The convergence of AI's electricity demand, aging grids and maturing crypto incentives has created an inflection point for decentralized energy, DePIN's most consequential real-world application yet. Crypto decentralized compute and connectivity, now energy represents the third and most vital physical infrastructure layer to fall under programmatic coordination. The macro setup supports this: global data center electricity consumption hit 415 terawatt-hours last year and is projected to double by 2030, yet interconnection queues are frozen with over 700 gigawatts of projects waiting to connect, and only ~20% of solar proposals ever make it online.

From such gaps emerge projects like Daylight, Starpower, and Plural Energy, who are deploying tokenized incentives to coordinate distributed solar, batteries, and smart appliances into virtual power plants that can bypass legacy bottlenecks, unlock stranded renewables and turn households into DeFi-linked market participants. The market opportunity is in hundreds of gigawatts and billions in deferred transmission spending; catalysts include the current regulatory environment, and the simple economic imperative that local generation plus battery storage now delivers power cheaper than centralized fossil fuel plants. This article maps the structural shift in how we build, operate and secure the modern grid.

The global electric grid is cracking under the weight of demands it was never initially designed to handle. Data centers, now the fastest-growing industrial load, consumed roughly 415 terawatt-hours of electricity last year, a number projected to surge toward 945 terawatt-hours by decade's end as AI training and inference workloads proliferate (IEA 2025 projections). The United States alone consumed 180 terawatt-hours in 2024 and face another 240 terawatt-hours of incremental load by 2030. This explosion collides with a transmission system that has barely expanded: just 888 miles of high-voltage lines were built across the entire country in 2024 (July 2025 FERC update), well below the required 10,000 miles to accommodate projected growth. The gap is widening in real time as 2025 battery storage deployments are on track to nearly double to 18.2 GW, while North American virtual power plant capacity has already reached 37.5 GW across 1,940 deployments. Yet interconnection queues remain frozen, with more than 1,000 GW of proposed projects across 42 tracked states still waiting for grid access. Roughly three-quarters of this backlog consists of solar, wind, battery, and hybrid projects. Data was pulled from Grid8, the most reliable real-time interconnection dashboard found.

The waiting list to connect new power projects to the grid now totals more than twice the U.S.'s existing grid capacity, with the vast majority made up of planned solar, wind, and battery projects. Typical queue wait times now surpass five years, and about 20% of applications ever get completed long-term. The grid’s hub-and-spoke architecture, engineered for one-way flows from massive coal and nuclear plants, cannot efficiently absorb millions of rooftop solar panels, bidirectional EV chargers, and behind-the-meter batteries. Geopolitical fragility compounds the problem: transformer lead times have stretched beyond 12 months and prices have quadrupled, while foreign entity of concern restrictions threaten to disqualify Chinese components from federal subsidies.

Wholesale electricity costs have actually fallen, with top-performing U.S. projects achieving prices as low as $38 per megawatt-hour while most new utility-scale solar contracts nationwide fall within a $38 to $78 per megawatt-hour range. But retail delivery prices keep climbing as utility companies pass on the costs of expensive grid projects to customers, making a sort-of invisible infrastructure crisis: abundant cheap generation stranded behind bureaucratic, capital-intensive, and politically vulnerable transmission networks. Just as crypto's first wave decentralized information flows and its second wave decentralized compute capacity, its third wave must now decentralize the physical production and distribution of energy itself.

Crypto has already proven it can coordinate physical hardware at scale through token incentives. Akash Network demonstrated that idle GPU capacity in data centers and edge locations could be aggregated into a decentralized cloud offering 79% GPU utilization and $9,000 in daily network revenue by late 2025, with total network spend surpassing $1 million and undercutting AWS and Google Compute pricing by matching AI workloads with underused silicon. In Helium’s case, over 380,000 people have deployed radio hotspots, with more than 98,000 providing 5G coverage, rewarded in MOBILE tokens and offloading 2.72 petabytes of data in a single quarter—creating a wireless network that competes with traditional carriers. Filecoin operationalized the model for storage, growing to over 11 exbibytes of capacity as node operators stake FIL to guarantee data availability and clients pay in programmable, verifiable deals. Bittensor is wiring idle GPUs into a global, token-governed brain with its halving confirmed for December 2025, tightening emissions and further spotlighting TAO’s role as scarce AI fuel.

The economic principle across these networks is consistent: tokenized rewards bootstrap supply, cryptographic proofs verify performance, and on-chain settlement removes intermediaries. Participants earn by provably delivering physical services such as compute cycles, radio coverage, disk space. The leap to energy is logical and necessary. Distributed energy resources like rooftop solar, home batteries, smart thermostats, EV chargers are already deployed in millions of American homes, each representing a latent node in a potential network. What they lack is coordination: a way to discover price signals, settle transactions, and aggregate into grid-scale capacity without routing through utility monopolies and ISO bureaucracies.

DePIN energy applies that playbook: devices register on-chain identities, stream telemetry through oracles, earn tokens for grid services, and participate in DAO-governed markets. Take Daylight for example. Daylight is a decentralized energy protocol that provides residential solar-plus-battery subscriptions, rewarding households with tokens for exporting stored power to the grid. Essentially, Helium is to telecom what Daylight and its peers aim to be for power. Just how Helium coordinates bandwidth and Akash coordinates compute, the next wave of DePIN protocols is coordinating electrons.

U.S. electricity demand, which grew at a sluggish 0.5% annually for two decades, is accelerating to 2.3% in 2025 and will average over 2% through 2026—the fastest sustained growth since the 1990s. The driver of this renaissance is AI infrastructure needs, electric vehicle adoption and industrial reshoring that demands reliable, high-capacity power. The grid's response has been to add batteries faster than any other resource (18.2 gigawatts of storage in 2025, nearly double last year's record) and to queue hundreds of gigawatts of solar and wind. Yet even when projects clear the queue, they face transformer shortages and NIMBY permitting delays.

And utility-scale solar now generates power at less than half the cost of a new gas combined-cycle plant, but the cost of delivered energy remains dominated by transmission and distribution charges that have doubled over the past decade. This is why the grid is becoming the new cloud. Just as cloud computing abstracted away physical servers behind APIs and spot pricing, decentralized energy abstracts away centralized generation behind local production, real-time markets, and tokenized incentives.

Energy is data: kilowatt-hours can be metered per second, priced dynamically, verified cryptographically, and settled atomically. Smart meters already generate telemetry; AI models can forecast local marginal prices; batteries can respond to price spikes in milliseconds. Crypto-native rails turn devices into market participants rather than passive ratepayers. When a home battery discharges during a grid frequency deviation, it should earn compensation instantly, transparently, and without a utility taking a 30% administrative cut. That requires on-chain identity, oracle-verified measurement, and programmable money. The convergence of AI demand, cheap DER hardware, and crypto incentive design supplies all three.

Such decentralized energy networks operate through a four-layer stack that mirrors the DePIN architectures already proven in compute and connectivity. At the physical layer, each device e.g. a solar inverter, lithium-ion battery, EV charger, smart thermostat, requires a cryptographically secure identity, typically embedded in a hardware security module or TPM chip. This identity is registered on-chain, creating a Sybil-resistant mapping between physical hardware and digital credentials. When Daylight installs a 10-kilowatt-hour battery in a Massachusetts home, that device joins the network with a unique keypair, its location and specifications attested by the installer, and its telemetry stream authorized via digital signature.

The second layer is measurement and verification: power output, state of charge, response latency, and grid frequency are sampled at sub-second intervals, aggregated by oracle networks like Chainlink or bespoke DePIN data layers, and posted on-chain as verifiable proofs. This prevents gaming, meaning no owner can claim phantom capacity (fake or exaggerated energy output claims), and enables precise settlement. Poor data quality is penalized with slashing, just as Filecoin miners lose collateral for failed storage proofs.

The third layer is incentive design: tokens reward physical service provision. Daylight's Sun Points accrue to households that export stored energy during high-value grid events, with rewards weighted by reliability, location, and grid need. Early participants receive bonus emissions that taper over time; location multipliers direct devices to congested nodes where marginal value is highest.

The fourth layer is settlement and composability. Energy sales, capacity payments, ancillary service fees, and renewable energy credits can each be tokenized, split, and traded. A household might earn $60 per kilowatt-year from energy arbitrage, $15 from frequency regulation, $8 from capacity markets, and $3 from solar renewable energy certificates, adding up to total revenues of $86 per kilowatt that can improve battery payback from eight years to five.

Generated cash flows can then be deposited into yield protocols: Daylight's upcoming GRID and sGRID tokens on Plasma will allow users to stake energy revenues, access DeFi liquidity, and hedge price volatility, effectively bridging physical infrastructure yields with on-chain capital markets. Contrast this with net metering, where utilities credit exports at flat retail rates and capture all grid-service value for themselves, or with traditional VPP aggregators that pay households $40–100 per year while earning the spread. Tokenized markets align incentives, automate settlement, and retain value at the edge.

For broader markets, decentralized energy networks function as a distributed optimization layer that relieves interconnection bottlenecks by routing around them. Instead of waiting five years for a transmission upgrade, a community can deploy solar-plus-battery microgrids that self-balance and export excess capacity during peak hours, reducing local marginal prices and deferring utility CAPEX. Tokenized, real-time prices let a home battery charge during a lunch-time price crash (sometimes below zero) and sell during the dinner spike above $200/MWh, turning wasted solar into arbitrage profit.

This instant-settlement pricing improves allocative efficiency; rather than monthly utility bills and opaque expenses, every kilowatt-hour can be priced, verified, and paid for in seconds. It creates new liquidity rails for green assets: tokenized PPAs, RECs, and capacity credits become tradable, liquid assets. Most importantly, resilience emerges from such distribution. A grid composed of thousands of autonomous micro-producers, each with cryptographic identity and economic incentive to maintain uptime, withstands extreme weather and cyberattacks better than a bunch of centralized plants. During Texas's January cold snap, batteries delivered $750 million in savings by responding to frequency deviations in under 200ms; a dePIN fleet could replicate that performance across tens of thousands of households, eliminating single points of failure.

For consumers, electricity ceases to be a passive cost center and becomes an active income stream. A household with a 10-kilowatt solar array and a 13.5-kilowatt-hour battery can earn $500–800 annually by selling energy, providing grid services, and staking tokenized revenues—turning a $15,000 capital expense into a self-financing asset. This expands access to renewable ownership: on-chain financing platforms like Plural Energy let investors pool capital into distributed solar portfolios, reducing minimum tickets from $100,000 to $10 and enabling renters to buy fractional stakes in community systems.

Essentially, decentralized energy brings autonomy to the most key, and increasingly costly, market of this century. Households become market actors instead of being ratepayers subject to monopolistic pricing and policy capture, and are free to choose when to consume, when to store, when to export, and which grid services to provide while capturing some economic upside.

As of late 2025, the regulatory landscape in this space is neither necessarily hostile nor entirely permissive just yet; it is fragmenting into jurisdictions that recognize decentralized energy as a grid asset and those that fear it as a consumer threat. In the United States, the Inflation Reduction Act's technology-neutral 45Y production tax credit and 48E investment tax credit provide roughly $27 per megawatt-hour at 2025 inflation levels for zero-emission generation, including solar-battery hybrids. However, the One Big Beautiful Bill Act signed in July 2025 terminates eligibility for new wind and solar projects placed in service after December 31, 2027, while tightening foreign-entity restrictions. Projects that begin construction by July 4, 2026, can still qualify under the safe-harbor rule, creating some urgency.

FERC Order 2222, implemented in CAISO and ISO-NE and still in phased rollout across other ISOs in 2025, requires wholesale markets to accept aggregated distributed energy resources, meaning a fleet of 10,000 home batteries can bid into capacity markets as a single 100-megawatt block. Order 1920, issued in May 2024, mandates 20-year regional transmission planning and cost allocation to beneficiaries, which could fund grid-enhancing technologies that support decentralized networks. Some states are moving faster: Texas’s “connect-and-manage” model has been adding new capacity faster than any other U.S. system, while California’s NEM 3.0 net-billing reform now exports solar at avoided-cost rates—around 75 percent lower than previous retail levels—and strongly incentivizes storage adoption.

In the UK, Ofgem’s August 2025 Modification P483 removes half-hourly settlement requirements, allowing millions of households to participate in flexibility markets through Virtual Lead Parties. The EU’s REPowerEU plan and Digitalisation of Energy Action Plan continue to standardize data sharing across DSOs, supporting the future of cross-border virtual power plants. So energy markets are quite regulated, tariffs are currently politicized, and tokens edge close to securities law, but policy is increasingly becoming a programmable feature. Early engagement with regulators, designing tokens as rewards rather than investments, and proving grid reliability can turn compliance into competitive moat. The networks that survive are those that treat regulation as infrastructure while also fighting for adaptation and improvement of such legislation.

The decentralized energy sector is one that is still early but rapidly growing; several distinct models are competing to define the architecture of programmable power.

Daylight exemplifies the residential VPP approach. After raising $75 million in October, the protocol operates in Illinois and Massachusetts, offering households solar-plus-battery subscriptions that earn Sun Points for grid exports. Customers pay $75–100 per month for equipment and receive tokens valued at roughly $0.01–0.03 per kilowatt-hour exported, supplementing bill savings and stacking revenues from energy sales, capacity payments, and ancillary services. What distinguishes Daylight is its move into DeFi abstraction: the upcoming GRID and sGRID tokens on Plasma will let users stake energy yields, borrow against future cash flows, and access liquidity without selling hardware stakes. In line with the trend of bridging physical infrastructure yields with on-chain capital markets, it allows a household to hedge token volatility or pre-finance a battery upgrade. It is yet to launch onchain, but the model is promising. By going behind-the-meter, Daylight bypasses queue bottlenecks entirely.

Starpower and Glow have a lighter-touch model focused on device mining rather than full VPP operation. Starpower plans to reward households for simply plugging in compatible batteries and solar inverters, minting Glow tokens proportional to connected capacity and uptime. The vision is a permissionless, bottom-up network where any manufacturer can build in compatibility and any owner can earn without signing utility contracts. Metrics are limited but the approach mirrors Helium's early oversupply phase: incentivize rapid hardware deployment, then layer on grid services later. The risk is token inflation without immediate revenue, but the opportunity is there and global.

Plural Energy, backed by Paradigm, takes the coordination layer route. Rather than own hardware, Plural provides on-chain financing and dispatch optimization for third-party VPPs. Investors buy tokenized cash flows from solar and battery portfolios; the protocol aggregates telemetry, bids into ISO markets, and distributes yields automatically. This separates capital formation from operations, letting local installers focus on deployment while Plural handles market participation. Early pilots are stealth, but the model addresses a fundamental gap: small developers lack the capital and sophistication to monetize grid services, while crypto-native investors seek real-yield exposure uncorrelated to token speculation.

Powerledger, the veteran from Australia, operates at the compliance frontier. Its blockchain-based P2P trading platform is licensed in multiple jurisdictions, enabling households to trade renewable energy certificates and track carbon offsets on-chain. Unlike newer DePIN projects, Powerledger works within existing utility frameworks, positioning its token as a settlement layer rather than an incentive bootstrapping mechanism. Its India pilot demonstrated 43% cost reductions for participants, proving that on-chain settlement itself delivers value even without token subsidies. To compare: Powerledger trades off permissionless scale for regulatory certainty, while Starpower bets on permissionless scale first and compliance later.

Arkreen plugs a missing piece: carbon-negative data. Built on Polygon, it turns smart-meter readings and IoT telemetry into standardized, on-chain RECs and carbon credits that DeFi can price and trade. Households mint “Arkreen NFTs” for each proven kilowatt-hour of green generation; buyers purchase those NFTs to meet net-zero pledges. Because the credits are fractional and instantly settled, Arkreen becomes a liquidity layer for the other DePIN models that could plug in and monetize surplus certificates without bilateral PPAs. Early traction is modest across Asia-Pacific, but the architecture is live and every new node expands supply and demand for the native AKT token used to mint, stake and retire credits.

Each model tests a different hypothesis about what decentralized energy must look like and optimize: user acquisition, capital efficiency, or regulatory integration.

Decentralized energy has been explored for multiple years now, but multiple structural shifts are converging to make what was previously too early entirely feasible now. First, crypto infrastructure has matured beyond speculation into real-world utility. Stablecoins provide dollar-denominated global payment rails; Layer-2s reduce transaction costs to fractions of a cent, making per-kilowatt-hour settlement economical; and on-chain identity standards like ERC-721 and ERC-1155 let hardware mint soulbound tokens that prove provenance and performance.

Second, AI and data have created demand that centralized supply simply cannot meet. The 240 terawatt-hours of new data center load projected for the U.S. by 2030 exceeds the entire generation capacity of California, no amount of transmission build-out can deliver that centrally fast enough. Modular, behind-the-meter resources are also the only route to scale at the speed of software. Third, grid constraints have aligned incentives: utilities facing transformer shortages and interconnection moratoria are beginning to view aggregated DERs as non-wires alternatives that defer CAPEX, while regulators see VPPs as reliability assets that performed when Texas needed them most.

The hidden catalyst is the accelerated sunset of the 45Y/48E credits for wind and solar. OBBBA requires projects to begin construction by Jul 4, 2026 and be placed in service by Dec 31, 2027 to retain roughly $27/MWh of support at 2025 levels, compressing a decade of deployment into a two-year sprint. Decentralized networks, which can deploy in weeks rather than years, capture this arbitrage. The contrarian view that coordination complexity will doom these networks misses the lesson from Helium and Akash. Early oversupply and token volatility are features of quick launch and growth; they attract hardware, debug telemetry, and then iterate governance in public. The engineering challenges are there but better oracles, hardware attestation, and slashing mechanisms are shipping fast.

And the market is telling us something: Daylight's $75 million raise, Akash's 70% GPU utilization, and Filecoin's 12.6% storage utilization and recent 150%+ token surge all signal that decentralized infrastructure reaches product-market fit when it solves a resource bottleneck that incumbents cannot. Energy is that ultimate bottleneck right now.

This decentralized energy breakpoint is a timely response to a grid that has become too slow, monopolized, and too brittle to power the 21st century. Programmable energy markets deliver lower costs by cutting out intermediaries, higher resilience by distributing risk, and freer participation by removing capital and regulatory barriers.

Solar-plus-battery hybrids generate power efficiently, compete with gas plants on capacity and earn additional revenue from storage that batteries uniquely provide. Tokenization just unlocks these cash flows for households that cannot otherwise access them, turning a liability into an asset and a consumer into a prosumer. Ratepayers will self-generate, data centers will be powered, and networks of smart devices will form virtual power plants that mimic the behavior of centralized plants at lower cost and higher reliability.

If compute and connectivity were the first major DePIN frontiers of the decentralized internet, energy will be the one that sustains and secures it—providing an attacker-resistant grid layer at the very moment volatile prices, supply-chain bottlenecks and geopolitical risk make that upgrade a necessity.

Written by Trace Research — exploring on-chain markets.

The convergence of AI's electricity demand, aging grids and maturing crypto incentives has created an inflection point for decentralized energy, DePIN's most consequential real-world application yet. Crypto decentralized compute and connectivity, now energy represents the third and most vital physical infrastructure layer to fall under programmatic coordination. The macro setup supports this: global data center electricity consumption hit 415 terawatt-hours last year and is projected to double by 2030, yet interconnection queues are frozen with over 700 gigawatts of projects waiting to connect, and only ~20% of solar proposals ever make it online.

From such gaps emerge projects like Daylight, Starpower, and Plural Energy, who are deploying tokenized incentives to coordinate distributed solar, batteries, and smart appliances into virtual power plants that can bypass legacy bottlenecks, unlock stranded renewables and turn households into DeFi-linked market participants. The market opportunity is in hundreds of gigawatts and billions in deferred transmission spending; catalysts include the current regulatory environment, and the simple economic imperative that local generation plus battery storage now delivers power cheaper than centralized fossil fuel plants. This article maps the structural shift in how we build, operate and secure the modern grid.

The global electric grid is cracking under the weight of demands it was never initially designed to handle. Data centers, now the fastest-growing industrial load, consumed roughly 415 terawatt-hours of electricity last year, a number projected to surge toward 945 terawatt-hours by decade's end as AI training and inference workloads proliferate (IEA 2025 projections). The United States alone consumed 180 terawatt-hours in 2024 and face another 240 terawatt-hours of incremental load by 2030. This explosion collides with a transmission system that has barely expanded: just 888 miles of high-voltage lines were built across the entire country in 2024 (July 2025 FERC update), well below the required 10,000 miles to accommodate projected growth. The gap is widening in real time as 2025 battery storage deployments are on track to nearly double to 18.2 GW, while North American virtual power plant capacity has already reached 37.5 GW across 1,940 deployments. Yet interconnection queues remain frozen, with more than 1,000 GW of proposed projects across 42 tracked states still waiting for grid access. Roughly three-quarters of this backlog consists of solar, wind, battery, and hybrid projects. Data was pulled from Grid8, the most reliable real-time interconnection dashboard found.

The waiting list to connect new power projects to the grid now totals more than twice the U.S.'s existing grid capacity, with the vast majority made up of planned solar, wind, and battery projects. Typical queue wait times now surpass five years, and about 20% of applications ever get completed long-term. The grid’s hub-and-spoke architecture, engineered for one-way flows from massive coal and nuclear plants, cannot efficiently absorb millions of rooftop solar panels, bidirectional EV chargers, and behind-the-meter batteries. Geopolitical fragility compounds the problem: transformer lead times have stretched beyond 12 months and prices have quadrupled, while foreign entity of concern restrictions threaten to disqualify Chinese components from federal subsidies.

Wholesale electricity costs have actually fallen, with top-performing U.S. projects achieving prices as low as $38 per megawatt-hour while most new utility-scale solar contracts nationwide fall within a $38 to $78 per megawatt-hour range. But retail delivery prices keep climbing as utility companies pass on the costs of expensive grid projects to customers, making a sort-of invisible infrastructure crisis: abundant cheap generation stranded behind bureaucratic, capital-intensive, and politically vulnerable transmission networks. Just as crypto's first wave decentralized information flows and its second wave decentralized compute capacity, its third wave must now decentralize the physical production and distribution of energy itself.

Crypto has already proven it can coordinate physical hardware at scale through token incentives. Akash Network demonstrated that idle GPU capacity in data centers and edge locations could be aggregated into a decentralized cloud offering 79% GPU utilization and $9,000 in daily network revenue by late 2025, with total network spend surpassing $1 million and undercutting AWS and Google Compute pricing by matching AI workloads with underused silicon. In Helium’s case, over 380,000 people have deployed radio hotspots, with more than 98,000 providing 5G coverage, rewarded in MOBILE tokens and offloading 2.72 petabytes of data in a single quarter—creating a wireless network that competes with traditional carriers. Filecoin operationalized the model for storage, growing to over 11 exbibytes of capacity as node operators stake FIL to guarantee data availability and clients pay in programmable, verifiable deals. Bittensor is wiring idle GPUs into a global, token-governed brain with its halving confirmed for December 2025, tightening emissions and further spotlighting TAO’s role as scarce AI fuel.

The economic principle across these networks is consistent: tokenized rewards bootstrap supply, cryptographic proofs verify performance, and on-chain settlement removes intermediaries. Participants earn by provably delivering physical services such as compute cycles, radio coverage, disk space. The leap to energy is logical and necessary. Distributed energy resources like rooftop solar, home batteries, smart thermostats, EV chargers are already deployed in millions of American homes, each representing a latent node in a potential network. What they lack is coordination: a way to discover price signals, settle transactions, and aggregate into grid-scale capacity without routing through utility monopolies and ISO bureaucracies.

DePIN energy applies that playbook: devices register on-chain identities, stream telemetry through oracles, earn tokens for grid services, and participate in DAO-governed markets. Take Daylight for example. Daylight is a decentralized energy protocol that provides residential solar-plus-battery subscriptions, rewarding households with tokens for exporting stored power to the grid. Essentially, Helium is to telecom what Daylight and its peers aim to be for power. Just how Helium coordinates bandwidth and Akash coordinates compute, the next wave of DePIN protocols is coordinating electrons.

U.S. electricity demand, which grew at a sluggish 0.5% annually for two decades, is accelerating to 2.3% in 2025 and will average over 2% through 2026—the fastest sustained growth since the 1990s. The driver of this renaissance is AI infrastructure needs, electric vehicle adoption and industrial reshoring that demands reliable, high-capacity power. The grid's response has been to add batteries faster than any other resource (18.2 gigawatts of storage in 2025, nearly double last year's record) and to queue hundreds of gigawatts of solar and wind. Yet even when projects clear the queue, they face transformer shortages and NIMBY permitting delays.

And utility-scale solar now generates power at less than half the cost of a new gas combined-cycle plant, but the cost of delivered energy remains dominated by transmission and distribution charges that have doubled over the past decade. This is why the grid is becoming the new cloud. Just as cloud computing abstracted away physical servers behind APIs and spot pricing, decentralized energy abstracts away centralized generation behind local production, real-time markets, and tokenized incentives.

Energy is data: kilowatt-hours can be metered per second, priced dynamically, verified cryptographically, and settled atomically. Smart meters already generate telemetry; AI models can forecast local marginal prices; batteries can respond to price spikes in milliseconds. Crypto-native rails turn devices into market participants rather than passive ratepayers. When a home battery discharges during a grid frequency deviation, it should earn compensation instantly, transparently, and without a utility taking a 30% administrative cut. That requires on-chain identity, oracle-verified measurement, and programmable money. The convergence of AI demand, cheap DER hardware, and crypto incentive design supplies all three.

Such decentralized energy networks operate through a four-layer stack that mirrors the DePIN architectures already proven in compute and connectivity. At the physical layer, each device e.g. a solar inverter, lithium-ion battery, EV charger, smart thermostat, requires a cryptographically secure identity, typically embedded in a hardware security module or TPM chip. This identity is registered on-chain, creating a Sybil-resistant mapping between physical hardware and digital credentials. When Daylight installs a 10-kilowatt-hour battery in a Massachusetts home, that device joins the network with a unique keypair, its location and specifications attested by the installer, and its telemetry stream authorized via digital signature.

The second layer is measurement and verification: power output, state of charge, response latency, and grid frequency are sampled at sub-second intervals, aggregated by oracle networks like Chainlink or bespoke DePIN data layers, and posted on-chain as verifiable proofs. This prevents gaming, meaning no owner can claim phantom capacity (fake or exaggerated energy output claims), and enables precise settlement. Poor data quality is penalized with slashing, just as Filecoin miners lose collateral for failed storage proofs.

The third layer is incentive design: tokens reward physical service provision. Daylight's Sun Points accrue to households that export stored energy during high-value grid events, with rewards weighted by reliability, location, and grid need. Early participants receive bonus emissions that taper over time; location multipliers direct devices to congested nodes where marginal value is highest.

The fourth layer is settlement and composability. Energy sales, capacity payments, ancillary service fees, and renewable energy credits can each be tokenized, split, and traded. A household might earn $60 per kilowatt-year from energy arbitrage, $15 from frequency regulation, $8 from capacity markets, and $3 from solar renewable energy certificates, adding up to total revenues of $86 per kilowatt that can improve battery payback from eight years to five.

Generated cash flows can then be deposited into yield protocols: Daylight's upcoming GRID and sGRID tokens on Plasma will allow users to stake energy revenues, access DeFi liquidity, and hedge price volatility, effectively bridging physical infrastructure yields with on-chain capital markets. Contrast this with net metering, where utilities credit exports at flat retail rates and capture all grid-service value for themselves, or with traditional VPP aggregators that pay households $40–100 per year while earning the spread. Tokenized markets align incentives, automate settlement, and retain value at the edge.

For broader markets, decentralized energy networks function as a distributed optimization layer that relieves interconnection bottlenecks by routing around them. Instead of waiting five years for a transmission upgrade, a community can deploy solar-plus-battery microgrids that self-balance and export excess capacity during peak hours, reducing local marginal prices and deferring utility CAPEX. Tokenized, real-time prices let a home battery charge during a lunch-time price crash (sometimes below zero) and sell during the dinner spike above $200/MWh, turning wasted solar into arbitrage profit.

This instant-settlement pricing improves allocative efficiency; rather than monthly utility bills and opaque expenses, every kilowatt-hour can be priced, verified, and paid for in seconds. It creates new liquidity rails for green assets: tokenized PPAs, RECs, and capacity credits become tradable, liquid assets. Most importantly, resilience emerges from such distribution. A grid composed of thousands of autonomous micro-producers, each with cryptographic identity and economic incentive to maintain uptime, withstands extreme weather and cyberattacks better than a bunch of centralized plants. During Texas's January cold snap, batteries delivered $750 million in savings by responding to frequency deviations in under 200ms; a dePIN fleet could replicate that performance across tens of thousands of households, eliminating single points of failure.

For consumers, electricity ceases to be a passive cost center and becomes an active income stream. A household with a 10-kilowatt solar array and a 13.5-kilowatt-hour battery can earn $500–800 annually by selling energy, providing grid services, and staking tokenized revenues—turning a $15,000 capital expense into a self-financing asset. This expands access to renewable ownership: on-chain financing platforms like Plural Energy let investors pool capital into distributed solar portfolios, reducing minimum tickets from $100,000 to $10 and enabling renters to buy fractional stakes in community systems.

Essentially, decentralized energy brings autonomy to the most key, and increasingly costly, market of this century. Households become market actors instead of being ratepayers subject to monopolistic pricing and policy capture, and are free to choose when to consume, when to store, when to export, and which grid services to provide while capturing some economic upside.

As of late 2025, the regulatory landscape in this space is neither necessarily hostile nor entirely permissive just yet; it is fragmenting into jurisdictions that recognize decentralized energy as a grid asset and those that fear it as a consumer threat. In the United States, the Inflation Reduction Act's technology-neutral 45Y production tax credit and 48E investment tax credit provide roughly $27 per megawatt-hour at 2025 inflation levels for zero-emission generation, including solar-battery hybrids. However, the One Big Beautiful Bill Act signed in July 2025 terminates eligibility for new wind and solar projects placed in service after December 31, 2027, while tightening foreign-entity restrictions. Projects that begin construction by July 4, 2026, can still qualify under the safe-harbor rule, creating some urgency.

FERC Order 2222, implemented in CAISO and ISO-NE and still in phased rollout across other ISOs in 2025, requires wholesale markets to accept aggregated distributed energy resources, meaning a fleet of 10,000 home batteries can bid into capacity markets as a single 100-megawatt block. Order 1920, issued in May 2024, mandates 20-year regional transmission planning and cost allocation to beneficiaries, which could fund grid-enhancing technologies that support decentralized networks. Some states are moving faster: Texas’s “connect-and-manage” model has been adding new capacity faster than any other U.S. system, while California’s NEM 3.0 net-billing reform now exports solar at avoided-cost rates—around 75 percent lower than previous retail levels—and strongly incentivizes storage adoption.

In the UK, Ofgem’s August 2025 Modification P483 removes half-hourly settlement requirements, allowing millions of households to participate in flexibility markets through Virtual Lead Parties. The EU’s REPowerEU plan and Digitalisation of Energy Action Plan continue to standardize data sharing across DSOs, supporting the future of cross-border virtual power plants. So energy markets are quite regulated, tariffs are currently politicized, and tokens edge close to securities law, but policy is increasingly becoming a programmable feature. Early engagement with regulators, designing tokens as rewards rather than investments, and proving grid reliability can turn compliance into competitive moat. The networks that survive are those that treat regulation as infrastructure while also fighting for adaptation and improvement of such legislation.

The decentralized energy sector is one that is still early but rapidly growing; several distinct models are competing to define the architecture of programmable power.

Daylight exemplifies the residential VPP approach. After raising $75 million in October, the protocol operates in Illinois and Massachusetts, offering households solar-plus-battery subscriptions that earn Sun Points for grid exports. Customers pay $75–100 per month for equipment and receive tokens valued at roughly $0.01–0.03 per kilowatt-hour exported, supplementing bill savings and stacking revenues from energy sales, capacity payments, and ancillary services. What distinguishes Daylight is its move into DeFi abstraction: the upcoming GRID and sGRID tokens on Plasma will let users stake energy yields, borrow against future cash flows, and access liquidity without selling hardware stakes. In line with the trend of bridging physical infrastructure yields with on-chain capital markets, it allows a household to hedge token volatility or pre-finance a battery upgrade. It is yet to launch onchain, but the model is promising. By going behind-the-meter, Daylight bypasses queue bottlenecks entirely.

Starpower and Glow have a lighter-touch model focused on device mining rather than full VPP operation. Starpower plans to reward households for simply plugging in compatible batteries and solar inverters, minting Glow tokens proportional to connected capacity and uptime. The vision is a permissionless, bottom-up network where any manufacturer can build in compatibility and any owner can earn without signing utility contracts. Metrics are limited but the approach mirrors Helium's early oversupply phase: incentivize rapid hardware deployment, then layer on grid services later. The risk is token inflation without immediate revenue, but the opportunity is there and global.

Plural Energy, backed by Paradigm, takes the coordination layer route. Rather than own hardware, Plural provides on-chain financing and dispatch optimization for third-party VPPs. Investors buy tokenized cash flows from solar and battery portfolios; the protocol aggregates telemetry, bids into ISO markets, and distributes yields automatically. This separates capital formation from operations, letting local installers focus on deployment while Plural handles market participation. Early pilots are stealth, but the model addresses a fundamental gap: small developers lack the capital and sophistication to monetize grid services, while crypto-native investors seek real-yield exposure uncorrelated to token speculation.

Powerledger, the veteran from Australia, operates at the compliance frontier. Its blockchain-based P2P trading platform is licensed in multiple jurisdictions, enabling households to trade renewable energy certificates and track carbon offsets on-chain. Unlike newer DePIN projects, Powerledger works within existing utility frameworks, positioning its token as a settlement layer rather than an incentive bootstrapping mechanism. Its India pilot demonstrated 43% cost reductions for participants, proving that on-chain settlement itself delivers value even without token subsidies. To compare: Powerledger trades off permissionless scale for regulatory certainty, while Starpower bets on permissionless scale first and compliance later.

Arkreen plugs a missing piece: carbon-negative data. Built on Polygon, it turns smart-meter readings and IoT telemetry into standardized, on-chain RECs and carbon credits that DeFi can price and trade. Households mint “Arkreen NFTs” for each proven kilowatt-hour of green generation; buyers purchase those NFTs to meet net-zero pledges. Because the credits are fractional and instantly settled, Arkreen becomes a liquidity layer for the other DePIN models that could plug in and monetize surplus certificates without bilateral PPAs. Early traction is modest across Asia-Pacific, but the architecture is live and every new node expands supply and demand for the native AKT token used to mint, stake and retire credits.

Each model tests a different hypothesis about what decentralized energy must look like and optimize: user acquisition, capital efficiency, or regulatory integration.

Decentralized energy has been explored for multiple years now, but multiple structural shifts are converging to make what was previously too early entirely feasible now. First, crypto infrastructure has matured beyond speculation into real-world utility. Stablecoins provide dollar-denominated global payment rails; Layer-2s reduce transaction costs to fractions of a cent, making per-kilowatt-hour settlement economical; and on-chain identity standards like ERC-721 and ERC-1155 let hardware mint soulbound tokens that prove provenance and performance.

Second, AI and data have created demand that centralized supply simply cannot meet. The 240 terawatt-hours of new data center load projected for the U.S. by 2030 exceeds the entire generation capacity of California, no amount of transmission build-out can deliver that centrally fast enough. Modular, behind-the-meter resources are also the only route to scale at the speed of software. Third, grid constraints have aligned incentives: utilities facing transformer shortages and interconnection moratoria are beginning to view aggregated DERs as non-wires alternatives that defer CAPEX, while regulators see VPPs as reliability assets that performed when Texas needed them most.

The hidden catalyst is the accelerated sunset of the 45Y/48E credits for wind and solar. OBBBA requires projects to begin construction by Jul 4, 2026 and be placed in service by Dec 31, 2027 to retain roughly $27/MWh of support at 2025 levels, compressing a decade of deployment into a two-year sprint. Decentralized networks, which can deploy in weeks rather than years, capture this arbitrage. The contrarian view that coordination complexity will doom these networks misses the lesson from Helium and Akash. Early oversupply and token volatility are features of quick launch and growth; they attract hardware, debug telemetry, and then iterate governance in public. The engineering challenges are there but better oracles, hardware attestation, and slashing mechanisms are shipping fast.

And the market is telling us something: Daylight's $75 million raise, Akash's 70% GPU utilization, and Filecoin's 12.6% storage utilization and recent 150%+ token surge all signal that decentralized infrastructure reaches product-market fit when it solves a resource bottleneck that incumbents cannot. Energy is that ultimate bottleneck right now.

This decentralized energy breakpoint is a timely response to a grid that has become too slow, monopolized, and too brittle to power the 21st century. Programmable energy markets deliver lower costs by cutting out intermediaries, higher resilience by distributing risk, and freer participation by removing capital and regulatory barriers.

Solar-plus-battery hybrids generate power efficiently, compete with gas plants on capacity and earn additional revenue from storage that batteries uniquely provide. Tokenization just unlocks these cash flows for households that cannot otherwise access them, turning a liability into an asset and a consumer into a prosumer. Ratepayers will self-generate, data centers will be powered, and networks of smart devices will form virtual power plants that mimic the behavior of centralized plants at lower cost and higher reliability.

If compute and connectivity were the first major DePIN frontiers of the decentralized internet, energy will be the one that sustains and secures it—providing an attacker-resistant grid layer at the very moment volatile prices, supply-chain bottlenecks and geopolitical risk make that upgrade a necessity.

Written by Trace Research — exploring on-chain markets.