A new project called SolarCoin seeks to make investments in solar energy just a little bit more attractive for anyone who may be on the fence. It’s a brand new digital currency of the Bitcoin ilk whose creators are offering to disburse to anyone who can prove that they’ve generated solar electricity. Right now, each megawatt-hour of electricity that your solar panels pump into the grid will get you one SolarCoin.
The goal, they say, is very simple. “SolarCoin will help make more solar energy,” says currency founder Nick Gogert. “In economics, whatever has more money flowing through it generally gets amplified. Throwing SolarCoin at solar electricity producers is the goal.”
To that end, SolarCoin Foundation volunteers began verifying electricity production claims in a pilot program this January. A third party reads each applicant’s meter to determine the amount of coins granted. The coins are then disbursed from a reservoir of “pre-mined” coins that the foundation has on hand.
This feature is a major modification of the Bitcoin protocol and an example of how quickly digital currencies are evolving to fit new needs. With Bitcoin, every coin that will ever exist must be created by a public community of miners who contribute computing power to the task of securing and verifying Bitcoin transactions. Anyone may join at any time. With SolarCoin, however, more than 99 percent of the coins were created internally, before the project went public. This lets the foundation have almost total control over the supply. The remaining fraction of a percent out of the foundation’s hands goes to miners as incentives to maintain the SolarCoin payment network.
Gogerty, who has spent much of his life thinking about how social behaviors and economic forces determine one another, wants SolarCoin grants to one day become a powerful influence on people’s decisions about whether to go solar. But he expects it to happen in phases.
“The reality is these coins are going to be granted over 40 years,” he says. “The current community sees it as a reward and acknowledgement for good deeds done. The future community may say, wow, this is a very interesting financial incentive.”
Questions about SolarCoin’s viability
But how do digital currencies attain value in the first place? And how do people choose to use one digital currency versus another? Why would someone accept SolarCoin for payment when they could just take Bitcoin? It’s not like it solves any new technological conundrum the way Bitcoin did. The success of a project like SolarCoin depends entirely on the answers to these questions.
John Dolan,the SolarCoin Foundation’s chair, says the value of the currency will come simply from widespread adoption if it succeeds. To try to make this happen, they are treating SolarCoin as a brand.
“One kind of has to put oneself into the future, where digital currency—in our mind—is going to be ubiquitous. What it will then be is a question of what coin do you want to use,” says Dolan. “It’s much like, you are what kind of car you drive. Anybody who uses SolarCoins in the future, with that transaction is saying, ‘This is important to me,’ even if they’re not a generator. They can help that community effort by using SolarCoins.”
Bitcoin established this network effect, in large part, by attracting a core community of passionate and vocal early adopters. In order to succeed, SolarCoin will have to do the same.
This was a major factor in the founders’ decision to go with solar instead of other alternative energy sources. With the cost of photovoltaic electricity production going down (last week, Goldman Sachs predicted that solar electricity will soon be able to compete with fossil fuels and will reach market parity by 2033) and the federal government providing tax incentives to those who install them, the future is looking rosy for solar.
Some of those getting in on the game are large solar electricity farms. But individuals have also been getting into the game. Lisa Shock, who lives in Phoenix, Ariz., was the first person to have her electricity output verified by the SolarCoin Foundation.
“I have read about Bitcoin over the years, but never really got involved,” she says. “I have friends who have been mining and trading for several years, and I guess that I was always a little skeptical about investing serious amounts of wealth into it. SolarCoin appealed to me because I could get coins for energy that my system had already produced…and the goal of encouraging more people to go solar aligns with my personal values.”
If digital currencies are to become brands in the future, then it will be people like Shock who do a lot of the marketing for them.
“I know that more people certainly need to hear about it, especially those who already generate solar energy,” she says.
[Morgan E. Peck]