SolarCoin: blockchain in the service of renewable energies

By June 13, 2016
Keywords : Fintech, environment, Europe

Lumo, a French crowdfunding platform dedicated to supporting renewable energies, is backing the ElectriCChain project. Ventures financed through the platform will in future be able to distribute SolarCoin, a crypto-currency specially created for the purpose of rewarding solar power producers.

ElectriCChain, an initiative whose aim is to apply blockchain technology to the solar energy sector, has just announced its 14th member, French company Lumo. Set up in 2012, crowdfunding platform Lumo is fully dedicated to promoting the transition to more sustainable energies. Its members help to finance renewable energy-based electricity generation facilities. In the near future, a solar power producer that raises funds on Lumo will receive one SolarCoin for each MWh of solar energy produced.

ElectriCChain, enabling solar power producers to use the blockchain

In order to organise the distribution of SolarCoin, Lumo decided to support ElectriCChain, an ‘Open Science’ project in which MIT and NASA are already taking part. The project seeks to promote the use of blockchain technology, and specifically the SolarCoin crypto-currency, among renewable energy sector players. Under this co-operation arrangement, Lumo is to run a Proof of Concept phase until January 2017, testing SolarCoin distribution out on a single project before it is made available for more widespread use. “We’re going to set everything up so that investors can open a wallet and then receive SolarCoin when the production facility is up and running. Our aim is to encourage those who are launching renewable energy projects to rally around SolarCoin and so boost the initiative to the greatest extent possible,” explains Lumo founder Alexandre Raguet.

Image de la plateforme Lumo

A dozen projects have already been financed through Lumo, mainly in the fields of solar electricity, hydroelectric power and biomass energy. For example, the Moulin de Courteron project, Lumo's first hydroelectric project, located near Troyes, south-east of Paris, was funded to the amount of €350,000 – a third of its total funding target – by 283 investors.

An engineer by training, Alexandre Raguet made a career in market finance before getting interested in microcredit and crowdfunding. Today he is Chairman of the Board of the European Crowdfunding Network and a fervent proponent of ‘impact investing’, i.e. making investments that both show returns and are also beneficial for the planet. He underlines just how useful this crypto-currency can be: “With SolarCoin you can easily quantify the benefits to the planet because investors earn one SolarCoin every time the installation they’ve invested in produces one megawatt hour. This is a complement to the payment system, a reward, which isn’t going to replace the euro on our platform.”

A still symbolic crypto-currency

For the moment this reward is more symbolic than real. The SolarCoin Foundation has set itself the target of attaining an exchange rate of $20 by 2018. At the moment however the rate for a SolarCoin is only a little over 10 US cents. Nevertheless, this ‘green’ currency - and not least the profiles of some SolarCoin holders - offers a real marketing opportunity for brands whose positioning is based on ecological values and environmental protection. “All the investors who have made an effort to obtain SolarCoin should be targeted by companies that might wish to use SolarCoin in order to highlight their offerings to consumers with interesting profiles,” argues Alexandre Raguet.

Image de panneaux solaires

The Brooklyn electricity micro-grid uses the Ethereum blockchain to manage contracts between the many small producers of electric power who have installed solar panels on their roofs in the New York borough, and the consumers who purchase the electricity.

Will companies such as French firm Nature & Découvertes and Californian sportswear company Patagonia accept SolarCoin at the checkout one day soon? That is the dream of the Lumo founder. For the moment the entrepreneur is studying the potential impact of the blockchain on crowdfunding: 'I don’t like Bitcoin very much because it has a bad reputation, but I’m very interested in blockchain technology. At Lumo, we’re very keen on smart contracts for transactions and also the ‘Minibons’ (mini-vouchers) announced by [French Minister for the Economy, Industry and Digital Affairs] Emmanuel Macron during the third conference on crowdfunding in late March. Those old savings certificates are going to be dusted off and transferred to a blockchain. We’ll be issuing shares, bonds and minibons as soon as we can,” says Alexandre Raguet.

The blockchain as a disintermediation tool for the energy sector?

In addition to these incentives to take part in crowdfunding, energy sector players are getting very interested in another potential application of the blockchain – i.e. for setting up contracts between energy consumers and producers without the need to pass through an intermediary. This is the goal of the micro-grid project which startup Transactive Grid is currently running in Brooklyn, New York: “When a renewable energy facility is installed in an area, local people tend to want to consume locally-generated electricity,” Raguet points out. “This is exactly what’s happening in Brooklyn, where consumers’ meters can connect directly to producers in the borough so as to buy their electricity with no intermediary - either for distribution or payment. Electricity sales with no middle-man!
The current SolarCoin exchange rate shows that we are still in the very early stages here. However, the blockchain could well be set to re-invent the energy industry, among many other sectors…


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