Africa’s First Blockchain-based Solar Energy Crowdfunding Platform
At a recent blockchain meetup at Coinspace’s headquarters in New York, Sun Exchange co-founder Larry Temlock gave a presentation explaining the company’s technology and mission.
Essentially a stock market for solar energy, Sun Exchange allows users to purchase solar cells (the components that make up solar panels to generate electricity) using the South African Rand or bitcoin. Individuals can then lease the solar cells to businesses in order to form a grid that powers hospitals, factories, schools, and other users seeking to supplement energy from the main energy grid. By combining software, blockchain, the internet-of-things, and renewable energy, Sun Exchange connects investors to businesses and communities who need access to affordable electricity in developing parts of the world.
A Money Problem
According to Sun Exchange, “over 620 million people live without access to electricity in sub-Saharan Africa,” almost twice the amount of the population in the United States. Due to the lack of funding for small-scale renewable energy projects (under $1 mln), businesses in South Africa are in dire need of affordable electricity, experiencing on average of five to ten power outages per month. Although the sunniest continent on earth, corruption at the hands of African government officials along with the high upfront costs associated with developing solar energy, has left many Africans in the literal dark. Compounding this problem is the fact that many people in sub-Saharan Africa are not connected to their country’s main energy grid.
Rather than selling whole solar panels, the platform sells solar cells to lower the entry cost to investors who lease the cells from Sun Exchange. Each solar panel is made up of 60 solar cells that are represented as individual shares and make up the solar grid. The businesses and communities utilizing the electricity generated from the solar panels pay rent to the solar cell owners at a fixed price for a lease term of 20 years.
Solar cell owners receive monthly payments from the sold electricity, paid out in bitcoin. Projects on the exchange have a set number of solar cells they need to sell (approximately $8 each) in order to successfully launch. Operating on an all-or-nothing model, if a project fails to sell the total sum of solar cells, the initiative does not launch.
Sun Exchange has developed Ethereum-based smart contracts for these projects, however, they have not yet been implemented. When operational, smart contracts will distribute monthly payments to owner wallets and exchanges, provide transparent disclosure of the energy generated, and automate the payment of expenses, such as insurance. The performance data lives on the blockchain and can be monitored by users with tools provided by Sun Exchange.
In his presentation, Temlock stated that future payments may be distributed using the Lightning Network, so that solar cell owners can acquire micropayments in real time with increased frequency.
A Bright Future
Through the use of cryptocurrency, Sun Exchange payments circumvent traditional banking systems, allowing for cross-border payments to occur faster and with fewer fees involved. Although Sun Exchange does not yet facilitate the trading of solar energy, it may explore this option in the future. Blockchain-based energy initiatives from LO3 and Power Ledger that allow for the trading of solar energy can influence future use cases for Sun Exchange and other renewable energy blockchain platforms.
To find out more information, you can view Sun Exchange’s explainer video.