In 2009, around the same time as Bitcoin was first created, commercially-viable solar PV emerged as a disruptor in the energy industry.
At that time, solar power was significantly more expensive than fossil fuel and other non-renewable power sources, and hefty subsidy programs were needed to incentivize the deployment of solar. Eventually, the economic stimulus had the desired effect, creating a boom in solar technology and manufacturing efficiency and achieving economies of scale.
Since 2009, the price of solar power has quickly declined and rates of solar deployment have skyrocketed.
In 2016, solar PV took the lead for the fastest electricity capacity growth compared to any other fuel, beating net growth in coal for the first time. At the current rate of growth, solar power could meet most of the planet’s energy requirements by the end of the century.
Unfortunately, while solar energy has taken off and quickly spread across the globe, it has lagged behind in the developing regions that need it most. Today, roughly 1 billion people globally still lack access to electricity. Coincidently, most emerging markets struggling with energy access are located in areas with a great abundance of sunshine.
In 2017 the International Energy Agency (IEA) confirmed that decentralized energy systems, and primarily solar, offer the lowest-cost option for electrification across Sub-Saharan Africa. This means that beyond offering an attractive, renewable and practical electricity alternative, solar can unlock critical socioeconomic development globally, improving education, healthcare, safety and human rights conditions across emerging markets.
However, despite the declining costs of solar, financing continues to be a major obstacle for solar deployment, especially in regions struggling with energy access. Traditional financiers prefer to fund large portfolios of solar projects or centralized utility-scale solar plants, leaving small to medium projects needed to power schools, hospitals, small businesses and communities with extremely limited funding options.
The challenge is even deeper for projects where off-takers are not “banked,” as is the case for many rural communities in developing regions.
Consequently, community-scale mini-grids are often left unfunded, despite their lucrative potential. Communities are then forced to spend more on diesel fuel and kerosene rather than on solar energy.
In Kenya, for example, 81 percent of households don’t have access to electricity, and rural households spend an average 26 percent of their income on kerosene, which continues to increase in price and has high levels of associated fire and respiratory health risks. This is where decentralized, digital, blockchain-based finance (i.e., cryptocurrency) is set to make a massive impact.
The fast-emerging crypto-economy is giving way to new financing innovations that offer a democratic solution to funding small and medium projects in emerging regions, unlocking a new flow of capital into projects with the potential to improve millions of lives and generate significant returns to investors. While solar and blockchain technologies have quickly advanced in parallel throughout the last decade, their combined potential is just starting to be realized.
An example is a partnership that South Africa-based Sun Exchange, recently announced with Kenya-based Powerhive. Through the new joint initiative, Sun Exchange will utilize the crypto-economy to facilitate funding for up to 150 new Powerhive rural mini-grid projects that will provide power to 175,000 people in Kenya.
Funding will be facilitated through the Sun Exchange solar micro-leasing marketplace, which enables individuals across the globe to buy into remotely-located solar projects and earn a return from the power that those projects generate. This means that a person in Tokyo, for example, can use cryptocurrency to purchase solar assets through Sun Exchange, which will be installed into a Powerhive mini-grid in rural Kenya.
That user will then earn a return for the power that his solar assets generate while helping to deliver life-changing energy access to the off-taker community in Kenya. Blockchain-based cryptocurrencies such as Bitcoin provide the optimal payment alternative to enable fast and seamless transactions across borders.
Sun Exchange and Powerhive teams with community on site at Powerhive microgrid /Sun Exchange & Powerhive July 2018
An important differentiator in Powerhive’s approach to solar mini-grid project development is its focus on community engagement and prosperity programs. The team at Sun Exchange is inspired to work with Powerhive to introduce democratic, cryptocurrency-based funding into these projects, which is the future of money for Africa.
Regarding the partnership, Christopher Hornor, CEO of Powerhive stated, “The crypto-economy is the best tool we have to fight poverty, hands down. Our customers are hard-working people who have been excluded from the global economy. Now, we are able to bring them onto a platform of modern, clean power and to offer support for new businesses and opportunities for personal and intellectual enrichment.”
Hornor explained that he’s seen brilliant kids in villages where Powerhive has deployed mini-grids who get electricity and an internet connection and suddenly learn to write flawless code.
“That’s why I’m excited about the partnership with Sun Exchange, we can scale our impact exponentially while working with individual investors who understand what we’re doing and now have the ability to support it,” Hornor continued.
The transformative capacities of blockchain and solar power have started to create a powerful nexus, as evidenced through the Sun Exchange and Powerhive partnership. Both technologies continue to quickly mature, spread and merge.
Suddenly, it seems entirely feasible that a fully decentralized, blockchain-based global economic system can unlock the full potential of distributed solar power, and finally give way to what once seemed to be a utopian dream: truly universal energy access for every person on Earth.