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SolarCoin: How Blockchain is Incentivizing a 5,000 Gigawatt Quest to Save the Planet

Feature Article | June 28, 2017 by Jacqueline Prause

A trip through the idyllic farmlands of Bavaria, in the south of Germany, is a testament to the enthusiasm here for solar energy, one of the many green technologies Germany is embracing as it undergoes a national Energy Transition to using 60% renewable energy sources by 2050.

Here aging dairy barns are entirely covered with solar panels to capture the sun’s rays that come over the nearby Alpine peaks. Munching on meadow grasses, the bovine residents hardly seem perturbed by the barns’ hyper-modern solar installations – and the barn itself is thus doubly productive for the farmer.

Worldwide there are currently about 7 million solar installations already grid connected, amounting to some 300 gigawatts (GW) of energy capacity, roughly the equivalent generation capacity of 500 nuclear reactors. Germany alone had a solar generation capacity of 41 GW in 2016, delivering more than six percent of its total energy consumption – impressive for a country that lies well outside the sun belt.

With climate change experts forecasting that global warming could possibly increase the earth’s temperature two degrees Celsius by mid-century, people are increasingly turning to low carbon energy sources, like solar, wind, and hydropower to mitigate the effects of global warming. According to the International Energy Agency (IEA), solar energy could become the largest source of electricity by 2050 – ahead of other energy sources like fossil fuels, wind, and hydro. Based on figures from the IEA, the solar community hopes to couple another 5,000 GW of solar power to the grid – that’s the equivalent of an additional 200 million households using solar power.

“We are the first generation to live global climate change in real-time and to feel it, but we are also the last generation to be able to do something about it,” Francois Sonnet, co-founder of ElectriCChain, an affiliate of the SolarCoin Foundation, recently told members of the European Parliament in a session on science and technology options (STOA). “The technology is there; the will and the money isn’t.”

We are the first generation to live climate change in real time but the last to be able to do something about it

Incentivizing Solar Uptake

Rather than wait for more money to flow into the solar industry, the SolarCoin Foundation, based in Greenwich, Connecticut, is incentivizing solar production for participating households and businesses, one megawatt-hour at a time – and it’s using blockchain technology to do it.

Founded in 2014 by a group of solar experts and macro-economists, the SolarCoin Foundation is an international network of volunteers and community whose job it is to oversee the distribution of SolarCoins (cryptoexchange symbol: SLR) – a blockchain-based digital currency that is distributed to solar producers at a rate of one coin per megawatt-hour of solar energy produced, based on verified meter readings. The organization maintains a public ledger that records each SolarCoin given out to solar electricity generators.

The SolarCoin is both an incentive and a reward for solar producers to participate in the solar economy. The program is often likened to air miles for frequent flyers in the airline industry. “Basically, you enable a prosumer to deliver to the grid and to use the infrastructure – or to set a whole new infrastructure, in the case of micro-grids in developing countries – and to bill energy to a neighbor. That’s the purpose of peer-to-peer energy,” explains Sonnet.

SolarCoin is active in 32 countries, with a network of affiliates and partners to serve different regions: Solar Change is active in South America, EMEA, and the United States; Solcrypto is the claims facilitator active in the Asia-Pacific region; and ElectriCChain, registered in Andorra, aims to record solar energy data for the purpose of the betterment of the solar tools as well as monitor human progress and academia.

SolarCoin is the first digital asset to be recognized at the supranational level by International Renewable Energy Agency (IRENA) as a source of financial support for the solar industry. Affiliate ElectricChain recently received high praise at the UN Climate Summit in Morocco, winning the “Homes” category for its groundbreaking nano-grid project. The recognitions have served to provide legitimization to the organization as it promotes its work around the world. “Depending on the places we go to, some people don’t necessarily know the good story of solar energy,” says Sonnet. “Working with these big institutions, like the UN and IRENA, certainly helps.”

Harvesting SolarCoins at Home

To manage the distribution of individual SolarCoins, the SolarCoin Foundation operates on its own blockchain, which is 200-300 times more carbon efficient than the limited processing capabilities of the Bitcoin blockchain (SolarCoin Blockchain explorer is available here). Plus, each SolarCoin has real value attached to it: one coin is the equivalent of one megawatt hour of solar power. By way of example, Sonnet explains how people can accumulate the SolarCoins, “Say five kilowatts of solar generation] in Munich would produce six megawatt hours, so that would be six SolarCoins on a yearly basis.”

Approximately 420,000 SolarCoins have been granted to solar producers worldwide. There are currently USD$500 million of SolarCoins waiting to be claimed. The SolarCoin Foundation expects that its distribution program will last 40 years as it distributes the 97.5 billion SolarCoins, which represent 97,500 Terra Watt hours of solar electricity.

For individual owners, the coins are distributed once every six months through the platform to the owner. No equipment is necessary outside of a solar installation. A solar producer would harvest SolarCoins in two ways: 1.) download the digital wallet from the SolarCoin web site; it will embed an API that enables you to claim SolarCoins directly from the blockchain; or 2.) use a $10 piece of equipment called a Raspberry PI, which is a data logger that gathers information from the solar installation and publishes it to the blockchain. Currently, there are also discussions in progress to have some solar equipment providers embed SolarCoin in a more dynamic way onto solar equipment they sell, hence enabling granting down to the minute. Find out how to enroll with SolarCoin here.

Seeding the Solar Economy

What can you do with your SolarCoins? Most people will likely exchange the digital currency for euros or dollars on one of many cryptoexchanges. At the moment, the value of an individual SolarCoin is around $0.24. Perhaps then, a better idea might be to hold the coin until more people join the network. Like many blockchain-based ventures, the value of the network increases markedly as more people join, adding more nodes and producing more transactions. The larger the network, the greater its value. This video from SolarCoin founder Nick Gogerty explains the concept of currency valuation in the network.

The SolarCoin Foundation expects to have one million participants by the end of 2019. This would provide the uplift to bring the value of one coin to between $20 and $30 per megawatt hour. As noted in Scientific American, “For now, the handouts act as a reward – a little token of thanks – to the people who are already doing their part for the environment.”

The envisioned future for the currency is that prosumers will be able to use SolarCoins to directly pay for goods and services, seeding the solar economy, which might for example include battery storage and additional services. “To the extent that solar participants understand that, then it makes a compelling case for SolarCoin,” says Sonnet.

According to Sonnet, SolarCoin plans to onboard “a couple dozen thousand” solar installations in the medium term. This will have the effect of triggering the next wave of installation owners to participate in the network and also for businesses to join the network too. “We’re at the very beginning of the value creation of SolarCoin,” says Sonnet. “It takes time obviously, but it’s like a spinning wheel: once the cogs are in place, it starts spinning by itself, and this will enable the Energy Transition.”

Top image via Shutterstock

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