, the problem we're trying to solve, the business model that we think we've created. It'll be great to test it, but it'll be also great just to be in the company of that kind of innovative mindset.

Carl Taylor: Absolutely. The people you get around, right? It can just make all the difference. Just a simply throwaway line could revolutionize your business or connect you to someone. That's fantastic.

Dave Martin: And it's the relationship you get through these things that are just amazing. In the journey of PowerLedger over the last two years, been exposed to people who are doing amazing things in renewable generating technologies, in the provision of energy services to communities, underserved communities now. New business models that are around blockchain and business uses for blockchain.

Dave Martin: It's been an amazing journey for the last couple of years, and it's all really been about the people that we've met, and the ideas, and that innovative environment that we've found ourselves in.

Carl Taylor: That is a perfect segue, because people listening are probably going, "Okay, he mentioned a whole bunch of words there like blockchain and renewables." What exactly is PowerLedger? What's your 30 second or 60 second elevator pitch?

Dave Martin: Well, we're either a technology company working in the energy space, or we're an energy space working with a really innovative technology. What we're trying to do is use blockchain technology to simplify the transactive relationships that occur in the electricity system, and make them very fast, very autonomous, and turn our existing electricity networks into trading platforms, that allow consumers to install distributed renewable energy technologies, and to monetize their investment, incentivizing them to install more.

Dave Martin: Ultimately what we're trying to create is an autonomous trading environment on the electricity network that encourages everyday citizens to take control of their renewable energy future.

Carl Taylor: Yeah, so when you say an autonomous trading platform, to the everyday Australian or global citizen, right? Who maybe they have solar panels on their roof. I know in Australian, a lot of people are installing solar panels onto their roofs, or they're thinking about it. What exactly does this truly mean for them?

Dave Martin: What it means to the everyday person is access to low cost, low carbon electricity. I guess the challenge that we face now is that we are in a ... You're right. in Perth, it's one in four households that has rooftop solar. in Adelaide, it's one in three. That number's growing, across Australia, every single day.

Dave Martin: We've got this system now that is becoming really distributed. There's lots of generation. In the last seven years, there's more generation connected on people's roofs than has been connected to transmission systems, in terms of large scale generation. You can see the typical model of our electricity system has changed, but nothing else has.

Dave Martin: We've got a regulatory framework that assumes we all still buy our electricity from some dirty coal fired power station, hundreds of kilometers away, and it travels through long, winding transmission distribution systems. Energy is dumped in a market, it can only be bought by retailers and sold to consumers, and we just get what we pay for.

Dave Martin: That reality is really different, but that whole governance framework still thinks it's that old linear model. Because of that, we've got this system that is driving up cost. At the moment, for residential consumers, the cost of their electricity isn't just the cost of turning a lump of coal or a breath of wind into an electron, into a kilowatt hour. It's all of those points in between, the cost of running a power station, fueling it, building transmission systems, operating in distribution networks, markets, all of those things.

Dave Martin: There's a lot of cost that goes into a kilowatt hour, but a lot of those costs are artificial. They're only there because they needed to be there historically. When you're paying for your electricity bill, between 40 and 50% of that energy is the cost of the network. The presumption is that every kilowatt hour that enters into the system travels through transmission and distribution networks to get to you, and so we divide the cost up and we share that across every kilowatt hour that's sold to consumers and we all pay our fair share of the network.

Dave Martin: But the reality is more and more people are putting PV on their roof, and they're spilling energy into the grid, and their nextdoor neighbors are consuming it. So rather than energy traveling hundreds of kilometers, it might only be traveling meters to get from your nextdoor neighbor's roof to your power meter.

Dave Martin: Because of that, and because consumers are consuming more and more of their own rooftop energy, the cost of being connected to the network is increasing. The fixed cost of network service provision don't go anywhere, they just get shared among a smaller number of consumers. The problem with that is the impact is felt most acutely by people who can least afford it.

Dave Martin: So you've got socially and financially marginalized consumers who can't afford to install solar panels, that are facing the rising cost of electricity. If the social impact doesn't get you enough, you look at the other end of the consumption spectrum, where you've got small industry and medium sized industry, who with their type of consumption that they have, distributed renewables won't work for them. Don't have the roof space, or their power demands are too extreme. Well, they also pay the rising cost of energy.

Dave Martin: We're hitting the poor, who are already marginalized, and we're hitting a sector of our community or our economy that is a significant contributor to the economy, with a whole lot of increased input costs. So, having a model that no longer reflects the physical reality of a system is driving up cost and reducing the productivity of the system.

Carl Taylor: Got it, yeah. Absolutely. With PowerLedger, you went down the route of blockchain. To do what you've said, what was the reason that blockchain was the technology to use rather than some other system or existing database type structure?

Dave Martin: Sure. The existing systems are all linear. Each of us has a relationship with a retailer, it's a one way flow of energy. We buy our electricity from them. If we've got PV systems on our roof and our spare energy gets dumped into the grid, then they buy the energy from us. It's this purely linear relationship.

Dave Martin: The physical reality of the system is energy's flowing in all sorts of directions. I might be consuming the neighbor on the left of me's energy one minute, and then the next minute I'm consuming energy from the neighbor on the right of me. If I'm out and my solar panels are dumping energy into the grid, then they might be consuming my energy.

Dave Martin: Overnight, we're all buying it from different retailers, so there are multiple parties involved in electricity generation and consumption these days. The linear relationship isn't sufficient to manage the complexity of the physical relationship. I always like to say we're not trying to change the laws of physics with what we're trying to do. We're just trying to change the way the market reflects the laws of physics.

Dave Martin: The blockchain gives us the ability to identify all of the participants in a transaction, and in this case, an electricity transaction. By reading all of the meters in a trading environment, we can understand who's generating what and who's consuming what at any point in time. We know where they are on the system, so we can identify the provenance of every kilowatt hour that enters the system. Where it was generated, at what source, at what price, who owned it.

Dave Martin: And then, where it was consumed, by who, at what price, and when. And then, what was the mechanism by which that kilowatt hour generated to the consumer, and what did that cost? We can take all of those physical contributions to a transaction of electricity, and then because we've got an immutable record of that physical transaction, we can tie a financial transaction to it, and create an autonomous financial reconciliation and settlement for an electricity transaction that occurs every five minutes, every 10-15 minutes, or every 30 minutes, in alignment with a wholesale market settlement.

Carl Taylor: So really what you're talking about, and what PowerLedger is doing, is disrupting the entire existing market of how we buy and sell electricity, right? As you're creating the platform to allow for that disruption. Your background, you spent 20 years in that traditional electricity industry. I suppose I'm curious to know is, by being in that industry, what led you to PowerLedger? As the Co-Founder and Managing Director, what led you to where you're at now?

Dave Martin: To take one step back, though, on what you just said. We are not disrupting this industry, necessarily. There are elements of it we are disrupting, but the consumers are. Like I said earlier, one in four consumers in Perth, one in three in Adelaide, this system is being disrupted but it's almost happening by stealth. It's happening in a really unmanaged way, and if we get to a tipping point where there are more consumers generating and storing their own energy than there are using energy from the grid, we get to a system where we lose enormous value in our existing network assets.

Dave Martin: That was the concern for me, when I was working in the industry, saying, "Hang on, we've got this changing nature, this changing industry, but we're not doing anything to mitigate that change on the socially marginalized," those elements of the economy I talked about earlier. Or, for the owners of the assets, the network assets, and the generating assets that already exist.

Dave Martin: Our platform is intended to help mitigate the disruption that's already occurring. The genie's out of the bottle, there's no putting that back in. We're trying to create a platform that allows that transition from an old model to a new model, in a way that preserves the value of the existing assets to the extent we can.

Dave Martin: That was me, working a few years ago in the industry, looking at the problem of the ... Well, the lovely problem of the falling price of electricity storage. In my last piece of work in the energy system before I started PowerLedger was a consulting piece for a network company that was looking at connection of emerging technologies.

Dave Martin: We were looking at connection of large scale solar farms, large scale factories, microgrids, disconnecting customers where it no longer made sense, and getting them standalone power systems. The whole while I was sitting there thinking, "This isn't a technology problem anymore." The technology's resolving itself. There's some really clever people creating some really clever generating and storage technologies, most things are buy and large, taking care of themselves.

Dave Martin: The problem that we're facing now is not a technical one. It was a cognitive one. It's how do we integrate these things technically? Great, we can do that, but how do we integrate them in a market sense, in an economic sense? What happens if electricity storage gets so cheap that more and more customers get off the grid and leave more and more of the costs of running the traditional system to fewer and fewer people? For me, it was a problem around accepting that the physical change was occurring and was well underway, wasn't going to be reversed, and couldn't be changed through punitive measures or digging your heels in.

Dave Martin: And in that case, how do we then manage the transition in a way that is sustainable? So, it's about changing market rules, changing tariff models. It's about changing your view of where electricity is generated, and who owns that capacity and who should benefit from their investment in that capacity. That's a really wicked problem when you look at it in the context of the entire energy system.

Dave Martin: Over the last 15 years or so in Australia, maybe even 20 years, we've disaggregated the electricity system. 20 years ago we used to have vertically integrated power companies that owned power stations, they owned the poles and wires, they owned the retail customers, and everything was done in a coordinated, holistic fashion. And then through various reforms and deregulations, we split the industry up. We've got generators, network companies, transmission companies, market operators, and we've really segmented the whole industry.

Dave Martin: We have this really poor ability to look at it holistically anymore. We're no longer looking from a traditional sense, from the coal pit to the cash register. We're not seeing all of those interactions in between, and we're missing the fact that the consumer now has the whip hand in developing the energy system.

Dave Martin: We were talking to a property developer yesterday who is in the process now of building a 250 lot housing development, just North of Perth, that will have a really skinny connection to the grid, but most of the generating and storage assets will be behind the meter, owned and operated by the property developer themselves, in a way that's providing low cost, low carbon energy just to the consumers of that development.

Dave Martin: We can see that what used to be a very centrally planned industry and centrally constructed industry is moving to the hands of property developers, and consumers. It's a very different development paradigm that the energy industry is entering into.

Carl Taylor: Yeah, I mean, so it's really changing the ownership of the infrastructure that generates the power, really taking that out of the big electricity companies' hands, and putting it back into entrepreneurs, property developers, or the homeowners themselves?

Dave Martin: Yep, absolutely. And what that means is that in a model that you traditionally used to look at things as capacity, "How much capacity do we need to meet peak demand?" So we have enough generating capacity to meet the peak, and then a little bit extra in case something breaks, a little bit extra in case our forecasts were wrong. And we build networks to meet that capacity as well, so we've got electricity networks that are underutilized for the vast majority of the time.

Dave Martin: In Western Australia, our peak occurs probably somewhere in early to late February. It's when we've had 40 ... Sorry, three or four days of constructive 40 degree days, and that's when we get our peak demand. But for the rest of the year it's down around 40 or 50% of that demand. But we've built all of these assets because we've looked at capacity in terms of the network capacity, we've duplicated it in terms of energy capacity.

Dave Martin: But if we look at it in terms of holistic capacity, and put generation where the consumers are, which is what the consumers are doing for us, we'll realize that we need a hell of a lot less capacity built into the system. You don't have networks competing with generators to create capacity. We've got a smearing across the system of economically placed and displaced generating systems that are where consumers are.

Dave Martin: So we need less networks to provide them, we don't have these big spikes at the end of the grid that we need to build big grids to push energy to, because generating capacity is acting as system capacity in those edge of grid areas, and we really change the way that the system needs to be designed and built, and you're spot on. We change the way that the system needs to be paid for, because the consumers are the ones that own that capacity.

Carl Taylor: Thinking from an economic standpoint, right? As an investor myself, it changes the concept of putting photovoltaic cells on my roof, from just an investment in my own power costs, to I can potentially be my own power plant and serve my community if I wanted to. I could look at it as an investment that way, and look at the return potentially available to me.

Dave Martin: Absolutely, and that's the basis of our platform and the way we're trying to help mitigate, or at least manage the transition to a more distributed economy, is to create that economic platform. The PowerLedger platform is fundamentally about allowing the person who makes the investment in that capacity to monetize it.

Dave Martin: If you have excess capacity, you have the right to monetize that excess capacity. Same with Uber. If you're not using your car on a Friday night, you can drive around and pick up passengers and monetize that excess capacity, or Airbnb. If you're pumping electricity into the grid, why shouldn't you be able to monetize that capacity by selling it to your nextdoor neighbor?

Dave Martin: And then to have a fairer reflection of the value of your capacity, reducing the overall requirement for large distant capacity. It's about creating an economic platform that says you're not just looking out for your own needs. If you put an extra couple of panels on your roof, you can monetize that capacity by selling it to your neighbor. The neighbor might be the guy that otherwise couldn't afford to participate in this place himself.

Dave Martin: He's benefiting, and the whole while, we're doing that with renewable energy. We're putting more renewable into the system. We're using storage, we're using power electronics to manage power quality, we're managing a whole range of issues that used to be managed centrally down at a distribution level, where traditionally we couldn't even see them, and we're getting a far better, more resilient, lower carbon, lower cost energy system.

Carl Taylor: Yeah. I mean, what just jumped in my head as an idea, obviously there might be some council restrictions around it, but if you bought a block of land, and right now your block of land's just sitting there empty, but you've got the investment to stick some solar panels onto that block of land, and connect it up to the PowerLedger system, you potentially could generate income without having to build a house and have renters in there.

Carl Taylor: I don't know if the legalities currently allow for that, but technically that's an idea that just popped into my head of what you're talking about.

Dave Martin: And I'm sure there are legalities, and there are legalities around how you do that, how you're physically connected to a network, but you're on the money. If I've got a group or a property portfolio full of warehouses and they're full of boxes, all they are is a big box with lights predominately, but they've got acres and acres of roof space that's just sitting there doing nothing. And they are the perfect opportunity for distributed power stations out in the community where the consumer demand is, where we're not using huge networks, we don't have huge line losses in supplying them, and we can quite easily create an investment opportunity for a whole range of investors to monetize what is basically underused real estate at the moment.

Dave Martin: That's another great point, is more and more of us are living in high rise apartments, and don't have access to roof space to be able to put PV systems on ourselves. But if we can access a percentage of a distributed power station, like the empty lot analogy that you've used, or a warehouse roof, I can at least offset my energy costs by earning a return on the investment in renewable generated energy somewhere else.

Carl Taylor: Yeah. I mean, one of the things I love most about what you guys are doing, I mean, so many people who are pushing the idea of renewables, solar panels on your roof, battery storage, they're really pushing the idea of becoming off-grid, disconnecting, you don't need to be part of the grid. What I love about what you're doing, if I'm understanding what you're saying is, it's not about being off-grid.

Carl Taylor: 'Cause there's always, or at least now, it looks like there's still going to be people who will have to be connected to that grid. As you say, the people who probably least can afford investing, or if you're in a big apartment complex, you don't have the space to put your own. So it's not about off-grid, on-grid. It's about making the two systems work better.

Dave Martin: Absolutely. You're absolutely right. The worst state we can get to is when the cost of energy has risen so much that people who can't afford it are incentivized to get off the grid completely. Like it's going to evolve, there's a really strong narrative in the PV and battery market now about getting off the grid. There are websites out there that promote it, how you can do it, and it is a reality now.

Dave Martin: The costs are almost at parity for getting off the grid and staying on the grid, but the disaster is, we have to install vastly more resources on roofs to meet individual peak demand, than if we stay connected to a grid and share our peak demand. You're right, the guys who can't afford it are the last ones to leave, and the last ones paying the check.

Dave Martin: There's a lot to be said around the efficiencies that are gained by staying connected to an effectively priced and built and managed electricity network.

Carl Taylor: Yeah. In an ideal world, who do you believe then should own the wires, right? The wires that connect all us up. Whose responsibility in an ideal world do you think is owning that? Is that individuals? Is it governments? Is it the power companies?

Dave Martin: I think running a power system's not an easy thing. It's a technical system, and it requires some smarts. We've got in Australia, a good mix of state owned and privately run electricity networks. Private networks as well, so there are skills out there and companies out there that can manage the operation of the network, and that role will continue for a period.

Dave Martin: Look, it'll change. It'll be running smarter and smarter networks, not the long spindly blind distribution networks that we've had traditionally, and they are becoming smarter as we speak. There are more sensors and remote switches and automatic switches in networks now that are becoming smarter and smarter. I don't think the ownership of the electricity network infrastructure is really all that relevant.

Dave Martin: It's how they're operated, how they're priced, how they're planned. At the moment, electricity networks are planned on this notion of meeting peak demand. The way they're priced is on you build this much, you get a regulated return on that investment, divide that annual revenue by the number of kilowatt hours you sell, and then that's your tariff. Networks are almost incentivized by the network, so the regulatory framework, to continue to build capacity, because that's how they make money.

Dave Martin: But if we flip it around and say, "Well no, actually our model now is to incentivize customers to stay connected and to use the networks." We're not talking about in a peak demand sense. We're talking about a throughput sense, like every other asset [crosstalk 00:25:44]-

Carl Taylor: Utilization.

Dave Martin: By utilization, yeah. And that's the opportunity in front of us, to switch from a system that almost inherently makes things inefficient, to one where we're making it ... Sorry, more efficient, and getting consumers to contribute to that.

Carl Taylor: Thinking into the future now, 20, 30, 50, 100 years from now, this is just the start, clearly in a number of ways. One of the things I love about what you're doing, it's one of the few, what I believe, are practical use cases for blockchain. This is a real, practical, true problem that globally, not just in Australia, but globally societies are facing. This is the start of where do you see things going from there?

Carl Taylor: Are we talking about distribution of all utilities? Not just electricity? Where do you see things going?

Dave Martin: Quite possibly. One of the projects we're looking at in Fremantle at the moment which is the Smart Cities Project, is looking at the nexus between electricity and water. Because water is not just about drinking water, it's about removal of water, and waste water, and treatment of water.

Dave Martin: The two things have a very strong interaction. You need energy to deal with water. The energy is typically electrical energy. Likely that we'll see smaller, more dynamically connected microgrids from an electricity perspective, and there's no reason to suspect that all of the utilities services, whether it's power and water, or transport, through sharing of EVs, or sharing of autonomous vehicles, all of those things becoming a more localized service that are interactive and sympathetic to the demands in the community at the time, and then able to help mitigate the fluctuating demands of adjacent communities.

Dave Martin: One of the pieces we're looking at with some partners in India is the development of microgrids in rural India, where in India there's something like 400 million people at the moment who don't have access to electricity suppliers. There's a government focus on providing access to electricity for those consumers.

Dave Martin: If we did it through traditional means, the type of costs would be extreme, the carbon intensity would be disastrous, and it would probably take a really long time for that to be achieved. But if we're looking at the creation of 100% renewable and distributed microgrids, that over time, as demand is induced, and more capacity is required in those areas, are able to be interconnected, we create a network of dynamically connected microgrids that are owned by the community themselves, where demand is met through incremental approaches.

Dave Martin: So, additional couple of solar panels every couple of weeks, rather than big chunky investments in [inaudible 00:28:38] plant, which is what we've done for the last 50 or 60 years. And ultimately, they can be connected, and operated in a way that is cognizant of the demands and the value placed on that demand by each of the communities. Using a system like the blockchain, using the platform like the PowerLedger platform allows us to be able to monetize within discreet communities and then across communities, and allow the creation of a series of dynamic microgrids, or dynamic economies that interact with each other on the basis of demand, and that capacity is provided in those areas by the communities themselves.

Carl Taylor: It's really interesting. I don't know if you've read the book "Sapiens." "Sapiens" talks a bit about how over the journey of how we've gone from hunter gatherers, small communities to the bigger communities that we're in now, and we've lost that smaller communities. One of the things I'm hearing you saying is this in a way is bringing back that ability to create those smaller micro communities, self-sustaining, but then feeding into the bigger community of the city or the country, or whatever.

Dave Martin: Absolutely. That's absolutely right. When I first joined the energy system, I think it was my first day working at Western Power in Perth. My general manager was taking me around to meet all the other general managers, and I went and saw the bloke who was in charge of the transmission system.

Dave Martin: I don't think he did this, but I've reconstructed a memory, is he patted me on the head and said, "Son, this industry is about scale. The bigger you can make your power stations, the bigger you can make your transmission systems, the lower your unit cost, the cheaper the electricity is. It's where the efficiency comes from."

Dave Martin: And that's how the system has, and up until recently, continued to be designed and managed. But that's all been flipped on its head now, because we've got the ability to get those efficiencies at a much smaller scale. Rather than having big lumpy individual investments, that by their nature are risky and expensive and difficult to manage, we've got many thousands of very small investments that are easy to manage, they're low risk.

Dave Martin: They're not at risk of being stranded. If I'm using solar panels on my own roof, [inaudible 00:30:48] going to strand my own power station. So, that old model, bigger is better, is changing. We've got the ability to build incremental, meet incremental demand in increments, rather than big lumps.

Dave Martin: All of that is changing and it's giving us the ability to come back to a smaller focus, and the beauty of that, from an environmental perspective, is that if you look at those small scale systems, power electronics can manage power fluctuations and security, and frequency controls, stability, all those things, in a way that could only be managed by big heavy and more often than not, coal fired machinery in the past.

Dave Martin: By making it smaller, we can make the individual investments easier, easier to manage, lower risk, lower cost, and importantly, lower carbon.

Carl Taylor: Yeah, absolutely. I mean, one of the things that came up when you were talking then is surely someone's listening right now, and they're going, "All right, we've talked so much about renewables and solar, but the sun doesn't shine all the time." So for the person listening who's going, "Well, that's great, but the sun's not going to shine all the time. We're going to have to be connected," talk about how it works in with existing infrastructure and coal and nuclear, whatever around the world is still being utilized.

Dave Martin: Yeah, so this is a transition. This is not a flick of a switch and moving to a new model overnight, 'cause you're right, the sun doesn't shine at night. We are in a state of transition from centralized to a decentralized model. Storage isn't quite there yet, but it's getting there rapidly, so the cost of energy storage, and the availability of energy storage. Cost is falling, availability is increasing. It's going to become an ever increasing element of a distributed energy system.

Dave Martin: The trick to all of that is managing the transition in a way that preserves value, preserves system stability, energy availability, and resilience over a period of time. The way we've looked to do that is to make sure that the trading environments that we create using PowerLedger system, are aligned and in sync with wholesale energy markets.

Dave Martin: From our perspective, it's not just enough to know that if I'm generating electricity in my roof at this time, and my neighbor's consuming it, we can do a transaction between the two. But that sits within the context of a broader supply relationship that each of us has with the electricity retailer. Our model needs to be sympathetic with that model.

Dave Martin: People are listening, we are having conversations with the network businesses around the cost of connection and how network tariffs might be refined to encourage people to stay connected. We're also talking to market operators around the model for performing ... Providing sorry, energy consumption data to markets, so that we can settle both the peer-to-peer transaction between consumers, as well as the wholesale market interaction in the same breadth, in a coincident time period.

Dave Martin: All of that needs to be taken into consideration as we transition through this change to a decentralized market space.

Carl Taylor: What would you say is the biggest hurdle or challenge you think you have to overcome, or needs to be overcome, to see widespread adoption of your platform?

Dave Martin: I think it's a cognitive one. It's an industry that has very comfortably done, and very securely and safely and successfully. I don't want to denigrate the work of the past, but it's now a cognitive challenge to say, "Well, that past is the past." We are absolutely moving into a new decentralized model. It's not an if scenario. It's absolutely a when. When you can see that the consumers are making decisions that used to be made by utility executives.

Dave Martin: We're already moving to a decentralized space, so okay, let's accept the fact that our future is decentralized. What do our planning structures look like? What do our government frameworks look like in that environment? If it's going to happen in 5 or 10 or 15 years, maybe even 20 years, what does that say about the investment planning of today?

Dave Martin: The electricity industry makes 40, 50, 60 year investments, so using those frameworks, any investment we make today in new, large scale generating plant, is going to be stranded before it gets halfway through its life. When we flick the switch to that realization, it changes the conversation.

Dave Martin: There are utilities around the place now that are saying, "Well, if we don't get a pay back on this investment inside of 10 years, we're just not going to make it. We'll look for a non-network type solution to resolve that issue." So, it is changing, and the technical challenges are there, but they're being resolved. The integration challenges are being resolved.

Dave Martin: The biggest one is accepting as an industry that things are going to be fundamentally different in a relatively short period of time, and that the way consumers interact with the system, the way the governments' frameworks exist, the way markets operate, all need to be changed. It's not just a technical issue, it's a far broader one.

Carl Taylor: Yeah. Definitely. So, what can everyday consumers potentially do to help? If they're interested in this, I mean, what can an everyday consumer do that might help with speeding up this transition to the distributed energy?

Dave Martin: I think continuing to do what they're doing now, installing their own rooftop solar systems where they can, resisting the urge in the short term to getting off the grid completely, and keeping pressure on around conversations like the one that we're having. Understanding or asking to be explained why the capacity that they're putting on their roof isn't afforded the same value of capacity that's been installed in a transmission system.

Dave Martin: Why does a market think that 50 megawatts of solar installed in a field down the road somewhere has some intrinsic value that's greater than 50 megawatts of solar that's installed across all of these roof spaces? Having those conversations, continuing to expect to have explained to you why there is a disparity between the value of centralized capacity versus the value of distributed capacity.

Dave Martin: Asking those questions, and generally resisting the urge to get off the grid until a new paradigm emerges.

Carl Taylor: Got it. Perfect. We've talked a bit about the future, we've talked about why PowerLedger exists. Let's talk a little bit about what's happening now, because I think it's very easy for someone listening to think, "Okay, well this sounds great." You talked about timeframes of maybe 20 years in the future, but this is not just stuff happening. You exist now, you have since 2016. You've been making some amazing partnerships and progress over that time, so talk to us a little bit about today. What's actually in place, some of these partnerships, India, Thailand, et cetera? What's happening today?

Dave Martin: In a blunt commercial environment, we are operating in a number of apartments here in Fremantle, Western Australian. Where the PowerLedger platform is allowing peer-to-peer energy trading between consumers in apartment buildings. In an embedded network, all of the rules around the regulated network don't exist. Or, the majority of them don't. So we've got a lot more flexibility to allow peer-to-peer trading behind the master meter than we do in front of it.

Dave Martin: The system's already operating in a couple of apartment buildings in Fremantle. We're working with a property developer in Northam to do the same thing behind a large scale property development there. Actually, we have another apartment building in Melbourne that's recently come into the system as well.

Dave Martin: But beyond the local apartment building approach, we've got conversations with partners in Thailand, BCPG, which is a government renewable company, building a microgrid smack back in the middle of Thailand, one the world's most energy intensive cities, with a renewable microgrid in a small section of the city, supplying a number of buildings with renewable energy.

Dave Martin: If you can do it there, you can do it anywhere. We've got partnerships emerging in India where we're doing trials of the microgrid technology I mentioned earlier, in rural areas, looking at the integration of multiple generation sources in rural microgrids. We've got partners in the US that are helping us build relationships there with [inaudible 00:39:20] technology and various areas in the United States.

Dave Martin: We're looking beyond just energy trading, to trading other energy related or utility related services, like water, like carbon credits, like low carbon fuel credits, those sorts of things. The platform itself, when we started PowerLedger, we were a trading application. We realized that if we want to have the reach and the impact globally that we aspire to, just being an application meant that we would have to duplicate ourselves all over the place to have that reach, and that just wasn't in itself sustainable.

Dave Martin: We took the view that we would create a platform that could host multiple applications, multiple trading applications, hosted by multiple people. We're working with other people to become application hosts on the PowerLedger system, to create their own trading environments, using our technology and software, and the fundamental economy that we create to host trading environments in other parts of the world.

Dave Martin: Those applications will broaden from just trading to energy ... Sorry, to certificate trading, carbon trading, all those other things as well. It's a busy period for us. We undertook an ICO in August last year, which concluded in October, and raised a sufficient amount of capital to give us a really good war chest to expand, and go from what was a startup company to a really solid scale up approach, broadening the number of applications we can provide, away from just electricity, to those other commodities that are discussed, always as broadening our footprint to places like Thailand, India, the United States, and Europe, and other places.

Dave Martin: That's what we're up to at the moment. We have a lot of flexibility in an embedded network space, so in apartment buildings, and strata complexes. Commercial stratas, like shopping centers, and industrial precincts, while we work on changing the regulations to allow us to operate more freely across the regulated network.

Carl Taylor: That's fantastic. I love how much you guys are doing. As a blockchain company, some listening and some wouldn't know that there's a lot of junk out there in the cryptocurrency and blockchain space, and it's so great to see an Aussie company utilizing it for something that is a genuine use case for the blockchain technology, and not just, "Oh, let's try and do an ICO to raise money."

Dave Martin: That's a really important approach, 'cause we look at the blockchain not as the solution. The blockchain is the tool that allows us to achieve the solution. The solution is turning electricity networks into trading platforms that encourage people to install more renewables, to monetize that investment, and to stay connected, to share the value of that energy across the system.

Dave Martin: That's the solution. The tool that we've found is that the most applicable tool is the blockchain, because it allows us to really simplify those complex transactive relationships in a low cost and very high security and high speed way.

Carl Taylor: How do the fluctuations of the cryptocurrency market, especially in recent months, how does that impact your operations? How does the POWR token fluctuations impact the business of PowerLedger?

Dave Martin: It doesn't, to be blunt. The POWR token is a utility token, so it provides access to the software. It provides access to a trading environment and a pool of cryptographic tokens that allow the transfer of value, and it also provides a credential guarantee for people trading energy, that their investment's secure. It is a utility token, that as our platform reach expands, we increase in value because of its intrinsic value, because of its use in the system.

Dave Martin: It will really decouple from the whole crypto market as it's more and more used. Our focus as a business is on running a good business. We're trying to build the platform in a way that has greatest reach, greatest applicability, greatest attractiveness for people to use the platform, and in that way the POWR token, its utility increases, and its value increases, but that's just a byproduct.

Dave Martin: The ICO raised the funds we needed to run and develop a really good platform and a really good business, and that's our focus. The same thing through the dotcom boom and burst. With businesses, the good business models stuck around beyond the boost, beyond the market fall.

Carl Taylor: Absolutely.

Dave Martin: And that's our focus.

Carl Taylor: Absolutely. I mean, same thing happened in the dotcom era as well, but people are adding blockchain to their names of their company, just so their stock price would go up, you know? The same thing happened in dotcom. Cool, let's wrap up. This has been amazing. I really do love what you guys are doing in PowerLedger.

Carl Taylor: My final question to you, I suppose, is when you think about the future, based on what you know in your industry, but also just the broader what's happening in the world, when you think to the future, are you optimistic, pessimistic, where do you sit when you think of the future of humanity?

Dave Martin: I'm massively optimistic. I think the challenge that we face is having the energy to do things differently. I don't just mean electrical energy, I mean the intellectual, the creative energy, just the energy to change things. You look around and the more that we operate in an innovative environment, and an entrepreneurial environment, you realize there are so many people operating in this space.

Dave Martin: There are so many great technologies. Look at the guys that are going to be joining us on Necker Island, on the Extreme Tech Challenge, and you see there are some brilliantly intelligent, motivated, and energetic people doing some really amazing things.

Dave Martin: My view of the future is incredibly optimistic. I think if more people were more engaged in the future of humanity, things might happen more quickly, but it's just not how human beings are designed. But there are some amazing people doing amazing things, and I think the future's going to be fantastic. I look at my team, and they're predominately millennials.

Dave Martin: They're a group of people that are better equipped, moving out of education, out of university now, to actually make a difference than any generation in the past. They are so motivated to be involved in challenging the status quo, and changing things for the better, and ours is just a microcosm of what's happening in the entrepreneurial and innovative space around the world. I can't wait to get to the future.

Carl Taylor: Fantastic. Me neither. I think my personal touch is that I think we're on a ... We could go either way. I see multiple options, and I definitely hope it is the optimistic approach that you see. For people who want to connect with you and PowerLedger, what are the best places they can find you to find out more information or to get involved?

Dave Martin: We're all over the web, on Twitter, on Facebook. So, it's PowerLedger.io is our web address, and all of the Facebook, Twitter. Telegram is a great one. We've got a Telegram group with about 17,000 really active members in there now, so if you want to get to the backstory, there's 17,000 people there that can fill you in.

Dave Martin: Most of us the senior team in PowerLedger get into the Telegram group pretty regularly, but we've always got moderators in there, and one of the marketing guys is usually in there or has their ear to the ground in there. Telegram's a really great way of getting in there.

Carl Taylor: Perfect. All right. We'll make sure there's link to all of those in the show notes. We'll also, for those who are more into the cryptocurrency space, we'll make sure there's a link to the whitepaper as well, if you want to look at the POWR token, and the cryptocurrency side of things. But thank you so much, Dave. It's been amazing to have you on.

Dave Martin: Pleasure.

Carl Taylor: I wish you and PowerLedger team all the best, and I'll be watching very closely with what you're doing.

Dave Martin: Thanks for your interest. It's great fun talking to you.

Carl Taylor: Thanks for listening to the Future of Humanity Podcast. To download the latest episode and find the transcript and various resources mentioned in today's episode, visit our website at FOH.show. That's F-O-H, as in Future of Humanity, and show, as in s-h-o-w. You can also via our website, contact me with any feedback or suggestions for future episodes, so please do reach out.

Carl Taylor: Now, if you haven't already subscribed, you can find the links to subscribe on all your favorite platforms at FOH.show/subscribe. That's FOH.show/subscribe. And, more importantly, if you'd like to continue the conversation from today's episode and connect with other listeners, then you can join our free community at FOH.show/community. FOH.show/community. I look forward to seeing you there.