A while ago I blogged about a Policy Exchange event which had encouraged people to pitch energy policy ideas.  One of the ones I liked was of enabling trade in ‘Negawatts’, pitched by Dustin Benton from the Green Alliance.  This one takes a bit of background, so bear with me.

The idea of ‘Negawatt hours’, according to this article in the Economist came from Amory Lovins, who one day noticed a misprint of ‘megawatt hours’ and used it to name his idea for a theoretical unit of ‘avoided energy’  – energy which would have been consumed, but was avoided due to energy efficiency measures.  If I do not use a Megawatt hour of energy that I could have done, that can be called a Negawatt hour.   According to the Economist article, energy efficiency was saving more carbon for the US in 2014 than all the investment in renewables combined.   Further, Negawatts can help deal with one of the challenges with renewables until someone really sorts out solar and wind batteries, which is that these sources are  intermittent and not enough to cope with peak demand.  If people were incentivised to avoid using energy at peak times, it would reduce the demand for dirty energy and possibly the need for entire dirty power stations that are only kept because they are needed for the peaks.

Dustin Benton’s pitch was to enable consumers to sell their negawatts back to the grid.  By way of illustration, my family doesn’t watch football but most of the UK will watch a big match and put their kettle on at half-time.  That uses up all the renewables on the grid and more, so the grid tells the diesel generators to crank up.  If it just so happens that my family are enjoying a walk in the park with no crowds (everyone else is watching football), then the grid can use the energy I might otherwise have been using at home, and give me a little financial reward.

Making this work would depend on a lot of granular data collection and smart metering; and possibly on some quite tricky upfront calculations, like what the standard energy allowance should be before Negawatts could work.  But it could be quite fabulous.

Later, when I was wondering how to initiate  small-scale trading in a currency people don’t think about much in their daily lives, I imagined it being marketed as an ‘AirBnB for energy’.  I could see a very soft focus advert with a pair of people, where one is having a party and the other is reading a book by a sunny window.  The book-reader is selling her Negawatts so that the party hostess can switch on fairy lights and heat up some birthday cake.  Like AirBnB, it’s not really anything to do with sharing, it’s much more about micro-transactions – but I think the communal aspect, helping other people live their lives to the full, is something that would sell. People often don’t think that much about energy, but they think a lot about the things it provides – warmth, cooling, light, comfort, entertainment – and from those things we build up fun times, cosy homes, great shared experiences. An AirBnB for energy would bring people in by selling those experiences with a side order of cash benefit.

There are already companies starting to link the small-scale in energy, like:  Vanderbron in the Netherlands: https://vandebron.nl .  We are getting the technology in place to do much more with such very small transactions.  Then once a primary market in Negawatts is established, the geeks in the City can do their thing too and think of ways to sell Negawatt derivatives and goodness knows what else, and that will keep the high-rolling capitalists on board with the idea.  There is a bit of a conceptual jump involved with Negawatts  – but if the City can borrow shares it doesn’t have in order to buy them when prices fall, I think we should have the ingenuity to be able to trade Negawatts.