With the drop in prices of solar panels, Solar energy has garnered significant interest of investors looking to diversify from fossil fuels. Similarly, Bitcoin- the cryptocurrency, has proven to be a useful remittance tool with intrinsic value. Bitcoin mining’s main expense is electricity. The Sun Exchange, a Cape Town, South Africa-based startup, launched in 2015, is an international crowd funding platform exclusively focused on Bitcoin financed solar power projects.
The Company has taken a unique decision to allow investments through Bitcoin – digital currency; removing the red tapes involved in investing abroad and facilitating transfers of funds within minutes. Investments through Bitcoin ensure savings in costs and time while transferring funds – with bitcoin transfers are made easily, quickly and safely irrespective of the geographical location of the potential investor. It is a first of its kind for Bitcoin, with the returns being also paid using Bitcoin. In future, the company plans to receive investments and pay returns only in Bitcoin. At present, the company is also accepting investments through local fiat currencies like South African Rands, etc. The company is also planning to start a crowdfunding campaign for a solar powered Bitcoin generator in the United States.
South Africa receives twice the amount of solar radiation as compared to England. The price of power for commercial connection is 1.20 Rand per kWh whereas for a residential connection it is 1.60 Rand per kWh whereas costs involved for solar systems are 0.40 Rand per kWh; thus ensuring very good returns for the business seeking funds for installing a solar system. Also, the consumer where the solar power plant is installed receives uninterrupted power supply, rather than depending upon the less reliable South-African power-grid. The small investors will have a good investment opportunity as they can reap their returns through Bitcoins.
The Company earns revenue by charging 5% to 10% of the funds raised as a success fee.
The company was founded by Abe Cambridge, a solar power engineer who ran a solar panels installation company in the UK. The Company raised 15000 GBPs through Indiegogo in November 2015. It was nearly 155% of the estimated projections & funds came from individuals of about 30 different countries.
The Company has currently raised investments for a solar power plant of 15 kilowatts capacity to be built on the roof of Waldorf School situated in Stellenbosch, South Africa. The power generated will be consumed exclusively by the school within its premises and the solar arrays have been designed so meticulously as to ensure there is no surplus energy. The internal rate of return have been calculated at 10.2%; there is a lease agreement with the school for 20 years – the school is to consume the power and the investors are to earn the revenue. The company projects that the investment will have the potential of a 10% internal rate of return.
The project in hand involves costs totaling 0.4 million South African Rands(60 Bitcoins) to build and make it operational. The Company has successfully raised the funding from individual investors mainly belonging to Australia, Canada, Switzerland and the United Kingdom. The first project was on a lease basis and the second project would be on a b2b loan basis. The company is looking to set up special purpose vehicle (SPV) according to the requirement of each project. Some businesses would not be interested in a lease structure as it does not allow them the benefit of depreciation on their books. As it is early days for the company it is still figuring out the best structure for all the parties involved.
The company will look for Solar projects that are technically feasible, economically bankable and profitable. Operational and financial due diligence of solar projects conducted by the company will be vital for its investors; Solar Power SPVs are to be built on co-operative foundation norms, i.e. pooling of resources, of which investors become the members and security owners. Investors will have a choice among a portfolio of diverse solar investments
The minimum investment for an adult investor is 1000 Rands and for a minor it is just 100 Rands. The Company is in favor of micro-investments as it wants to involve the general public to participate in solar power and park their funds ethically, safely and transparently. A MegaWatt solar project can cost up to 21 million Rands in South Africa. The company will be looking to tap the sub 1 MW projects currently, as conventional funding options are plenty available to large scale projects but lack for small projects.
The startup is looking to leverage the concept of responsible investing and combine it with the power of Bitcoins. With 3 million users across the world and a reported $6.5 bil in Bitcoins total market capitalization, the crypto-currency has gone mainstream.
The Sun Exchange is already a part of SW7 Accelerator Program in Cape Town, South Africa. The Company is looking to become a marketplace for not only South Africa but the entire world. It will leverage its technology and due diligence to ensure that the projects showcased are investment worthy.
Bitcoin electric meters
Once Bitcoin operated electricity meters are employed, investors can receive money instantaneously and in small increments as and when electricity is produced and consumed. IOT sensors would allow investors to analyze the performance of the project in real time and bring transparency to the entire investment scheme. The potential consumers will be equipped with Bitcoin electricity meters so that they pay in terms of Bitcoins for the energy consumed.
TheSunExchange has created a unique product from the standpoint of the millennial, an amalgamation of socially responsible energy & a digital currency free from the restrictions of governments and central banks. The company’s ability to curate the solar investment opportunities along with solid performance in existing portfolio investments will make it the Indiegogo of Bitcoin-powered solar projects.
Author: George Popescu and Heena Dhir