Building virtual power plants with AI and blockchain
with Alex Nicoara, Solmag
Building virtual power plants with AI and blockchain
Show Notes
Alex Nicoara is the co-founder of Solmag AI, a Bucharest-based startup building virtual power plants from distributed residential solar panels. Inspired by the Kardashev Scale - a 1964 framework for measuring a civilization's energy mastery - Alex is working toward a world where neighbors trade electricity peer-to-peer in real time, EV owners pull surplus power from empty houses down the street, and communities no longer depend entirely on centralized grids. The company is pre-seed, installing its first hardware device the day after this episode was recorded, and already has 100-device orders from solar installer partners. This is an early-stage look at a technology that could reshape how energy is produced, distributed, and monetized.
How Solmag Turns Rooftop Solar Into a Peer-to-Peer Energy Network
Today, a homeowner with solar panels sends excess electricity back to the utility grid and receives a credit - typically at 30–40% below what the utility charges other customers for that same electricity. Solmag's model eliminates most of that spread. A small gateway device installed at each home connects to a cloud aggregator that holds a virtual power plant license. When a household's EV starts charging and demand exceeds local production, the platform identifies nearby homes with surplus and routes power between them in real time - charging 10% per transaction instead of the utility's 30–40% margin. The routing algorithm mirrors the Waze model: geometric deep learning maps the most efficient energy path through the network the same way Waze maps traffic, adjusting cost based on distance from source. European legislation (Project Picasso) enabling this kind of peer-to-peer transfer is scheduled to take effect in 2026, and pilot programs have already run in Brooklyn, Sweden, and the Netherlands. Solmag is one of the first companies building the full hardware-plus-platform stack to operate at community scale.
5 Frameworks from the Virtual Power Plant Playbook
1. The Kardashev Scale as a Founder North Star
- Nikolai Kardashev's 1964 framework ranks civilizations by energy mastery: Type 0 (current) through Type III (galactic)
- Humanity is at approximately 0.73 - we use only about 40% of the energy we produce on Earth
- Type I requires harnessing all energy available on our planet; reaching it at 3–4% annual energy growth takes roughly 300 years
- The framework gives Alex a mission that transcends any single product: every Solmag device is a step toward civilizational energy mastery
- Application for founders: a north star that extends beyond your company's lifetime changes how you prioritize and what you are willing to endure
2. The Alexander Graham Bell Distribution Model - Sell the Network, Not Just the Device
- Bell's first phone was useless until there was someone else to call - he had to seed both sides of the network simultaneously
- Solmag faces the identical challenge: a single gateway device has no value without neighboring devices to trade with
- Solution: partner with solar panel installers as distributors who place gateway devices across entire communities at once
- Three installer partnerships already in place; 100-device order from one partner before the first device was even installed
- The network effect is the moat - a competitor can copy the hardware, but cannot replicate the installed community base
3. The Waze Model for Energy Routing
- Waze uses geometric deep learning to route traffic dynamically based on real-time conditions across a network of data-contributing users
- Solmag applies the same algorithmic approach to electricity: route energy through the community mesh along the most efficient path
- Distance-based pricing: power from a neighbor costs less than power routed 200 km from a nuclear plant - the algorithm prices accordingly
- Behavioral prediction: the platform anticipates demand (e.g., a resident arriving home at 3pm to charge their EV) and pre-positions supply
- The AI layer is what converts a collection of devices into an intelligent grid - without it, you have hardware; with it, you have a platform
4. The Prosumer Economy - From Consumer to Energy Entrepreneur
- A prosumer produces and consumes energy - the emerging category of homeowner with solar panels who has surplus to sell
- 25 million prosumers globally today (from roughly 8 billion people); projected to reach 100 million within 5 years
- Solmag converts prosumers from passive grid contributors (selling at a discount to utilities) into active market participants selling at ~85% of exchange price
- Decentralization creates capital market incentives: why not add more panels if you can profit from the surplus?
- Community-scale use cases: floating lake houses sharing power, smart neighborhoods like Sterling Ranch harvesting energy from unoccupied homes
5. The Anti-Extraction Hardware Strategy - Own the Device, Own the Data
- The obvious shortcut: pull data from existing inverter brands (Fronius, SolarEdge) via their APIs instead of installing new hardware
- Why Solmag rejects this: data access without device control is a security breach, and those brands will never grant the control layer needed to actually route energy
- The analogy: asking Elon Musk for Tesla data - you might get read access, but you will never get write access to the vehicle
- Going home by home to install a physical device and get explicit user consent creates the network Solmag actually controls
- The harder path builds a deeper moat: no competitor can replicate a consented, device-anchored community network by scraping an API
Founder Experiment: Map the Energy Micro-Economy in Your Neighborhood in 5 Steps
Step 1 - Identify your local prosumer density. Use Google Maps satellite view or your utility's net metering registry (many US states publish these publicly) to count how many homes within a half-mile radius have visible solar panel installations. In newer smart communities like Sterling Ranch, this number can be 80–100% of homes. This is your potential supply side.
Step 2 - Calculate the stranded energy. The average US residential solar installation produces 10,000–12,000 kWh per year; the average home consumes 10,500 kWh. In communities with high EV adoption or unoccupied new-build homes, surplus per household can be 20–40% of production. Multiply by your prosumer count to estimate the total stranded energy available for peer-to-peer trade in your area.
Step 3 - Research your state's net metering and peer-to-peer rules. US peer-to-peer energy trading is regulated at the state level. California, New York, and Texas are the most advanced. Look up your state's public utility commission website for "community energy sharing" or "virtual net metering" rules. This tells you what is currently legal and what legislation is pending - critical context if you are evaluating Solmag as an investor or integration partner.
Step 4 - Model the economics at the community scale. Take your stranded energy estimate from Step 2. Apply the current utility buy-back rate (typically 30–40% below retail) versus the Solmag model (85% of exchange price, 10% platform fee). The delta represents value currently being extracted by the utility that could stay in the community. For a 500-home neighborhood with average surplus, this spread can easily exceed $200,000 per year.
Step 5 - Identify the natural distribution partners. Solar installers are Solmag's go-to-market channel - they have existing relationships with every prosumer in a community and strong incentives to offer a platform that increases the value of their installation. If you are a real estate developer, EV charging operator, or solar installer, you are already Solmag's target partner. Reach out via the Solmag waitlist to explore a community pilot.
Glossary
Tools & Resources Mentioned
Q&A
What is Solmag AI and what problem does it solve?
Solmag AI builds virtual power plants from distributed residential solar installations. The core problem it solves is stranded energy: homeowners with solar panels produce surplus electricity during the day that utilities buy back at 30–40% below the retail rate they charge other customers. Solmag installs a gateway device at each home, aggregates those homes into a licensed virtual power plant, and enables peer-to-peer energy trading at approximately 85% of the exchange market price - charging a 10% platform fee instead of the utility's 30–40% margin. The result is more money for producers, cheaper power for consumers, and a more resilient community energy network.
How does the Solmag gateway device work and why is the hardware necessary?
The gateway device is a small unit installed at each home near the solar inverter or electrical panel. It collects real-time production and consumption data and connects the household to Solmag's cloud aggregator. The hardware is necessary because there is no way to actually control energy routing through a software API alone - brands like Fronius will share data but not cede control of their hardware. Alex draws the parallel to Tesla: you can ask for data, but you cannot get write access to someone else's vehicle. Going home by home to install a physical device and obtain explicit user consent is the harder path, but it creates the control layer that makes peer-to-peer trading technically and legally possible.
What is the Kardashev Scale and how does it shape Alex's vision for Solmag?
The Kardashev Scale, proposed by Russian astrophysicist Nikolai Kardashev in 1964, classifies civilizations by their total energy consumption: Type 0 (current humanity, at approximately 0.73) through Type III (galaxy-scale). Humanity currently uses only about 40% of the energy it produces on Earth. Alex discovered the framework after his first startup exit while searching for a mission with genuine civilizational stakes. Reaching Type I - harnessing all available planetary energy - at the current 3–4% annual energy growth rate takes approximately 300 years. Solmag is his first step: building the distributed network infrastructure that enables communities to use the energy they already produce before humanity attempts the much larger challenges of space-based solar or multi-planetary energy production.
What is the Alexander Graham Bell parallel and why does it matter for Solmag's go-to-market?
Bell's first telephone was worthless until there was someone else with a phone to call - a network of one has no value. He solved this by installing phones across entire communities at once, seeding both sides of the network simultaneously. Solmag faces the identical cold-start problem: a single gateway device in a neighborhood produces no peer-to-peer trading because there are no peers. Alex's solution is to partner with solar panel installers as distributors - companies that already have relationships with every solar homeowner in a community and can deploy devices across an entire neighborhood as part of the installation process. One installer partner has already committed to 100 devices before Solmag's first device was even installed.
How does the AI routing algorithm work, and what is the Waze analogy?
Waze uses geometric deep learning to model traffic as a dynamic graph - each road segment is a node with real-time cost data (congestion, speed, incidents), and the algorithm continuously finds the lowest-cost path between origin and destination. Solmag's AI layer applies the same structure to electricity: each home is a node with production, storage, and consumption data, and the algorithm routes energy through the community mesh along the most efficient path. Distance is a pricing variable - power from a neighbor two streets away costs less than power routed 200 kilometers from a nuclear plant. The system also predicts demand (a resident arriving home at 3pm to charge their EV) and pre-positions supply, the same way Waze reroutes before a bottleneck forms.
What is the current regulatory landscape for peer-to-peer energy trading, and when does it open up?
Peer-to-peer energy trading is regulated at the national or state level and is still illegal or unregulated in most jurisdictions. In Europe, Project Picasso is the EU legislative initiative that will establish a legal framework for household-to-household energy trading; it is scheduled to take effect in 2026. In the US, regulation is handled state by state - California, New York, and select other states are the most advanced. Early pilots have run in Brooklyn, Sweden, and the Netherlands. Alex notes that the technology is ready; the bottleneck is regulatory readiness, and the 2026 European legislation represents the first major market opening at scale. Indonesia is a notable market in the other direction - so many solar panels have been installed that they are already overloading the grid.
What is Alex looking for in investors, and what stage is Solmag at?
Solmag is raising a pre-seed round of $150,000, with two angels already committed for $60,000. Alex is looking for angels who bring more than capital - specifically people with experience scaling hardware startups, energy or climate tech networks, or connections in the US market (where Solmag is incorporated in Delaware and plans to expand after closing the pre-seed). The company is a team of two, has three solar installer distribution partnerships, a 100-device order from one partner, and is installing its first device the day after this episode was recorded. The seed target is $1M. Ideal partners beyond investors include real estate developers, EV charging operators, solar panel manufacturers, and solar installers who want to deploy the platform to existing customer bases.
How did Alex's first startup - a home cleaning app born from a party mess - lead to Solmag?
Alex and a friend built a mobile app to summon a cleaner after a particularly chaotic apartment party that triggered a parental visit. A local Romanian investor saw the opportunity, backed them, and the company scaled to managing 100 apartments with 26 staff. Alex sold his equity - not a large exit, but enough to give him two months of reflection time. During that period he discovered the Kardashev Scale and decided his next company would be oriented toward civilizational impact rather than operational convenience. The through-line is entrepreneurial opportunism: the cleaning app started as a joke; the insight that a real problem (an annoyed parent) plus a simple solution (an app) could become a fundable business gave Alex the confidence to tackle a much larger real problem - stranded distributed energy.
What does Alex believe about the future that most people think is crazy?
Alex believes humanity will eventually converge on a universal unit of value tied to energy - essentially, that watts or some derivative will become the base currency of a multi-planetary civilization. Bitcoin was a first attempt at a universal, programmable store of value independent of national governments, but it is energy-inefficient and too volatile for transactional use at scale. Alex's thesis is that as civilization becomes multi-planetary and the need for a common measurement system that works across Earth and Mars becomes real, energy - the one universal constant - becomes the logical denominator. The path from Solmag's peer-to-peer energy trading platform to an energy-denominated global currency is long, but both point in the same direction.