Open & smart solar financing
We are building an open source platform that leverages decentralization technology for disintermediation and contractual automation of financial processes to drive community-owned solar projects.
OpenSolar’s core technology seeks to streamline the flow of crowd-based funds (eg. bonds and equity) to finance the deployment of solar assets, allowing end-users to own these resources in a short time frame through regular utility-like payments driven by energy generation and consumption IoT data.
The Global Context for Next-Gen Renewable Project Finance
By 2050, the world needs to achieve a net-zero carbon emission state. The transition to renewable energy is accelerating, but is still not on pace to meet this global target. Solar power is a consolidated viable option for household and utility power in many parts of the world, both where there is a functioning electric company and where one is absent. Solar power is now affordable and increasingly accepted as a viable alternative to legacy energy systems. It's also a solid generator of jobs
There are many options for financing solar energy, particularly in the USA. However, the underlying contractual frameworks to finance renewable energy are not fit for the purpose of a radical mobilization of capital to achieve global goals. Most long-term power purchase agreements (PPA), lease-to-own models and the procedures to capture the associated investment tax benefits and green attribute credits are cumbersome and require economies of scale to be affordable.
Furthermore, the industry lacks a common platform and standard to seamlessly integrate a full array of investors—overseas, institutional, public and private— with beneficiaries using accessible debt and equity securities. To the energy finance world “there is more money available than there are projects.” In part, this is due to the cumbersome legal pipeline that developers must navigate from project inception to capitalization.
We believe that by applying a combination of IoT & blockchain technology, we can significantly advance contractual automation in energy project finance. By embedding this in the backend of adaptive peer-to-peer open platforms and intuitive user interfaces, we can significantly remove the financial frictions preventing a full decarbonization of the energy sector.
End-to-End connection between investors and end-users
The OpenSolar Project and platform aims to use blockchain and IoT-based smart contracts for disintermediation and contractual automation in financial processes to drive community-owned solar projects.
We seek to develop open source core technology to streamline the flow of crowd-based funds (eg. muni bonds and equity) to finance the deployment of solar assets, and allow the end-users to own these resources in a short time frame through regular utility-like payments driven by energy generation and consumption IoT data.
The payment platform is built on the Stellar blockchain, and our pilot projects are done in public schools in Puerto Rico.
Pilot projects: Puerto Rico’s public schools and emergency shelters
Our blockchain and hardware engineering, and field efforts, are geared to consolidate a model to transform all of Puerto Rico’s public schools into solar-power emergency shelters.
Puerto Rico emergency and opportunity
One year after hurricane Maria hit the island, schools are still exposed to a centralized and high-carbon energy system vulnerable to climate impacts. At the same time, most schools are becoming grass roots community centers facilitating discussions of concerned parents on how to increase climate & social resilience in the whole community. The Puerto Rican (PR) government and the department of education are working to appoint schools as emergency shelters —nodes with robust energy and communication systems— for the community to reach out in the event of unavoidable climate shocks. Financing is a key gap. The American Red Cross has allocated a grant to the PR dept of education that will cover 100 schools. We believe the system and model we are developing could provide secure and novel financing for the solar reconversion of the other 700 public schools in the island, delivering a substantial cost-saving in the education budget. In the process, we seek to introduce an new open source platform to structure peer-to-peer solar finance and payments, replacing the now outdated power payment agreement (PPA) model for residential and commercial solar, with an adaptive and data-driven pay-to-own model.
Architecting a Municipal Smart Solar Bond
The initial financial investment model considered here is through the issuance of a municipality bond as the debt instrument. The issuer and end-user —in this case the Puerto Rico Department of Education— issues the bond through a blockchain-enabled platform (eg. neighborly), and investors cover the principal (i.e. capex) of the solar system. Our smart solar contract will then organise bidding processes with contractors (i.e. solar developers), pay out contractors, inform when the system is 'live,' and orchestrate tariff-based payments.
We seek to develop a model where impact investors can finance solar systems around the world with several layers to de-risk their investment and certify the project's social and environmental value. End users should receive solar arrays with no down-payment, pay for the energy per kWh —just like they do with current utilities, but once they pay off the cost of the system plus a low interest (i.e. a return to investors), they fully and legally own the system.
IoT sensor data stream for smart solar contract
Different layers of IoT energy monitoring devices informs of the energy generated by the solar system and the energy consumed by the end-user. This energy data, that will eventually use an intermediary oracle, activates payment transactions per kWh at a specified tariff rate and at specific intervals. Energy payment transactions occur between the end-users wallet/account and a main escrow smart contract that accrues the funds and issues payment of interests (i.e. coupons) to investors. Once the accrued funds can cover the original principle, the contracts pays off investors and the bonds matures.
Proof-of-concepts to date, roadmap and project endorsements
Our team has successfully deployed a 1kW solar array in our partner school and community in Aibonito, Puerto Rico. These assets were sized to power our data sensors and the school’s admin building since the headmaster’s office holds critical emergency loads like a telecommunication system for first responders. The system and its IoT data is directly connecting to the Ethereum test-network and simulating payments through an architecture of smart solar contracts already in place. Both the Yale and MIT hardware and software engineering teams hold weekly meetings and development sprints with different partner organisations to advance platform integration. Our roadmap seeks to successfully deploy a full pilot project to install a 30kW system in the school by early 2019. This pilot would use a first full version of the municipal smart solar bond. With a successful pilot project, we will be presenting a project finance document for the reconversion of 700 public schools. The project has ongoing endorsement from the Puerto Rico government innovation office and secretary of education