Sun Exchange is one of a growing roster of ambitious, digital tech-driven social enterprises looking to do good in the world by broadening access to distributed solar energy technology in the developing world, as well as for like-minded investors small and large.
Last October, Sun Exchange announced it had raised $1.6 million to launch what it billed as the world’s first blockchain-based solar equipment and project crowdfunding platform, one that enables small investors to lease or purchase solar photovoltaic (PV) cells and modules and lease them to help build solar energy systems in Africa, the Middle East and an expanding range of developing, as well as some developed, world markets. Mobile device and network-friendly, the Sun Exchange crowdfunding platform enables community members to purchase or lease solar energy assets for as little as US$10.
Management is following that up with the creation of a digital, so-called utility token – Sunex – and the planned launch of the Solar Project Insurance Fund (SPIF), which Sun Exchange says is the world’s first developing world solar project default insurance fund. Solar Magazine spoke with Sun Exchange founder and CEO Abraham Cambridge to learn more about the company’s pioneering distributed solar energy products and services, what the company has accomplished to date, and how the new Sunex token and SPIF are expected to benefit the organization and accelerate and expand its mission of deploying solar power capacity in developing countries around the world.
A project insurance fund for the developing world
Sun Exchange is pre-selling Sunex utility tokens to community members at large discounts in advance of a full-scale, public offering slated to open April 22 – Earth Day 2018. A total of some US$800,000 worth had been sold at the time Solar Magazine spoke with Cambridge. “Many thousands of people have already registered on our platform and they’re waiting to buy,” he said.
Micro-leases and purchases of solar PV cells and modules carried out via the Sun Exchange platform have been made using Bitcoins as currency. Creating its own digital utility token (Sunex) will facilitate establishment of the company’s SPIF and the company’s ability to carry out commercial and industrial-scale solar energy projects, as well as help build and maintain a larger, active base of Sun Exchange community members, Cambridge explained during an interview.
Sun Exchange’s SPIF will be funded with Sunex tokens upon completion of the public offering. As management explains in a press release:
“The SUNEX network token is utilized in the new Sun Exchange Solar Project Insurance Fund (SPIF), designed to minimize risk and unlock financing for previously financially under-served solar projects.”
Management highlights following as SPIF key attributes:
- Safeguards Sun Exchange solar cell owners against costs associated with potential solar project defaults.
- Unlocks the flow of capital into emerging markets Commercial & Industrial (C&I) solar projects, accelerating critical economic and social development.
- Sun Exchange members can grow their token holdings by staking SUNEX tokens into the SPIF.
Doing well by doing good
Sun Exchange community members can earn annual, 20 percent returns on the Sunex tokens they invest in the SPIF, Cambridge told Solar Magazine. Management targets internal rates of return (IRR) of 10 percent for a typical, 20-year solar cell or module lease. “We take into account inflation and estimated increases in the cost of electricity, as well as other assumptions, such as probable solar energy production,” Cambridge elaborated.
Those targets have been exceeded for Sun Exchange’s inaugural solar power project. A solar power system installed in South African wine country – the town of Stellenbosch – has generated 6-7 percent annual returns during its first two years in operation. Project lease returns on average increase 6-7 percent each year, Cambridge explained.
“Small commercial and industrial solar projects can drive urgent economic development by powering organizations such as hospitals, schools, small and medium businesses in developing regions. However, with aid organizations and NGOs primarily funding residential solar, and large banks and financiers only backing large and utility-scale projects, C&I solar projects fall into a major funding gap,” he is quoted in the press release.
“With the new SUNEX network token and SPIF, Sun Exchange is leveraging blockchain and the crypto-economy to further bridge that funding gap and address a very real global challenge with the power to impact the lives of millions.”
Micro-scale crowdfunding for macro-scale solar projects
Sun Exchange has completed four solar energy projects in South Africa to date. Crowdfunding for a fifth project, for environmental NGO South South North, recently sold out in a record-breaking two weeks.
Germany’s Soventix is Sun Exchange’s main solar project engineering, procurement and construction (EPC) partner. “They bring us their commercial and industrial projects, which we offer to our clients,” Cambridge said.
Sun Exchange has been working to expand on that relationship, and its solar power project development portfolio, initially by assembling a network of African solar project EPC partners. “We now have cooperative agreements with 11 major installation companies operating across Africa,” Cambridge continued. That group includes Solar Turtle and the Conco Group, among others.
The company is also expanding into Latin America. Sun Exchange expects to begin construction of a solar power project in partnership with Civics in Puerto Rico over the course of the next three months, Cambridge said.
Sun Exchange has to wait for members to purchase or lease all the solar cells or modules needed for any specific project before initiating project development. Creation of Sunex crypto-tokens and the SPIF will enable Sun Exchange to pre-fund solar power projects. In addition, members who invest in projects will benefit as Sun Exchange will be able to begin making lease payments immediately upon a project’s completion. That’s opposed to waiting the one or two months that’s typical at present, Cambridge explained.
“What is fantastic about the Sun Exchange model is that it benefits us as the recipient of power and it benefits the people buying the solar cells and it’s also a win for the environment,” said Carl Wesslink, South South North’s director.
Their unprecedented approach to solar financing can achieve installation at scale on a commercially sustainable basis. This is the catalyst required for realizing our (distributed) energy revolution.
An additional layer of utility and a “gamified” solar rewards program
“Issuing our own crypto-token gives the Sun Exchange platform an additional layer of utility,” Cambridge explained. More specifically, it will enable the company to more fully realize its “gamified” rewards program, as well as help grow the value of the SPIF and Sun Exchange’s solar energy project portfolio.
The solar PV cells and modules leased or owned by Sun Exchange community members and used to build solar power projects in Africa earn an Africa Electrification Reward in the form of Sunex tokens, for instance, Cambridge continued. Reward recipients will also be offered incentives to invest those tokens in the SPIF.
“In total, we have about 50 different achievement rewards that are unlocked beginning with the first Watt [of installed PV power capacity] to 1 megawatt (MW),” Cambridge said.
Some achievement rewards are sector-specific, for leasing or purchasing solar cells or modules installed at schools or manufacturing plants, for example. The underlying aim, Cambridge explained, “is to help our customers build a diverse, ‘impactful’ solar cell portfolio.”
Sun Exchange will issue a total of 266 million Sunex crypto-tokens via the pre-sale and full-scale sales offering. Of those, 166 million will be sold publicly. The remaining 100 million will be held in reserve for making achievement award payments, Cambridge said. “We always try to keep the same public domain-to- reserve ratio – for every 1.6 tokens sold, one is put in reserve.”
That ratio will change once the SPIF goes live and achievement awards, which only take the form of Sunex tokens, are earned, Cambridge noted. “We will burn any unsold tokens and start out with that 1.6:1 ratio when the token sales offering is completed,” he added. “We’ll have enough in reserve to reward the equivalent of 100 MW of solar power installations.”
Sunex digital tokens and the Sun Exchange rewards program
Sun Exchange is preparing to launch its Sunex token public offering on several cryptocurrency exchanges. Cambridge said he could not disclose which at present. With security in mind, Sunex crypto-tokens comply with the the ERC-20 standard for Ethereum blockchain-based smart contracts. There were more than 21,000 ERC-20 crypto-token contracts in circulation as of January 2018.
Sun Exchange encompasses 11 levels of membership, which are calibrated to the value of their holdings. Higher levels of membership come with more in the way of advantages and benefits.
The level of Sun Exchange membership drops should members sell their Sunex award tokens, so there’s an incentive not to sell them, Cambridge explained. “The point in having higher membership is to offer incentives to invest more in the SPIF and participate more actively in solar cell and module micro-leasing, purchasing and solar project crowdfunding,” he said.
Sun Exchange offers discounts on the leasing or purchasing of solar PV cells or modules. Those discounts increase 0.1 percent as membership levels rise. Bonus lease payments also increase 0.1 percent with each step up. In members in higher tiers gain preferential choice of the solar power projects they invest in.
“We have invested in the Sun Exchange and purchased SUNEX tokens because we believe in the fundamental value of the business, and in the healthy growth of the network as people all over the world embrace renewable energy,” said David Orban, Network Society Ventures’ founder and managing partner and a Sun Exchange adviser. Network Society Ventures and Kaylon Venture Partners invested US$1.6 million in Sun Exchange’s initial round of venture capital funding.
“The innovation of coupling blockchain with solar energy decentralizes renewable energy funding and production, democratizing access and setting the stage for the long-term growth of Sun Exchange’s activities.”
By Andrew Burger. Source: Solar Magazine