Imagine trying to run a modern economy without banks. No savings accounts, so you can’t set aside money for next month. No lending, so businesses can’t borrow to invest in growth. No credit, so large purchases require years of hoarding cash. Every transaction must happen immediately, in full, with whatever resources you have on hand right now.
That’s not a hypothetical – it’s a description of how most humans lived for most of history. And it’s a surprisingly accurate description of how our electrical grid still operates today.
You can’t save for later. When the sun is shining and solar panels are generating abundant power, you can’t bank that surplus for the evening peak. When wind turbines spin furiously at 3 AM, that energy can’t be deposited for withdrawal at breakfast time. The grid has no memory, no reserves, no way to carry value forward in time. Every electron generated must find a home immediately or be lost forever.
Waste is built into the system. In a pre-banking economy, a farmer with a bumper crop and no way to store grain watches the surplus rot. The electrical equivalent happens every day. When renewable generation exceeds demand – a windy night, a sunny Saturday – grid operators curtail output, essentially ordering wind turbines to stop spinning and solar farms to disconnect. We’re generating clean power and then throwing it away because there’s nowhere for it to go. Germany, a leader in renewable deployment, has curtailed billions of kilowatt-hours of clean energy over the past decade. It’s like printing money and then burning it because no one happens to need cash at that moment.
The system is fragile. Without reserves, any disruption cascades. South Australia’s statewide blackout in September 2016 wasn’t caused by anything exotic – just severe storms triggering failures that the system had no buffer to absorb. The entire state went dark. The 1998 ice storm that devastated Quebec left four million Canadians without power for weeks in the depths of winter, not because generation capacity was lacking but because the transmission system had no resilience, no local reserves to fall back on. Italy’s 2003 blackout affected 56 million people across the country from a single cascading failure. These aren’t rare anomalies; they’re the predictable consequence of a system operating without buffers.
Prices swing wildly. In a barter economy, the “price” of wheat in terms of shoes depends entirely on who happens to show up at the market that day. Electricity markets aren’t much better. Because supply and demand must balance instantaneously, wholesale prices can spike from €30 per megawatt-hour to €500 or more within minutes. During the 2022 European energy crisis, spot prices in some markets exceeded €700/MWh – nearly twenty times normal levels. Imagine if the price of petrol (gasoline) could quintuple between when you pulled into the station and when you finished filling up. That’s the reality of a commodity market with no storage buffer.
Power flows one direction, from the powerful to the powerless. In the pre-banking economy, capital accumulates with those who already have it. The traditional grid has a similar structure: large centralized generators produce, passive consumers consume, and there’s no mechanism for the household with rooftop solar to meaningfully participate in the market. You’re either a producer or a consumer, never both. The system architecture itself enforces a hierarchy.
Investment is inefficient. Without banking, every major purchase requires saving up the full amount in advance. You can’t borrow, so you can’t invest ahead of demand. The grid equivalent: utilities must build generation and transmission capacity sufficient to meet peak demand on the hottest day of the year, even though that infrastructure sits idle most of the time. A gas peaker plant might run only 200 hours annually. Transmission lines are sized for worst-case scenarios that occur a few hours per year. It’s like building highways wide enough for holiday traffic that sit empty the other 350 days – except we have no choice, because there’s no way to “borrow” capacity from the future or “save” it from periods of surplus.
This is the world we’ve been living in. A world where the most sophisticated technology of the industrial age – the electrical grid – operates on economic logic more primitive than a village money-lender. We’ve engineered extraordinary workarounds, built continent-spanning coordination systems, developed real-time markets that balance supply and demand second by second. But we’ve been working around the fundamental constraint rather than solving it.
Until now.
