The Sun Exchange is an example of how blockchain technology is being applied in the energy industry, specifically in the category of energy financing. The South African startup is a crowdfunding platform for relatively small scale solar energy projects in developing countries, especially on the African continent. The company aims to address one of the largest obstacles to increased investment in rural renewable energy projects: the large overhead costs of installation. Sun Exchange allows investors worldwide, regardless of desired size of investment, to buy solar assets using either national currency or Bitcoin payment. Not only does Sun Exchange allow for crowdfunding of their solar projects, but it sells solar panels by the cell, significantly reducing ownership cost and encouraging micro-investments around the world. Some examples of SUNEX projects include the installation of solar panels (117.5kW) in Sacred Heart College, Johannesburg and Nioro Plastic (473kW) to power their plastic recycling plant. 1.
Once the solar energy systems are built, investors see a passive (rental) income from the project over the next 20 years. This is done through smart contracts that “automatically execute payments from solar producers to investors, as energy is being produced in near real-time.” 2. Furthermore, while Sun Exchange allow investors to use national currencies, there is an important advantage offered by the use of cryptocurrencies such as Bitcoin in this crowdfunding process. Namely, international transfers of traditional currency is often not only expensive but also time-consuming. By contrast, using Bitcoin makes it easier for investors around the world to put their money in these solar projects and also facilitates the distribution of earnings from the projects. Additionally, Sun Exchange also uses their own cryptocurrency, SUNEX, to track the energy performance (production and earnings) of their projects, which is useful information to motivate potential investors. While the Sun Exchange demonstrates an innovative approach to funding clean energy projects, it will be crucial for such initiatives to address the issue of long-term ownership so that it doesn’t “simply turn into a way for international entities to continue owning assets in African countries once the people in these regions want to take control of these value streams.” 3.
Written By: Mihnea Filip
- The Sun Exchange Website, https://thesunexchange.com/project
- Adoni, Melinda et al. Blockchain Technology in the Energy Sector. Renewable and Sustainable Energy Reviews. October 2018 https://www.sciencedirect.com/science/article/pii/S1364032118307184
- Ferrero, Vanessa. Blockchain: What Does it Mean for Energy Markets in Africa? November 2017. https://www.renewableenergyworld.com/ugc/articles/2017/11/10/blockchain-what-does-it-mean-for-energy-markets-in-africa.html
- Coldewey, Devin. The Sun Exchange funds Solar Installations with Micro-investments and Bitcoin. 2017. https://techcrunch.com/2017/12/04/the-sun-exchange-funds-solar-installations-with-micro-investments-and-bitcoin/?guccounter=1