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Power Ledger, an Australian startup that recently won the Extreme Tech Challenge by Richard Branson, plans to start selling tiny fractions of renewable energy plants to anyone who is interested. "At the moment, it is quite difficult for ordinary people to invest and co-own energy resources," says Jemma Green, co-founder and president of the company. "It is practically exclusively the domain of institutional investors".
At the start of next year, the company plans to make its first deals – portions of a commercial-scale solar farm and a battery project connected to the grid in Australia – via a blockchain cryptocurrency token. (If you only have a confused understanding of what blockchain is, here's a detailed explanation.) "This will be the first regulated criptovaligence offer in the world," says Green. Later on, customers will also be able to buy portions with dollars.
The company, like a handful of others, is already using blockchain to enable a peer-to-peer grid, a system that allows someone with solar panels to sell excess energy to their neighbors. In Japan, the company uses blockchain to help create a virtual power plant. In California, he is working with a utility to use the blockchain to give carbon credits to electric car drivers to charge their cars during the day, when there is more renewable energy, rather than at night. But the new project uses blockchain to find a new source of funding for large-scale projects.
The product, called Asset Germination, will work with existing solar farms and other assets, rather than building new ones, because it is less risky for Power Ledger retail investors. Sophisticated investors can take on new projects separately, where there is a risk that a developer will not be able to complete the construction or find customers to buy electricity. Retail investors will only purchase assets that are already operational. The process helps to stimulate the growth of renewable energy because developers can use the money from the sale to create new projects faster than it would otherwise be possible.
Generally, selling a solar or wind farm to institutional investors is a slow process. "It takes a long time and there are not many buyers, because it's a great resource in terms of packaging methods," says Green. "But in splitting it into some parts and putting that token into an exchange, this makes the asset more liquid." The power plant (or battery, or other renewable energy asset) will function as a trust, with a custodian managing the investor facility. Investors will get returns as electricity is sold and the blockchain, which creates an immutable transaction ledger, will make the process transparent and secure.
Using blockchain is also a way to tap into the huge amount of money that flows into crypto-often markets for questionable ideas like Bananacoin, a digital token attached to the price of bananas, or occasionally definitive scams such as OneCoin, a Ponzi scheme which has raised hundreds of millions of dollars. "Many of the crypto investment proposals are high-risk and will turn into very little, in a similar way to what happened with the tech boom in the early 2000s," says Green. "I think that the owners of cryptography are interested in real goods."
It is one of a small but growing number of approaches to crowdfund cleantech. A new site is trying to build a version of Kickstarter for large renewable energy projects. Some researchers are exploring the idea of using the blockchain to circumvent the intermediary in financing new infrastructure in the developing world. "The public funding of the infrastructure because it is absolutely broken, and I would say, in many, many parts of the world, completely corrupt process," says Michael Casey, senior advisor for the Digital Currency Initiative at the MIT Media Lab, who contributed to launch a research project on how to use the blockchain to build solar microgrids in Puerto Rico. Bordering, a Bay Area startup that is trying to democratize municipal bonds, has worked with small investors to fund projects such as a huge wind farm in Utah and hydroelectric power in Ohio.
For Power Ledger, the new project is a way to accelerate the transition to a zero-emission economy in the tiny window of time that remains to prevent catastrophic climate change. "I hope it can play a decisive factor in helping to achieve the Paris climate goals," says Green.
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