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Adopting Blockchain for Alternative Energy access slides

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Adopting Blockchain Technology
for
Financing Alternative Energy Access
in Africa
Presented at the:
Nigeria Alternative Ene...

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The International Energy Agency (IEA) submits that about 1.2
billion people lack electricity globally – 95% of these peopl...

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About half the global population growth is being recorded in the emerging
markets of Asia and Africa and it is becoming mo...

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Adopting Blockchain for Alternative Energy access slides

  1. 1. Adopting Blockchain Technology for Financing Alternative Energy Access in Africa Presented at the: Nigeria Alternative Energy Expo (NAEE2018) Author: Victor Alagbe VP Operations & Blockchain Technology, OneWattSolar
  2. 2. The International Energy Agency (IEA) submits that about 1.2 billion people lack electricity globally – 95% of these people are in sub-Saharan Africa and developing Asia. Large swatches of the population are entirely off-grid or underserved by unreliable electricity. Renewable energy is a viable solution, but the systemic bottlenecks in the centralization of government agencies, NGOs, and financial institutions are making it hard for the alternative energy industry to actualize its potential in providing energy to unserved and underserved demographics.
  3. 3. About half the global population growth is being recorded in the emerging markets of Asia and Africa and it is becoming more necessary than ever before to create sustainable pathways to develop the energy sector. In Nigeria, there’s an annual energy demand of about 98,000 MW but the traditional grid only has an installed capacity of 12,000MW. Much of the energy deficit is being supplied by generators running on fossil fuel and a smattering of renewable energy projects. This paper provides insights into how Blockchain technology could unleash an era of decentralization to unlock the rapid growth of renewable energy projects across key verticals.
  4. 4. What is Blockchain Technology Blockchain technology in practical terms is a decentralized network on which users can transfer unique pieces of digital property to other users with the guarantee that the transfer is secure, visible to everybody on the network, and such that the legitimacy of the transfer cannot be challenged. Functionally, a Blockchain is a record of digital transactions that that is immune from alteration, third-party interference, and data breaches. A Blockchain provides a fool-proof measure of digital interactions without a centralized control/server/database that could be targeted as a point of failure.
  5. 5. How does a Blockchain work? 1. Someone requests a transaction/data stream/file 2. The request is broadcasted to a P2P network of computers called nodes 3. The network verifies the authenticity of the transaction required using cryptography algorithms 4. If the transaction is successfully verified, it is added to other transactions to create a block of data in the ledger 5. The block of data is now added to an existing chain of blocks to be a permanent and unalterable record of data For context, you can’t get rid of an information stored on the Internet by destroying the computer in your home or office; likewise, you can’t alter any record stored on the blockchain by attacking any one node that has a copy of the ledger.
  6. 6. Blockchain is not Bitcoin Most people get their first interaction with Blockchain technology from hearing about Bitcoin or one of the many other cryptocurrencies in the market. While Bitcoin is mostly responsible for bringing Blockchain technology into the limelight, Bitcoin is only of the many applications of Blockchain. Bitcoin and cryptocurrency in general, is essentially digital money based on cryptographically defined trust to enable counterparties engage in a transaction without a financial intermediary. The key elements of cryptocurrency – being peer-to-peer, transparent, fast, and with low/zero transaction costs would be valuable in catalysing access to renewable energy financing.
  7. 7. Decentralizing renewable energy projects with Blockchain Blockchain technology provides a means for the industry to transition from the current centralized models into a decentralized models. Decentralizing the markets will in turn optimize energy generation, transmission, storage, consumption, and transparency. The deployment of decentralized energy systems – (SHS systems in clusters and Minigrids) – could create the pathway for unlocking sustainable growth. Many emerging market countries have limited infrastructure and institutional capacity to meet the fast-rising energy demand that is required to keep their economies afloat. Decentralized models could enhance the growth of solutions that fix the energy deficit without incurring huge infrastructure investments that have delayed the development of the energy industry. It might be easier to build a microgrid to reach 100 homes and scale the process 10 times than it is to build a l power plant to reach one thousand households in one fell sweep
  8. 8. Enabling the growth of the prosumer alternative energy economy Blockchain technology is a transparent and tamper-proof system of records—it is becoming increasingly reliable as a transactional platform for energy prosumers: people who produce, use, and sell their energy. Households who generate renewable energy can easily convert their surplus energy to tokenized energy credits, the surplus flows into the transmission system, and other consumers have a choice in buying their energy on the P2P market from their neighbour or from corporate utility providers.
  9. 9. The Blockchain provides reliable data about how much energy is produced, how much of the surplus energy was traded, and how much the prosumer earns in energy credit among other things. More pointedly, we can leverage Blockchain to manage energy transactions, billing and settlement. LO3 Energy is running​ the Brooklyn Microgrid to reimagine the traditional energy grid model with the concept of a communal energy network. In the Brooklyn Microgrid, the utility provider still maintains the electrical grid that delivers power, however, the actual energy is generated, stored, and traded locally by members of the community, for a more resilient and sustainable clean energy model. The TransActive Grid project in New York currently has more than 130 homeowners with or without solar photovoltaic (PV) systems who are already buying and selling power from each other on a blockchain.
  10. 10. Increasing investor confidence Cryptocurrency for instance provides a secure way to track the disbursements and utilization of funds for accountability on funds allocation. Smart contracts can guide the disbursement of funds against predefined milestones. Smart contracts can also ensure the prompt and accurate disbursement of returns/dividends to investors without much FX volatility and transaction costs. Supply chain management solutions being built in the blockchain, when adopted for renewable energy projects, can help investors track the system components across the value chain to prove that a Minigrid project approved for Potiskum has not been diverted for installation in Gboko.
  11. 11. Crowdfunding investments in renewable energy Tokenization provides an incredibly way to crowdfund investments in renewable energy projects. If you need $5 million to execute a renewable energy project – you might find it easier to find 10,000 people to invest $500 each than it is to convince 5 investors to give you $1 million each. For one, many people who are interested in clean energy do not necessarily have the deep pockets necessary to fund green energy projects. Blockchain powered crowdfunding could allow them to risk smaller amounts directly to the project without necessarily going through intermediaries.
  12. 12. OneWattSolar is leveraging the crowfunding feature of blockchain to provide an innovative Energy-As-A-Service solution that bypasses the initial reservations that people have towards paying upfront to install solar home systems. OneWattSolar pays for, installs, owns and operates the Solar Home Systems in off-grid and unreliable-grid markets of sub-Saharan Africa through Blockchain technology. We are using a blockchain-powered solution to crowdfund (using our OWT token) the financing of solar home systems – so, our customers don't have to pay upfront for the SHS systems or commit to unfriendly loan offers. Our customers only pay a monthly access fee to use the Solar Home Systems which has the capacity to supply most of their energy demand based on the energy audit of their property.
  13. 13. Blockchain technology helps us provide transparency in financing, generation, and consumption along the value chain. Token holders can see exactly how many systems we have installed because each SHS has an internet-enabled OneWatt Meter that feeds data back to our blockchain. The blockchain-powered tokenization of renewable assets also provides liquidity for investors by allowing fractional investment/ownership in renewable energy projects to create a secondary market for the exchange of such investments. Hence, the partners who buy the OWT token can liquidate their positions at any time by selling the OWT tokens on an exchange for other cryptocurrencies or their preferred fiat currency.
  14. 14. Challenges of adopting blockchain for energy financing • Knowledge gaps • Lack of skilled blockchain developers with interest in the energy space • Unclear regulatory environment • There are not many proven use cases Blockchain outside cryptocurrencies
  15. 15. Knowledge gaps Many people still confuse Blockchain technology with Bitcoin and cryptocurrencies. Hence, the first mention of Blockchain technology often causes many people to put up walls of scepticism because of the stories they’ve heard about the volatility of Bitcoin and other cryptocurrencies. There needs to be an ongoing concerted effort to provide product education on how Blockchain technology could solve the transparency bottlenecks hampering the growth of the renewable energy industry.
  16. 16. Lack of skilled blockchain developers with interest in the energy space Another challenge hampering the adoption of Blockchain technology is the fact that the industry is still young and Nigeria still has a talent gap of skilled blockchain developers who can create localized applications. For the most part, local blockchain developers are focused on cryptocurrency applications or working with foreign teams on applications in other markets. Renewable energy firms that want to leverage Blockchain will be ready to put in a lot of hard work in finding local developers that want to work on their project or be willing to pay top dollar to outsource to foreign developers
  17. 17. Unclear regulatory environment Many governments are choosing to err on the side of caution in relation to cryptocurrencies – and understandably so because cryptocurrency is digital money operating outside the control of governments. However, the strong connotations between cryptocurrency and Blockchain means that the regulations around how Blockchain could be applied are unclear. Of course, regulations tend to catch up with innovations, but it will be reckless to ignore the fact that a ban on cryptocurrencies in any country will limit the direct applications of Blockchain technology.
  18. 18. Not many proven use cases outside cryptocurrencies Blockchain is great but it is still hard to point to its widespread applications beyond cryptocurrencies. Many of the other applications of Blockchain especially in the energy space such as OneWatSolar, LO3 Energy, SunPower are still in pilot phases. Other companies in the renewable energy space are still watching out these pilot programs will turn out before they make a final decision on whether it Blockchain is a solution worth exploring or not.
  19. 19. Final Words! The original debut of digital disruption birthed the Internet of information. We are witnessing a second wave powered blockchain technology as the Internet of value gains mass- market adoption. Renewable energy companies that are proactively exploring how to leverage blockchain technology to improve their competitive advantage will most likely be better off than companies that are ignoring this disruptive force. Start disrupting today. Victor Alagbe VP Operations & Blockchain Strategy, OneWattSolar Email: victor@onewattsolar.com, info@onewattsolar.com Website: https://www.onewattsolar.com

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