The Blockchain technology behind cryptocurrencies like Bitcoin are catching a lot of attention, and not just because of the phenomenal rise in Bitcoin’s value this year. Because each Blockchain is a “distributed ledger” where there’s a huge degree of security, thanks to an ingenious application of cryptography, many folks think it can democratize all kinds of commercial activity. One area is in contracts, where the blockchain can hold details of the contract using cryptographic signatures to ensure ownership. Which gets us to the topic of investment in solar projects.
This morning the Blockchain2Business conference organizers held a Webinar presenting some ideas regarding the Blockchain can be used to organize and democratize investments in solar power projects.
The presenters asked us to consider ones rooftop might be an inconvenient place to install your solar power. You might not own your rooftop, because you’re a renter. Or your rooftop might be shaded or pointing in the wrong direction. If you move, you can’t take the solar power system with you. Well, you could, but doing so would be expensive since it would involve de-installing it from one rooftop, transporting the equipment, then getting permits approved and an installation done at the new location. In any case, if it’s not feasible to own solar on your roof, perhaps you can instead own a piece of an industrial solar array located elsewhere.
Such as … oh … Africa, where there’s abundant sunshine. The presentation fell apart for me as I pondered why they suggested investing in a solar array located so far away. But we can consider instead shared ownership in a community-level solar array where ownership is mediated using a Blockchain (cryptocurrency).
Two companies presented their model – SunExchange and WePower. SunExchange is offering solar plants in Africa, whereas WePower appeared to be in operation in Europe. All the participants were based in Europe, as is the conference. Again, the general concept can be applied to a solar array down the block, or around the world.
The concept is to divide ownership of a solar array down to the solar panel, or perhaps solar cell, level. One can buy a piece of a solar array at that level of granularity, and then reap rewards from that piece amortized from the rewards of the entire solar array.
For example you might want a more stable electricity price, but are unable to install solar for your own house. The jointly owned solar array can give you that stable electricity price, conceivably. Or it could be a straight-up investment where you’re paid proceeds from the profit of running the solar array.
Because the exchanges of value occur through the Blockchain/Bitcoin it’s feasible to make an investment anywhere in the world. And it’s claimed that it will be possible to achieve a greater level of transparency not only in the value of the solar array as an investment, but a clearer accounting of emissions gains.
The presentation included a couple buzzwords of the current cryptocurrency landscape — ICO’s, or Initial Coin Offerings, and Tokens. ICO’s were described as being “crowdfunding for blockchain-based businesses”, that Tokens are sent to the funders, and that those Tokens can be exchanged for future energy/electricity deliveries.
Where I lost the story
I said earlier that I lost the story when they started talking about investments in Africa. The story sounded interesting and intriguing until they described the what/why’s of investing in a solar array in Africa. Namely, that side of the story simply sounded like an economic form of colonialism, and would leave the Africans not owning their energy supply.
African countries have an interesting challenge ahead of themselves. It’s a large continent with a large quantity of mineral and agricultural and cultural potential. But the territories have been subjugated to 500+ years of colonial rule, which left the peoples and governments unprepared for modern times.
We were told that by 2100 Africa is expected to have a population greater than the sum of China and India, meaning that Africa is expected to have huge population growth. Obviously if African economies develop using fossil fuels we’re all in trouble, environmentally and climate-wise. Therefore the necessity to encourage renewable energy development in Africa is strong.
The model described was for an investment to set up a “microgrid” in an African village. Microgrids in that sort of context would mean a localized electricity system, perhaps supplying a single village or a cluster of nearby villages. The word Microgrid is used because it wouldn’t be connected to a country-wide electricity grid, instead the village-level microgrid would be a detached island working on its own. It could have Solar and Wind electricity generation plus batteries for energy storage. They talked about offering other services like Internet access, Cell Phone services, and even Bitcoin mining. The village would have a clean energy supply, wouldn’t have to chop down trees to have light and heat at night, and the direction would be set towards renewable energy systems.
But … that microgrid would not be owned by the village. Instead it would be owned by investors in other countries who have purchased shares in that microgrid rather than putting solar on their own roof.
In other words, critical infrastructure for the development of Africa would not be owned by Africa, but would be owned by outsiders. It’s just like the hundreds of years that Europeans have owned the governments of Africa.
We want there to be lots of renewable energy (solar and wind both) all around the world. Africa clearly would be better off starting its modernization with renewable energy rather than committing the sin of fossil fuels. One would also hope that economies in Africa are developed for the betterment of Africans, rather than to enrich the global elite. Social justice is just as worthy a long-term goal as is cleaning up the environment.
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David, As typical, a very interesting column. I am still not quite sure what exactly blockchaining has to do with renewable energy ownership, but I’ll accept that it is a way of tracking small pieces of the ownership pie. (I’d think it would be more about tracking RECs and other things that are tricky in tiny-ownership slices.)
Regarding Africa, I’m afraid I have to completely disagree with you. You called out the problem in your penultimate sentence: “One would also hope that economies in Africa are developed for the betterment of Africans, rather than to enrich the global elite.” Uh, yeah… one might hope that. Or, one might notice that every single headline ever written that has to do with Africa proves that this is never the case.
We should help Africa out. I can think of no better way to help than to promote renewable energy there. Just because someone acted badly in the past is no reason for us not to act at all — indeed, wouldn’t that just compound the problem?