The Narrative of KWHU – Why, How & What if?

Rationale

The indisputable value of KWHU is fundamental to the value of the KWHU, in a manner similar to the indisputable value of a sovereign of gold is fundamental. Hence the first standard enshrines the permanent and indisputable connection between the kWh of electricity and the KWHU. Gold became the predominant means of exchange because it is indisputable once accurately measured and authenticated. The same applies to KWHU, once authenticated and measured the kWh of electricity’s conversion to KWHU is indisputable.

The second standard is in support of proliferating renewable energy. Reduction of CO2 emissions and nuclear waste is the goal and restricting the use of KWHU to renewable sources of electricity supports this goal. Additionally, individuals and companies using the KWHU as a means of exchange benefit from the reputation of being environmentally responsible.

The third standard prevents arbitrage opportunities due to the varying price of electricity across jurisdictions. There are certainly arbitrage opportunities that will become apparent but it is the hope that adding the product & service component limits the speculation that arbitrage opportunities may cause. It is still possible that one could produce electricity to earn KWHU and use it to purchase goods and sell it for fiat currency; but the number of steps makes the effort more complex and thereby limiting the volatility

Modus Operandi

The KWHU will be the accounting of the amount of kWh of electricity transferred at an authenticated measuring point from one party to another. For example, when 10 kWh of electricity is supplied to a buyer, the seller would be obliged to receive 10 KWHU. This 10 KWHU is now accounted as credit to the seller and a debit from the buyer. It is entirely possible that the value of kWh of electricity delivered may have changed in fiat currency and this is the exact difficulty that is being mitigated by the use of the first and third standard. Producers of electricity can begin to earn KWHU immediately and there would be an initial imbalance where the buyer may not have KWHU to pay for the electricity purchased. Therefore, an initial negative balance in the KWHU account would be allowed in order to facilitate the requisite KWHU required for transactions. However any buyer can offer exchange of KWHU priced product or service and thus the seller of electricity could directly or indirectly use the earned KWHU.

These following examples can be expanded with the growth of participants; every exchange cumulatively builds greater consensus of pricing in KWHU. For example, an apple farm could buy 1000 kWh of electricity from the solar power plant. The solar power plant operator earns 1000 KWHU, who can purchase various goods and services from the market worth 1000 KWHU. The market would pay for apples worth 1000 KWHU thus completing the exchange of KWHU to satisfy all balances. A house solar power plant could produce 50 kWh of electricity and sell 25 kWh of electricity to their neighbour to charge their EV to earn 25 KWHU and buy 15 KWHU of IT services from a service provider who in turn pays the EV owner 10 KWHU for a shared ride in to town every week. In this manner KWHU becomes a conduit that allows value to traverse through an economy as a means of exchange and possible storage of value until the accounts are inevitably balanced. Imbalance is likely to occur because of differences in pricing or accumulation of KWHU but consensus will be achieved as prices of products & services are raised or lowered to balance the difference in negative versus positive accounts.

Every producer of electricity from renewable sources can participate in the KWHU but given the high capital investment and returns expectations of the larger electricity producers and their current contracts they are unlikely to find the KWHU beneficial to their immediate requirements. It is possible for net-metering & wheeling to be provided through the use of KWHU. In essence instead of providing a net-metering credit on the electricity supplied to the grid which is then either consumed at the same or different location at a later date. The utility or authority could credit KWHU to the account which of course could be used to pay for the consumption of electricity but it could also, where accepted, be used for other products & services. The utility or authority is not negatively affected by the fiat currency value of the electricity supplied, which is the primary concern when creating the net metering policies, because the KWHU can only be converted to kWh of electricity when paid to the utility or authority. Leaving them net neutral irrespective of from where or whom the KWHU is ultimately paid.

KWHU can be used to pay for electricity from battery storage provided that the battery storage is connected to and is charged exclusively from a renewable energy sources. Electric Vehicle users can also use KWHU to pay for charging of electricity from a charging point provided the electricity is exclusively from renewable energy sources. Corporate entities can earn KWHU to compensate or reduce their emission burdens by providing products or services but not outright payment of fiat or crypto currency.

Platforms & Technology

Unlike Gold, KWHU attributed to the ledger of an account can be transported or transferred with ease for delivery anywhere computing & networking allows. This will require the development of specifically designed platforms, accounts, cards, encrypted storage devices, smartphone applications and facilitation by mobile service providers. Technology will need to be built for each of these possibilities and it would be the KWHU early adopters who would have to be the vanguard in these ventures. The standards & principles are quite simple and therefore several existing technologies can very easily be adapted for the purposes of KWHU. An intriguing possibility is the adaption of energy meters to automatically transmit to accounting ledgers the credit of KWHU immediately after the measurement of a transfer of kWh of electricity.

Community & Participants

The global share of electricity generated annually from renewable sources exceeds 9 PWh and therefore there will be no shortage of potential sources of kWh of electricity. Furthermore, the share of distributed electricity from renewable energy sources continues to increase thanks to the rapid and continuing proliferation of solar PV. It is more than sufficient at the early stages for house, C&I and community solar power generators to actively participate in the use of KWHU in their local community. The accounts and market place will be able to operate regardless of jurisdiction. As these small community clusters grow and interact with other communities we would be able to realise the objective of a global KWHU adoption.

The entire ecosystem of the KWHU would seek to aspire for greater distribution of wealth. While this cannot actively be controlled and nor should it be coerced, it should be the objective of the KWHU Community to ensure that all participants benefit from the ecosystem. In the context of greater social equity the products & services provided and the consensus price & value thereof is influenced by market forces & economic factors. There is a likelihood that initially the KWHU would circulate exclusively in certain sectors and jurisdictions, possibly predominantly in the renewable energy sector. Though, it is unlikely to be a hindrance to the growth of KWHU and nor is it necessary that KWHU dominate. Value is transferred by multiple currencies, commodities and indeed assets, several of which are constantly changing in value relative to each other. This essential economic reality is likely to have an impact on KWHU as well. But to the extent possible the objective is to strive towards a global consensus of price for common products & services in KWHU terms. This objective might be met with the supporting role of the KWHU Foundation.

Economy

A company or even a country can accumulate KWHU as is also true for any fiat currency. What is likely to happen to this accumulated KWHU? It can appreciate or depreciate in value in comparison to products & services but not relative to the kWh of electricity. The purchase of electricity may not be needed or cannot occur directly and therefore the entity is forced to use the KWHU on products & services. By selling oil for US Dollars the company or country has sold a commodity and accumulated US Dollars and thus no different than selling kWh of electricity for and accumulating KWHU. And just as the US Dollar, KWHU can also be used for purchase of products, services & assets. Thus, KWHU can also be used to purchase assets such as land, essentially KWHU can become an asset class rather than merely a form of exchange. Therefore, it is quite possible that accumulation of KWHU can be a store of value akin to accumulating gold provided of course as in the case of gold there is a counter-party willing to accept KWHU as payment.

Electricity is continuously generated by power plants. When kWh of electricity is delivered for the acceptance of KWHU the value of the kWh of electricity delivered is now held in terms of KWHU. The concern is that accumulation of KWHU will distort the value of KWHU relative to products & services, either inflating or deflating, and negatively impact transactions. However, it must be considered that at some point the KWHU would need to be spent for products & services and at some point inevitably for the purchase of electricity, thereby closing the loop by converting the KWHU back to kWh of electricity. Relying on the fact that energy can neither be created nor destroyed, in the case of KWHU the kWh of electricity simply converts to a storage of value until such time that the KWHU is paid once again for the kWh of electricity.

In an environment that is dominated by exchange of KWHU, the inherent differential in efficiency between the sources of electricity are likely to become apparent. This could also lead to having the effect of KWHU having an inflationary or deflationary trend when being converted to kWh of electricity. However, at this point in time, these arguments remain conjecture and a true state of affairs can only be understood at the point when KWHU is a dominant means of exchange. The differential in efficiency could also be another opportunity for arbitrary speculation, which must be closely monitored and corrected.