Can crowdfunding and cryptocurrency accelerate the adoption of solar power in developing economies? South African startup The Sun Exchange plans on finding out.
The Sun Exchange is a marketplace where you can purchase solar cells with bitcoin for a specific businesses or community. The solar cell owners then lease the asset back to business, earning money on the cells they purchased.
The platform gives businesses in the developing world the ability to switch to solar power without having to make a large up front investment in the technology.
For example the company recently completed a crowdfunding campaign for the Knysna Elephant Park which cares for more than 40 orphaned African elephants in South Africa.
Abraham Cambridge, founder of The Sun Exchange told Which-50 each cell cost R90, around AU$9, so the whole solar plant cost AU$110,000.
The system is currently being installed at the park and it’s leased for 20 years, although the hardware is guaranteed to work for 25 years.
“At the end of the 20 years it gets gifted to Knysna Elephant park, still with five years of guaranteed operating life within solar modules,” Cambridge said.
Since its first project in 2016 The Sun Exchange now has four solar plants up and running, which has allowed schools and factories to switch to solar power with no upfront cost.
Through The Sun Exchange, consumers can now buy increments of solar projects down to US$10, opening up solar energy to a far greater number of people. According to Cambridge the benefits of buying a solar cell are threefold: social, environmental and financial.
By accelerating the adoption of solar energy, Cambridge says The Sun Exchange is ultimately trying to tackle climate change.
“The African nations are such fast-growing economies combined that it’s imperative for the planet’s survival that Africa does go down the route of clean energy. If Africa goes down the route of India or China, of coal energy, then we’re all screwed. Africa has to go solar for planetary survival, and that is the problem we’re solving.”
Buyers can purchase their solar assets and receive rental payment with standard currencies or bitcoin.
Using bitcoin to fund the projects allows The Sun Exchange to take money from all over the world to fund its projects, Cambridge said.
“It’s got other great features as well, it’s transparent and secure, so people who’ve got concerns about owning assets in developing countries in Africa which to date have been known for corruption, bitcoin payments solve that by enabling direct payments peer-to-peer, in a transparent manner.”
The Sun Exchange plans to launch its own cryptocurrency – SUNEX token – at the end of this year/early next year which will allow its solar cells to be traded on a secondary market.
“The token doesn’t give you a financial income. Instead, it pools all the revenue created from all those tokens which can then be used to purchase additional solar cells.”
“Tokenising” allows owners to sell their solar cells, Cambridge said.
“This means you don’t have to be locked into owning a solar cell, you can sell them on a secondary marketplace peer-to-peer, without relying on us as an intermediary, which is a game changer because to date people have been relying on us to buy their solar cells and go to us if they want to sell it on.”
The concept of ownership and the right the sell electricity has posed regulatory hurdles for the start-up.
“We’re pushing the vanguards of financial technology and energy technology, so we’ve had to push the envelope on what it means to own solar plants. We’ve reverse engineered a solar plant and broken down the ownership of it to it’s base unit – no one has ever done that before, so it’s quite hard to define who is the actual owner.”
To overcome this the company had “innovative legal agreements” drawn up to clarify ownership of an asset within a solar power plant.
Highly regulated energy markets also pose a challenge for the business.
“In most jurisdictions you’re not allowed to sell electricity, which is why we lease the systems – we’re actually leasing hardware rather than selling electricity,” Cambridge said.
Cambridge explains, “That then gives us a universal application, because, for example, anyone in the world can lease a photocopier, you don’t need a license to lease one out. It’s the same thing with our solar hardware – we’re leasing hardware that is then used by the electricity user, on a sole consumption basis.”
For now, the company is revamping their website to improve usability and transparency. It recently built a dashboard so customers can now see a real time input of how much energy their solar cells are producing.
“Ultimately we’re going to make it much easier to find projects, to pay for solar cells on projects and offer a more diverse range of projects – we’re already looking at projects in Zambia, Kenya, Tanzania and into West Africa as well like Ghana and Nigeria.”
The Middle East also presents a big opportunity for future projects, Cambridge said.
“We’re setting up a project in Dubai where we’ve partnered with Dubai Solar Schools to roll out a very large rooftop solar plants for all the universities and schools in the city from early next year.”