Grid+, one of a growing number of energy-related blockchain ventures, has raised $29 million in presales before even going public.
Correction: GTM previously cited a CryptoCoinsNews report that incorrectly stated Grid+ raised $40 million from its pre-sale event. However, the company confirmed it actually raised $29 million from the pre-sale, which amounts to 36,422,909 GRID tokens. GTM has updated this story to reflect the correct dollar amount.
Grid+ acknowledged it made some errors in its pre-sale calculations, and ultimately sold fewer tokens than initially thought. The errors had no bearing on the total dollar amount raised, however. With the pre-sale complete, that leaves 53,577,091 GRID tokens for sale in Grid+'s public token sale taking place October 30.
The startup, owned by New York blockchain development house ConsenSys, had to shut down the presale of its GRID tokens due to “overwhelming interest,” Grid+ said in a tweet. “Any new interest will officially be moved to a waitlist.”
Each GRID token gives the owner the right to purchase 500 kilowatt-hours of electricity at wholesale prices. The actual purchase of electricity will be via cryptocurrencies including Ethereum, BOLT and possibly Bitcoin in the future.
Grid+ had earmarked 45 million GRID tokens for the presale, which was available to participants contributing at least $50,000 and completing an anti-money-laundering screening process.
Presale participants were given a discount on the value of GRID tokens, ranging from $0.90 a token for people putting in $50,000 to $0.75 per token for customers investing $3 million or more. In the public initial coin offering (ICO) due Oct. 30, each GRID token will cost $1.15.
In total, Grid+ hopes to make $75 million on the sale of 90 million GRID tokens, out of a total of 300 million minted by the company. Following the pre-sale, that leaves 53,577,091 GRID tokens available for Grid+'s public token sale taking place October 30.
Of the remaining 210 million tokens, 90 million will be used for future customer acquisition and 60 million each will be held by Grid+’s external owners and its current and future employees.
The company is aiming to pull in up to 20,000 customers by the end of next year and 100,000 by the end of 2019, at which point it expects to be processing around 120 gigawatt-hours of electricity purchases a month using the blockchain.
The company will also start licensing its technology to utilities worldwide from 2019 and is preparing to announce a utility partnership next month, Karl Kreder, director of energy at ConsenSys, told GTM.
Grid+ is aiming to slash consumer electricity bills by giving users direct access to deregulated energy markets, starting with the Electric Reliability Council of Texas next year.
“It’s common practice for electricity retailers to buy wholesale energy and sell it to their customers at over a 100 percent markup,” revealed the company in a video. “This is a very high price to pay for a company that is only responsible for billing you.”
Using peer-to-peer (P2P) technology and information from smart meters, Grid+ intends to cut out this middleman and offer electricity at near-market prices, buying energy wholesale on behalf of its customers.
“If Grid+ customers can anticipate their future demand, they can also purchase energy in advance at typically lower and less volatile prices,” said Grid+ co-founder Alex Miller in a blog post.
“This provides an immediate benefit to both Grid+ customers and the electrical grid. If Grid+ customers can predict their energy usage more accurately than a traditional retailer, as well as respond to market pricing, they will not only save money but will also increase grid reliability," wrote Miller.
Another feature of the system is real-time payment. “Traditional electricity retailers have customers buy electricity on a credit basis,” said Kreder. “Grid+ is using blockchain to allow real-time payments of electricity.”
People with rooftop solar panels, meanwhile, will be able to choose when it makes most financial sense to sell their electricity back to the market via Grid+. Having access to market pricing could provide an incentive for solar panel owners to invest in storage, Miller said.
“A battery can be turned into a revenue stream if it purchased power when it was cheap and sold that power back when it was expensive,” he noted.
Miller acknowledged that you don’t need a blockchain to set up a virtual utility along these lines. The point of using a blockchain, which in Grid+’s case is Ethereum, is to allow future peer-to-peer energy trading between prosumers.
“Ethereum becomes useful for the future state of the electrical grid where there are more distributed energy resources and dynamic distribution charges which will create more localized pricing,” wrote Miller.
Grid+ is not the only blockchain company to try this. Earlier this month, an Australian startup called Power Ledger pulled in AUD $17 million (USD $13.5 million) through token pre-sales based on a premise almost identical to Grid+’s.
Power Ledger is hoping to raise more than AUD $30 million (USD $23.8 million) when it goes public. But while Grid+ may not be unique, observers are impressed with its vision and pedigree.
“I think that Grid+, being a ConsenSys company, has a genuine solution toward P2P applications and other business models, unlike other companies in the sector,” said Francois Sonnet, co-founder of ElectriCChain, an energy generation data project.
“We keep an eye out on such ICOs and look forward to cooperating with the most serious of them.”
Grid+, Power Ledger and LO3 Energy were among the most promising contenders, he said.
GTM CEO Scott Clavenna observed: “It's becoming clear that the barrier to entry for an ICO is so low that many are terrible ideas at best, outright fraud at worst. In this case, like Power Ledger, there is a fully fleshed-out idea, growth plan and team of experts."
“It's still a very early-stage investing opportunity, versus a true IPO, but it has the ingredients of a real startup addressing a market opportunity," said Clavenna.
Listen to a conversation about blockchain and energy with Scott Clavenna on The Interchange podcast.