---
# System prepended metadata

title: HIP XX - ENERGY

---

# HIP-XX: Energy Subnetwork

Author(s): [@frahlg](https://github.com/frahlg), [@jthiller](https://github.com/jthiller), [@abhay](https://github.com/abhay), [@T0bias0lss0n](https://github.com/h0bb3), [@leitet](https://github.com/leitet), [@VIKOLO](https://github.com/VIKOLO) 
Start Date: [Today's Date]
Category: Economic, Technical
Original HIP PR: [Leave blank for now]
Tracking Issue: [Leave blank for now]
Vote Requirements: HNT Holders

# Overview
This HIP proposes the creation of ENERGY, a new subnetwork within the Helium ecosystem. This network rewards users who participate in solar power production and battery energy storage. The network aims to collect data from, and offer control of connected solar power and battery resources.

The ENERGY subnetwork is designed to create significant value for the entire Helium ecosystem:

1. **Dual Mining for Existing Compatible Hotspots**
   Existing compatible Helium Hotspots can be upgraded to participate in the ENERGY network and earn both IOT and ENERGY rewards.
   
2. **Utilization of the IOT Network**
   The ENERGY network will transfer supporting sensor data over the existing IOT infrastructure. This creates a substantial new use case for the IOT network through increased network activity.

3. **Increased DC Burn**
   Energy management and grid stabilization services provided by the ENERGY network will drive significant Data Credit (DC) burn. This increased DC burn directly benefits all HNT holders by potentially increasing HNT value through the burn-and-mint equilibrium.
   
4. **Expansion of Helium**
    By entering the rapidly growing renewable energy sector, Helium expands its utility and potential market reach attracting new participants and investors.

5. **Sustainability**
    The ENERGY network aligns Helium with global sustainability goals, potentially attracting environmentally conscious users and partners. This could open up new opportunities for grants, partnerships, and positive public relations for Helium.

The ENERGY subnetwork is a practical expansion for Helium. It builds on the existing network while tapping into the growing renewable energy market, solving the real world problems of the acceleration renewable power. This addition will increase IOT network usage, drive more Data Credit burn, and give Hotspot operators new ways to earn.

## The Problem
Global energy is shifting from centralized production, dominated by large-scale power plants, to a decentralized model where energy is produced closer to where it is consumed, with solar leading the charge. 

However, existing grid infrastructure, designed for centralized production, struggles to effectively integrate this dispersed and variable power. This is being addressed via coordinating Decentralized Energy Resources (DERs), such as electric vehicles, more responsive power demand technology, and energy storage systems. However, no system exists to adequately incentivize and support widespread DER coordination at a homeowner level.

There are already institutional markets for power management–often called *Demand and Response* or *Ancillary Services*. However, these markets are generally unavailable to homeowners, because each individual energy resource is too small to qualify for participation. When these gated systems do permit participation, they disproportionately reward the centralized entities which manage them.

### The Solution/Opportunity
The ENERGY subnetwork seeks to incentivize and reward the efficient grid integration of renewable energy production. With an ENERGY-capable gateway, users will be able to onboard energy resources from a variety of manufacturers, activating and rewarding a network of decentralized power generation, responsive energy storage, and grid management. 

Initially we're connecting small scale Solar Photovoltaic (PV) systems and Batteries. Batteries are incredibly effective at offsetting the variability of weather-dependent renewable energy production and also play a key role in stabilizing the power grid in real time.

These *Decentralized Energy Resources* (DER) would be coordinated in what is known as a *Virtual Power Plant* (VPP), a collection of disparate small- to medium-scale DERs. These can be energy generation resources, loads, or energy storage. For example, Solar PV systems, electric pool heaters, and batteries. These units are coordinated, virtually, to function as a single power plant.

At scale, the VPP that exists via the Helium ENERGY Network may be leased (purchased via Data Credits) by Service Providers and offered to Clients such as energy companies, grid operators, or aggregators in order to balance grid supply or demand (Energy Services). Use of these resources would reward individual *DER Hosts* with ENERGY token.

### Subnetwork Goal
The primary objective is to create an ecosystem and incentive structure that promotes DER deployment and connects DER's to enhance their intelligence and flexibility. This is critical for achieving affordable and abundant renewable energy within the power system. Additionally, the subnetwork aims to capture opportunities in the global demand for energy data and a more intelligent ancillary services market, which is essential for grid stability as renewable energy integration increases.

Key objectives of the ENERGY subnetwork:
* **Establish a Network of Connected DERs:** Build the People’s Virtual Power Plant by creating a robust network of Distributed Energy Resources (DERs).
* **Stabilize the Power Grid:** Ensure grid stability as the integration of renewable energy sources increases.
* **Empower Homeowners:** Enable homeowners to participate in and benefit from energy markets traditionally dominated by centralized energy companies.

### Market Potential
The global market for ancillary services had a capitalization of over $9 billion in 2023, expected to grow to $18 billion by 2032. In the US, the Power Ancillary Service Market was valued at $6.09 billion in 2022 and is projected to reach $8.79 billion by 2028, with a compound annual growth rate of 6.14%. Today, there are no services available for aggregating a massive amount of small DER’s, globally and with an open and permissionless protocol. Additionally, the production of energy data represents a new market beyond traditional energy sales, providing further compensation opportunities for participants of the ENERGY network.


## Economic Overview

There are a number of real world physical entities that comprise the network and perform the following functional and economic roles:

| Name                     | Functional Role                                                                                                                                                                                          | Economic Role                                                                                                                                                                                                    |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| DER Host                 | Operates a connected DER through an ENERGY-capable Gateway including compatible IOT Hotspots (Dual Mining).                                                                                                                                                      | Receives ENERGY rewards for sharing data from DER. Stakes ENERGY to qualify DERs for data and VPP service usage and receives ENERGY rewards for participating with controllable DER in the VPP (Energy services). |                                                                                                           |
| Service Provider         | Promotes and enables data and VPP services to Clients. Aggregates DERs for market optimizations and guarantees technical requirements. Srcful AB is the first service provider at ENERGY network launch. | Receives payments for data and VPP services from Clients, burns HNT into Data Credits and settles data usage with DER Hosts. Stakes ENERGY to receive % of rewards from Energy Emissions contract.               |
| Client                   | Energy Companies, Grid Operators, or Aggregators that use the ENERGY network. Clients act in accordance with the country's Transmission System Operator.                                           | Pays Service Providers to access data and/or the right to control DERs in the ENERGY network for VPP services.                                                                                                          |
| Gateway Vendors          | Builds, sells and supports ENERGY-capable gateways. This includes firmware upgrades for existing Helium Hotspots to enable ENERGY functionality (Dual Mining).                                                                                                                                                      | Stakes ENERGY to access an NFT to be accepted to operate on the ENERGY network.                                                                                                                                          |
| Sensors and Support Host | Provides needed high-quality data (e.g Frequency meters) to support the VPP, and special reward programs.                                                                                                            | Receives ENERGY mining rewards for verified sensor data or validation and support of the ENERGY network.                                                                                                                |
| Oracles                  | Relay data to L1 emission contract. Calculate incentive points for service providers and sensor hosts.                                                                                                   | Stakes ENERGY. Receive % of rewards from emissions contract                                                                                                                                                      |



To operate on the network, Service Providers and Gateway Vendors must control a respective NFT. Acquiring this NFT requires Gateway Vendors and Service Providers to:

1. Gateway Vendors must stake 50M ENERGY, and new Service Providers must stake 500M ENERGY.
1. Obtain ENERGY governance approval (Srcful AB will be the first Service Provider when the network launches).


## Token Allocation
Allocation of ENERGY tokens prioritizes emission to the community of DER hosts for the data and energy services they provide. A max supply of 250B ENERGY tokens is enforced following the mechanics deployed on the IOT and MOBILE subnetworks. 190B tokens are dedicated to emissions mainly as rewards for DER hosts including a one time issuance of 1B tokens to the Operations Fund. 60B tokens are dedicated as emissions for initial funding to investors and founders of the project.

### Emissions Curve

There will be a max supply of 250B ENERGY.

The proposal is for halvings of ENERGY issuance to occur every 2 years, with the first halvening aligned with the HNT issuance halvening in August 2027. This alignment necessitates an initial period of approximately 3 years from the ENERGY token generation event to the first halvening, followed by regular 2-year halvening intervals thereafter.

We propose that 60B ENERGY be reserved for providing startup capital for Srcful AB and investors, required to launch the ENERGY network and develop the technical and operational infrastructure required to build the ENERGY subnetwork. The pool will have a lockup of a minimum of 12 months after token emission date. 190B ENERGY is emitted mainly as community rewards but also for the continued operations of the network. Community rewards are divided into two parts, the baseline rewards for participating in the network and the service rewards for participating in ENERGY services. The baseline rewards will receive 15% of emitted ENERGY and the service rewards will receive 45%. Services are rewarded to reflect the respective DC burn of the DER host, remaining tokens are burned. We use net emissions to replenish burned tokens into service rewards using a 30 day average of burned tokens with a cap. The cap will initially be set to 1% of current emissions but will likely be subject to change.

We propose using one pool for buffering issued baseline rewards:

**Network growth pool** acts as a resource for growing the network using direct incentives to DER hosts. This pool will receive tokens from the baseline DER host rewards inversely proportional to the total ENERGY network DC burn as long as this is less than $100 000 USD. The proportion allocated to the pool is calculated by:

Network&nbsp;Growth&nbsp;Pool&nbsp;Proportion =&nbsp;0.5&nbsp;&minus;&nbsp;min(0.5,&nbsp;0.5&nbsp;*&nbsp;Total&nbsp;ENERGY&nbsp;Network&nbsp;DC&nbsp;burn&nbsp;/&nbsp;1e10)

The motivation for the network growth pool is to stimulate growth of the network in general and to build critical amounts of DERs in areas that will unlock service contracts. DER hosts are rewarded from the pool for participating as a beta tester, for DERs located in hexes whitelisted for services, and to provide current IOT Hotspot hosts one free DER onboarding for a limited time. Other future initiatives with rewards from the network growth pool will be voted on based on suggestions from the community.


For clarity, the community emission schedule is as follows:

| Year | ENERGY at the start of the year (M) | ENERGY minted (M) | DER host Baseline Rewards | DER host Service Contract Pool | Sensor hosts | Service Providers | Oracles | Operations Fund | veENERGY stakers |
|------|-------------------------------------|-------------------|---------------------------|-------------------------------|--------------|-------------------|---------|-----------------|------------------|
| 1 (Stub + 2025) | 1&nbsp;000 | 47&nbsp;250 | 15 % | 45 % | 5 %  | 20 %  | 4 %  | 5 % | 6 % |
| 2 (2026)   | 48&nbsp;250                     | 47&nbsp;250   | 15 %                    | 45 %                           | 5 %           | 20 %               | 4 %      | 5 %              | 6 %               |
| 3 (2027)   | 95&nbsp;500                     | 23&nbsp;625   | 15 %                        | 45 %                           | 5 %           | 20 %               | 4 %      | 5 %              | 6 %               |
| 4 (2028)   | 119&nbsp;125                    | 23&nbsp;625            | 15 %                        | 45 %                           | 5 %           | 20 %               | 4 %      | 5 %              | 6 %               |
| 5 (2029)   | 142&nbsp;750                            | 11&nbsp;812.5          | 15 %                        | 45 %                           | 5 %           | 20 %               | 4 %      | 5 %              | 6 %               |
| 6 (2030)   | 154&nbsp;562.5                          | 11&nbsp;812.5          | 15 %                        | 45 %                           | 5 %           | 20 %               | 4 %      | 5 %              | 6 %               |
| 7 (2031)   | 166&nbsp;375                            | 5&nbsp;906.25          | 15 %                        | 45 %                           | 5 %           | 20 %               | 4 %      | 5 %              | 6 %               |
| …    |                                     |                   |                           |                               |              |                   |         |                 |                  |


Below is a high level overview of the reward flow from the emission curve to economic participants of the subnetwork:

```mermaid
%%{init: {'theme': 'neutral'}}%%
flowchart LR
    HETEmissions[HET Emissions Contract\n190B ENERGY]:::dashed

    OperationsFund[Operations Fund]:::dashed
    veENERGYStakers[veENERGY Stakers]:::dashed
    RewardOrBurn{Reward\nor\nBurn}:::standard
    NetworkGrowthPool[Network Growth Pool]:::dashed
    ServiceProviders[Service Providers]:::standard
    Oracles[Oracles]:::standard
    SensorsSupportHosts[Sensors & Support Hosts]:::standard
    DERHosts[DER Hosts]:::standard
    BaselineRewards{Calculate\nNGPP}:::standard
    NetEmissions[Net Emissions]:::dashed
    
    classDef dashed fill:#ffffff,stroke:#000000,stroke-dasharray: 5 5
    classDef standard fill:#ffffff,stroke:#000000

    HETEmissions -->|5%|OperationsFund
    HETEmissions -->|6%|veENERGYStakers
    HETEmissions -->|45%|RewardOrBurn
    
    HETEmissions -->|15%|BaselineRewards
    
    BaselineRewards --> |100 - NGPP%\nBaseline rewards|DERHosts
    BaselineRewards -->|NGPP%|NetworkGrowthPool
    
    NetworkGrowthPool -- Rewards to beta testers and\nDERs located in hexes whitelisted for services --> DERHosts

    HETEmissions -->|20%|ServiceProviders
    HETEmissions -->|5%|SensorsSupportHosts
    HETEmissions -->|4%|Oracles
    SensorsSupportHosts --> |Unused tokens|RewardOrBurn

    NetEmissions --> |min#40;avg#40;30 day burn#41;, cap#41;|RewardOrBurn 


    RewardOrBurn -->|All fulfilled service contracts are rewarded according\n to their respective DC burn Remaining tokens are burned|DERHosts



```


### Baseline Rewards
The ENERGY subnetwork proposes an incentive system designed to optimize the participation and contribution of DERs. This approach aims to strengthen and connect more DERs, helping to integrate renewable energy into the grid effectively. The ENERGY subnetwork reward structure draws inspiration from DIMO's successful [Baseline Issuance model](https://docs.dimo.zone/governance/dip2), and rewards DERs for their consistent connectivity and high quality contribution to the network. This structured reward system is crucial for building a reliable data foundation that enables in-depth knowledge of the grid and new service proposals. 

Baseline rewards for an online DER are defined in three buckets based on the following principles:

#### Principle 1: Uptime
Reward DERs that have been part of the network for a long time;

| Level | Definition                     | Score |
| ----- | ------------------------------ | ----- |
| 1     | 3-20 weeks connected           | 100   |
| 2     | 21-35 weeks connected          | 200   |
| 3     | 36 or more weeks connected     | 300   |

#### Principle 2: Quality
Incentivize an evenly distributed and continuous data connection; which tells a fuller story of DER behavior and performance. A given time period with data points is subdivided into several levels. If there is data across a whole level the score for that level is used. The score is proportionate to the division of the level. For an hour time period the first division is 2 (data every half hour), the next 2 (data every quarter), the next 3 (data every 5 min), the next 5 (data every min), the next 2 (data every 30 seconds). This gives the following:

| Level | Definition                 | Score |
| ----- | -------------------------- | ----- |
| 1     | Data in each 30 min period | 10    |
| 2     | Data in each 15 min period | 20    |
| 3     | Data in each 5 min period  | 60    |
| 4     | Data in each 1 min period  | 300   |
| 5     | Data in each 30 sec period | 600   |


#### Principle 3: Value
Incentivize DERs who contribute with marketable services such as credible and rapidly controllable resources;
| Level | Definition                                       | Score |
| ----- | ------------------------------------------------ | ----- |
| 1     | Read DER Data                                    | 100   |
| 2     | Read Validated DER Data                          | 300   |
| 3     | Read Validated DER Data + Control Qualified DERs | 600   |


##### Validation and Qualification Mechanism
Validation and Qualification is offered by the Service Provider to DERs that want to participate in Energy Services. Validation is achieved by the DER Host staking $10 USD worth of ENERGY tokens per kW available power for 45 days with a 10 day un-staking period. During staking the DER is subject to additional Service Provider audits and tests. The DER Host must comply with requirements and provide needed information promptly. Failure to comply with the requirements the staked ENERGY tokens will be forfeited and burned. A validated and controlable DER can be Qualified by the Service Provider. A Qualified DER can be opted in to be available for energy services by the DER Host.

#### Calculation
Each DER datapoint gets a score based on the sum of the baseline reward principles for a given reward period, e.g. 1h. The scores are summarized for a given period. When the sum of scores for each DER is calculated, each DER is rewarded ENERGY tokens based on its fraction of the total score and the token distribution level for that period.

Example: A DER has been connected to the network for 5 weeks (Uptime Level 1). During the reward epoch of one hour the DER has provided 500 data points, but it had some connection problem for two minutes so there is no data for two consecutive minutes (Quality Level 3). The DER has not been validated (Value Level 1). This gives a score of 500 x (100 + 60 + 100) = 130 000

The total scores for the hour is the sum of all DER scores, e.g. 2&nbsp;000&nbsp;000 and the DER’s part of this is then 130&nbsp;000&nbsp;/&nbsp;2&nbsp;000&nbsp;000&nbsp;=&nbsp;0.065. The amount of energy tokens issued to the DER is then 6.5% of the DER Host rewards emissions.

### Rewards for Energy Services

Ancillary services from DERs are services that stabilize the power grid by rapidly adjusting to changes in electricity demand and supply. They ensure the grid maintains a consistent frequency (usually 50 or 60 Hz). As more renewable energy and distributed resources are integrated, the demand for these reserves increases because grid operators rely on them to quickly balance the system in the operating hour, creating a market for those capable of providing these services.

The demand for controllable resources typically comes from the respective country's Transmission System Operator, responsible for the stability of the electricity grid during the operating hour. Clients (energy companies, grid operators, aggregators) act, directly or indirectly, on behalf of the Transmission System Operator. This market differs from the more traditional energy market, focusing specifically on grid stability rather than bulk energy production and consumption.

DER Hosts opts DERs into the program after a successful Qualification (Value principle Level 3) by continued staking. A DER that does not continue to fulfill requirements of the Qualification will lose the stake and the ENERGY tokens staked are forfeited and burned, providing an incentive for DER Hosts to maintain DER availability from Qualification and market bidding to the fulfillment of the Client contract.

Clients receive staked, qualified, controllable DERs from the Service Provider and bid these into the market (typically one day in advance). The winning bids generated revenue are allocated from the Service Contract Pool (via HNT DC burn mechanism) to the DER Hosts who have staked controllable DERs (Value principle Level 3).

#### How it works for Battery storage
Batteries are flexible and can help regulate the grid by both consumption and production of energy, as an example; a battery with 0 % charge can only charge from the grid, and a battery with 100 % can only discharge power to the grid - in order to be flexible both ways the state of charge needs to be in the mid range. Batteries are not affected by weather conditions or time of day and are as such a more valuable resource for the network.

To participate with a battery in Energy services, the DER Host leases the battery to the Service Provider during the staking period. When participating with a battery in these services, DER Hosts will receive the state of charge (kW) schedule for the battery based on market bids, meaning the full capacity of the battery cannot be used to store generated solar energy during the staking period as it needs to have a state of charge being able to both discharge and charge power from the grid. Even if there is no need to discharge or charge power, the DER host still get rewards every hour just for being a backup.

Under normal grid conditions:
1. DER Hosts will receive a state of charge schedule for the battery based on market bids.
2. The Service Provider will manage the battery's charge and discharge to support grid stability.
3. A portion of the battery capacity can be reserved for emergency use by the homeowner (handled via staking).

During a power outage:
1. The DER Host regains full control of their battery for home backup purposes.
2. This emergency use does not violate staking rules or affect rewards.


#### How it works for Solar PV
Solar PV systems can contribute to frequency reserves by decreasing (curtailing) their production based on grid needs. Unlike batteries, solar panels can not store energy directly but can temporarily reduce output during production hours. Typically, this happens for a maximum of 20 minutes and occurs a few times per year, but compensation is provided hourly since the value lies in being a controllable, connected curtailment reserve. There can also be other reasons for decreasing the power production from PV such as negative prices on the electricity market (in this case you’re paying to deliver energy to the grid).


### Network Rates & Fees
#### Gateway Onboarding
Gateways can manage multiple DERs on a local network. Under a gateway, each DER is onboarded individually. In many cases this will be just one inverter for a household, but as the network evolves, additional entities may be onboarded – such as pool heaters, batteries, or even bitcoin miners.

The fee for onboarding an ENERGY gateway is set at $1 USD, paid using the ENERGY token and the fee for onboarding one DER is set at $20 USD, paid using the ENERGY token.

The location of the entity is defined as part of the gateway onboarding. There is no separate location assertion fee. DERs are linked to the gateway by an on-chain mechanism.

Existing Hotspot owners (with a compatible dual mining Hotspot) on the IOT network will be granted one free ENERGY gateway onboard with one free DER onboarding within the first 3 months after dual mining launch.

### Network Rates
At the start, usage of the network is divided into two main buckets, energy data and ancillary services. Usage across all buckets is recorded by network oracles and rewarded to DER Hosts at the end of each epoch. Access to data and DERs for ancillary services is paid using Data Credits derived from HNT. Rewards are allocated to DER Hosts in ENERGY tokens. DER Hosts are eligible for rewards in both buckets simultaneously.

#### Energy Data
Energy data is priced at 1 DC per data point. This data is provided at frequencies of up to one data point per second. Typically, data costs from utility meters (which only measures the amount of energy) are generally billed at about $2.60 USD/month with a transmission rate of one data point per hour. DERs, however, can send more data points more frequently. The ENERGY network prices the data cost for a single DER significantly lower rate than the base price for what a utility company is paying.

| Frequency    | Data Points (DC) /Day | DC per Data Point | 30 Day Cost (USD) |
|--------------|-----------------------|-------------------|--------------------|
| Every Hour   | 24                    | 1                 | $0.0072            |
| Every Minute | 1&nbsp;440            | 1                 | $0.432              |
| Every Second | 86&nbsp;400           | 1                 | $25.92              |



#### Ancillary Services
Ancillary services do not have a fixed price; rather, their prices are determined by the open market marginal pricing each hour, depending on the supply size and the minimum bids allowed by the resources comprising the supply. 

Clients pay the Service Provider for the right to control an aggregation of DERs from the network. The Service Provider pays at least 80% to the DER hosts participating in the service by burning HNT into Data Credits. Service provider may retain 20% as a service fee.

In the years 2023-2024, the average price across several European and US markets ranges from $10-40 USD per hour for a portfolio of 1 MW controllable resources. As a rough example of the historical market, a standard household with a 10 kW battery (a typical battery installation) could range between $2.4 - $9.6 per day ($876 - $3504 per year), equivalent to 240 000 - 960 000 data credits (DC) burn per day. There are already well known services available such as the [Tesla Demand Side Grid Support](https://www.tesla.com/support/energy/virtual-power-plant/dsgs) that compensates battery owners with up to $350 for a year. The ENERGY network rewards will be equivalent or higher depending on region. 

Solar PV systems are only eligible for curtailment during daylight hours with safety margins depending on the weather, making the reward significantly lower than for systems including batteries.

Example of a 24-hour delivery period of aggregated DERs with a combined power of 1 MW (equivalent to 100 average-sized DERs for a household) in a European country with prices as of Q2 2024:

| Type of DER | Daily availability | Controllable resources in MW | Daily price in $  | Daily price(DC) | Monthly price(USD) |
|-------------|--------------------|------------------------------|-------------------|-----------------|--------------------|
| Batteries   | 24&nbsp;h               | 1                            | $1&nbsp;000            | 100&nbsp;000&nbsp;000     | $30&nbsp;000           |
| Solar PVs   | ~ 8&nbsp;h              | 1                            | $100              | 10&nbsp;000&nbsp;000      | $3&nbsp;000              |


## Oracle Operations for the ENERGY Subnetwork

Oracles within the ENERGY subnetwork ensures data integrity, pricing accuracy, and reward distribution across DERs. Key Functions of ENERGY Oracles:

* Gather and process market data to update pricing in given periods, reflecting changes in supply and demand, regional pricing variations, and emergency energy needs. This ensures that all transactions within the VPP are conducted at fair market rates, maximizing returns for DER hosts and minimizing costs for Clients.
* Calculate and distribute rewards to DER hosts based on the baseline rewards.

# Rationale
As decentralized physical infrastructure has risen, token incentives are a path forward when it comes to coordinating the deployment of physical resources. Solar and battery storage, as a residential asset class, will benefit from the people-powered growth and management that comes with web3.

Solar PV deployments show no signs of slowing, and the energy they produce can only be managed at the production source. In order to make solar energy work on a global scale, utilities and people need a simple way to communicate and coordinate. Given the funds trading hands at an industrial scale, it stands to reason that an incentive should be passed to the small-scale individuals that make these larger systems work.

## The Power of Decentralized Physical Infrastructure Networks

Decentralized Physical Infrastructure Networks (DePIN) represent a new paradigm in building and managing critical infrastructure. By leveraging blockchain technology and token incentives, DePIN enables the creation of community-owned networks that are more resilient, cost-effective, and adaptable than traditional centralized systems.

### Why the DePIN Approach Makes Sense for Energy

The energy sector is undergoing a rapid transformation towards decentralization, driven by the proliferation of small-scale renewable energy resources. There needs to be an effective way of coordinating the vast number of small energy resources. By leveraging the community with already open hardware platforms, and coordinating current and unforeseen products, we can build a more cost effective, permissionless, and transparent energy system than options available today. 

The decentralization of the energy sector is a disruptive movement and we need technology that empowers people to be the stakeholders and builders of this movement, not just bystanders.

The energy system is already a decentralized network that functions solely because there is a coordination of both consumption and production that is always in balance. However it is rapidly growing and needs are outpacing what’s possible with existing tools. We believe that this coordination–built upon a decentralized and transparent protocol where the people participating are the stakeholders–can solve this problem. 

One example: In Germany there is now the possibility of installing small scale solar PV that can be plugged directly into your wall socket (such as balcony solar). Bringing solutions like this to scale is a global energy solution, but there are currently no effective incentive mechanisms to get these resources coordinated in the traditional markets for small scale PV or batteries deployment. The ENERGY subnetwork will incentivize and reward individuals for addressing global power needs. 

This shift presents both challenges and opportunities:

- **Coordination of Distributed Energy Resources**: There is a need for an effective way to coordinate the vast number of small energy resources. The DePIN model, with its community-driven approach, offers a solution that is more cost-effective, permissionless, and transparent than traditional centralized systems.
- **Empowering Stakeholders**: The decentralization of the energy sector is a disruptive movement. DePIN technology empowers individuals to be active stakeholders and builders in this movement, rather than passive bystanders.
- **Balancing Supply and Demand**: While the energy system is inherently decentralized in terms of consumption and now more increasingly reneawable production, its rapid growth is outpacing the capabilities of existing coordination tools. A decentralized and transparent protocol, where participants are stakeholders, can address this coordination challenge.
- **Incentivizing Small-Scale Solutions**: Consider the example of "balcony solar" in Germany, where small-scale solar PV can be plugged directly into a wall socket. While such solutions have potential for global energy transformation, traditional markets lack effective incentive mechanisms to coordinate these small-scale resources. The ENERGY subnetwork, following the DePIN model, will provide the necessary incentives and rewards for individuals to contribute to addressing global power needs.

### Why Helium Makes Sense for ENERGY

The Helium Foundation acts as an established ecosystem for wireless DePIN, and by aligning a new subnetwork ENERGY it can effectively grow the pie so the whole Helium ecosystem gains value. 

By being able to partner with the existing community of builders it’s a clear win for the whole ecosystem if subnetworks with a strong demand and use case are added. There are already hundreds of thousands Hotspots deployed in the world that can be utilized for the ENERGY network with a software update. This creates not only an opportunity for quicker growth of the ENERGY network, but also new incentives for those who are already operating a Helium Hotspot and have renewable energy production in their home. We see this as the natural evolution Helium ethos - building people-powered critical and decentralized infrastructure.

The ENERGY network will also help strengthen the IOT network as the software for reading and controlling DERs is running on the same Hotspot. This means a broader buildout of the IOT coverage to regions beyond highly populated areas with existing coverage. There will also be a need for sensors, such as certified energy meters, sensors for measuring state of the grid such as frequency and voltage and solar lux meters. These sensors will be utilizing the Helium IOT, creating a stronger demand for IOT data. One important aspect is also the anti-gaming perspective: when a new subnetwork is created we can leverage both the ENERGY and IOT network for cross-validation. It is essential that the physical location is correct - and both networks benefit from the other’s validation. For instance, solar panels can be validated both by sensor data (such as energy meters running on Helium IOT) and satellite data where solar panels can be seen from space. As the Helium Hotspot is utilizing the same cryptographic chip for both networks it will be yet another layer of validation added that both networks can leverage from.

Applying the governance structure of the Helium community to power systems will increase the numbers of those involved in the influence and buildout of yet another very critical part of our infrastructure. Communication is essential for both sensors and people, but electrical energy is at the core of a modern society. Now is the time to be part of the start in the shift to a new model that is operated by the people - for the people.

## Definitions
* [Decentralized/Distributed Energy Resource (DER)](https://en.wikipedia.org/wiki/Distributed_generation) - Electrical generation and storage performed by a variety of small, grid-connected or distribution system-connected devices.
* [Photovoltaic (PV)](https://en.wikipedia.org/wiki/Photovoltaics) - The conversion of light into electricity using semiconducting materials. Typically solar cells, which generate electrical power.
* [Ancillary Services](https://en.wikipedia.org/wiki/Ancillary_services_(electric_power)) - Services necessary to support the transmission of electric power from generators to consumers.
* [Virtual Power Plant (VPP)](https://en.wikipedia.org/wiki/Virtual_power_plant) - A system that integrates multiple, possibly heterogeneous, power sources to provide grid ancillary services (and grid power).
