Energy as Commodity Money
Next: Tokens vs. Community Coins
Electrical Energy as Commodity Money
Electrical energy is one of the physical products that could act as the anchor for a virtual currency since everyone needs it.
In this option, the electric grid would replace the payment networks of today (to a degree) and blockchains (or some centralised, commonly accepted ledger) would handle the settlements.
Everyone with an energy producing facility, be it solar installation, wind power station or larger power plant would effectively be running a mint, producing money.
The currency would not be directly energy amount but futures of energy just like the food producing capacity of a co-operative was done in Community Currency. The amount of energy-backed money in circulation then would be the tokenised future energy generation capacity + energy currently stored in storage + capacity being currently on market.
Producers can only mint the amount of energy as they can produce for any given day/hour combination and the futures price will reflect the expected demand at that time. A producer would tokenise each hour capacity on the market to futureofkWh where the amount of fkWh depends on their reputation + expected demand.
Capacity that is very close, would probably be priced higher than capacity that is further away. Seasonal factors would affect as well. So capacity at high-demand hours and times (workweek day time, winter), the price would go up. When there is alot of production capacity (like in summer) and less demand, the price of kWh in terms of fkWh would go down.
If someone having fkWh for today, but not needing, they could exchange it for tokens with longer run-time and probably get more.
As you consume electricity, tokens from your wallets would be withdrawn in real time.
Your salary could be paid in this currency and you could pay your taxes in it as well.
The national grid operator is responsible for the operations of the grid and they need service providers that can either quickly shape their demand or sell extra capacity. They could also buy this capacity with fkWh currency. The grid operator is typically financed by taxes.
The extra energy would come from energy storages. Electricity can be stored in batteries, synthetic fuel, potential energy or any of the other methods discussed earlier in Energy Industry Structure. Storing energy also incurs quite large losses so the storage energy would have correspondingly higher price.
Demand peaks can be shaped with incentive schemes i.e, by buying capacity reduction (NegaWatts).
Usage
It’s possible to turn electricity into synthetic fuels (petrol, diesel, ammonium) through carbon (and nitrogen for ammonium) capture technologies and ship around globally with so called power-to-fuel technologies. Every country will be oil producing nation. If the transformation to electric drive in vehicles becomes too expensive due to the limited supply of rare earth metals (needed in batteries), use of synthetic fuels is an alternate method to move to a carbon neutral future without changing the existing user interface (i.e. continue using combustion engines but with the same carbon circulating).
Synthetic fuels are identical to the fossil fuels taken out of ground today with the exception that they lack extra pollutants like Sulphur, organic Chloride found in natural oil – i.e., they are cleaner. Modern chemical industries are based on fossil fuels today. Thus, everything that chemical industries make today, can be manufactured locally. This includes medicine, clothes, fuel, colorants, all plastic products etc. The production can also be automated. These factors will be covered more in posts on the ‘Unfactory’.
So, if I have fkWh tokens, I could use them and purchase anything that chemical industries make and have it manufactured nearby. The use the same fkWh tokens and have it delivered via self-driving vehicles. This eliminates long logistics chains, warehousing and waste. At least in theory.
Since production capacity is higher in summer when sun is shining, each fkWh token buys more energy. This makes manufacturing and product prices lower in summer. This means it makes sense to manufacture consumer durables – furniture, clothes, medicines, fuel for winter, protein powder at low energy price times. Same difference exists between day and night in prices to a small degree (there is less production capacity but in summer demand is much lower as well at least in countries where AC is not needed)
International Settlement
This does not work internationally. Since electricity grids are regional, it would be too easy for people to claim that they have lots of power in storage in faraway places without a way for recipient of testing it. Or an authoritarian government nearing collapse might order their relevant energy authorities just add numbers to the computers that keep record of energy balance.
A global clearing currency is needed.
It may work so that people in country A sell their fkWh using some global virtual currency like Bitcoin. This Bitcoin can then be used to purchase something from country B – either digital service or physical products. And in country B Bitcoin can again be used to purchase fkWhs.
This also reflects that fact that price of energy will be quite different in different parts of the world. In areas where there is ample sunshine or other energy sources (geothermal, nuclear), the price of kWh will be lower whereas elsewhere kWh price will be higher. An the price will fluctuate based on supply of intermittent sources and seasonal variances.