They are a new way to raise money and build green power.
In the middle of the Bitcoin speculative orgy that is happening right now, it's important not to forget that the bones behind it, the blockchain, has tremendous promise. We noted in our post on Blockchain that another technology, Ethereum, was "a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference." I also quoted Don and Alex Tapscott who called it a Ledger of Everything:
This new digital ledger of economic transactions can be programmed to record virtually everything of value and importance to humankind: birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, provenance of food, and anything else that can be expressed in code.
I suggested that it might also be used for green building; in fact, it is being used for green renewable energy by WePower. The new company claims that it is really hard to raise money for renewable energy ventures because they are often small and decentralized, and often difficult to finance, but that they have the solution -- the WePower Ethereum smart energy contract Token.
Each token represents 1 kWh of green energy. To raise money, energy producers pre-sell their production at below market rates. By using Blockchain technology, there is higher efficiency because there are no intermediaries, greater security due to the "immutability of data" and a history of transactions. The guy building the renewable energy venture sells the tokens, gets the money and builds the power plant.
Once you start construction of the plant, you connect it to the platform and start providing energy to the grid. At the very moment the green energy is produced and has reached the grid, the energy tokens are burned and represent the claim of the buyer/investor to receive the proceeds of the energy liquidation. This is done via smart contracts, according to the power purchase agreements, and is accomplished with full transparency, speed, and liquidity.
A bit of energy from every producer (0.9%) is donated to the holders of tokens, so even if the price of power stays stable, the tokens increase in value constantly as power is produced, making them a better investment; kind of like a dividend on top of capital appreciation.
Owners of WePower tokens can use the energy when it is produced, assuming that there is a supplier who accepts them in the owner's home market. Or they can sell the token. If the investor hangs on, they "automatically sell the energy to the wholesale energy market once the energy is produced and [the investors] receive the energy price in fiat or crypto currency." Having bought future production at discount, they get their return at market rates at the time of production.
When looking at your investment using WePower, you feel happy. Your investment is backed by real, tangible assets — green energy. Due to smart contracts, it is liquid. You can always see how your investment is doing on the public blockchain. You are putting more funds into the energy sector, because by doing business, you are also doing good, by supporting the adoption of renewable energy.
Unlike Bitcoin, a WePower token actually represents something tangible, a kWh of green energy.
With WePower, you could choose what kind of energy you want to buy and always be able to observe its production on the public blockchain. You would always get green certificates, allowing you to see how much CO2 was cut and how you have contributed to a better world.
Is this all clear as day? No, the Blockchain may be transparent but the math behind it still isn't for me and I hope I got this right. I still have many questions:
- What happens if the producer selling the token doesn't deliver the power? Is the token then worthless?
- Who is paying the cost of running and verifying the blockchain, which still uses a lot of energy on the Etherium platform?
- Is the value of the energy needed to run the blockchain is greater than the commissions one would pay if this was just an investment fund?
- Is the CO2 produced by the blockchain is greater than the CO2 saved by the renewable investment? Perhaps it runs on green power.
#Startupbootcamp #Accelerator (SBC) chose us as one of 10 #energy companies for a prestigious #Australian energy track program! It is both a huge honour & achievement!— WePower (@WePowerN) December 13, 2017
Thank you, @trevortownsend, @ruudhendrikstv, @Sbootcamp! #ICO #Blockchain #GreenEnergy https://t.co/zzjaPyHPaM
But it is an interesting example of how, as Vitalek Buterin said about Etherium, the blockchain can be a tool to effect positive change in the world. More at WePower, and on their recent recognition in Australia.