Tuesday, January 9, 2018

New Startup Applying Blockchain to Renewable Energy Financing

By Vincent El Hayek

In what seems to be a first, WePower Ltd., a European startup, is aiming to finance the development of renewable energy projects across Europe using a blockchain powered platform. The company aims to fill what they view as structural problems in the manner in which renewable energy projects are currently financed that are depressing investment in the sector. In effect, WePower is looking to open up the project financing of renewable energy projects to the general public.

The WePower platform will allow energy producers to issue "energy tokens", each one of which represents a commitment to produce 1 Kw of energy in the future. A person or potential investor can buy tokens from a renewable energy project and either use the energy or sell the token. The purchase price of the tokens will be at below market rates. Further, .9% of the energy produced by energy projects on the platform is given to holders of tokens in a form of "dividend" that increases the value of the token. If the investor does not use the energy corresponding to the tokens the investor holds when the energy is produced, or does not sell the token, then the energy is automatically sold to the wholesale energy market and the investor receives the energy price in either fiat or crypto currency.

Besides just opening up renewable energy project financing to the general public, WePower claims that because everything on their platform is done via smart contracts, the transaction costs for each financing will be significantly lowered.

At the moment WePower is still rolling out its platform; however, they claimed in October to have already started working with a 1000 MW solar plant in Spain and to have a pipeline of renewable projects ready to be financed in Spain, Germany, Italy, Greece and Portugal. According to WePower, the company's platform has been cleared by European regulators and they are currently working with the Governments of Estonia and Lithuania. WePower has also recently been accepted into the Startupbootcamp track in Australia, one of world's biggest startup accelerators.

WePower is hoping to roll out its platform across Europe over the summer of 2018. To finance their expansion plans, an initial coin offering (roughly, the cryptocurrency world equivalent of an initial public offering) is planned to occur in February. It is still too early to know if the WePower platform will be successful, but successful or not, it is likely just one of the first of many applications of blockchain technology to the project finance and renewable energy fields.