Funding energy efficiency on the blockchain

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Apple co-founder Steve Wozniak has launched Efforce, a blockchain-based energy efficiency crowdfunding platform.

Efforce, styled as “the first blockchain-based energy saving platform”, is designed to enable contributors to support energy efficiency projects by investing in tokenised future savings. These funds are delivered to companies to support energy efficiency projects with the resultant savings written on the blockchain from where they are redistributed to the investors.

The model draws on the crowdfunding model popular in the early days of blockchain and the traditional ESCO model for funding energy efficiency projects in which returns on investment accrue through energy performance contracts, i.e. the savings the energy efficiency improvements deliver.

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Energy efficiency has considerable potential in the future energy system. In 2019 the market reached $250 billion, according to the International Energy Agency (IEA).

While there has been a slowdown in the current year, growth will continue. The IEA has projected energy efficiency to deliver almost half of the reduction in energy-related greenhouse gas emissions over the next 20 years in its scenario targeting full achievement of the international climate and energy goals.

Energy efficiency upgrades can readily run into the millions of dollars. But the main challenges occur for the smaller amounts of hundreds of thousands of dollars, which are the requirement of many SMEs but outside the scope of the higher value investment funds.

Efforce says in its white paper, that the intention is to make investment in energy efficiency “fluid and accessible”, overcoming factors such as a typical minimum investment requirement of $250,000 and lack of technical knowledge on energy systems or funding uncertainties.

Efforce has apparently been some years in the making and has evolved out of the Milan-headquartered ESCO, AitherCO2, founded in 2010 by Efforce co-founder and Project Lead, Jacopo Visetti.

Energy efficiency projects

The white paper cites two of the first projects to be implemented on the platform, which are carried over from AitherCO2. One is an energy efficiency project on a dual 8.55MW industrial tri-generation plant located in Italy, with a total cost of €6.5 million offering an annual IRR of 20% for 7 years.

The second is an energy redevelopment project for a hotel complex located on the French Riviera costing €1.35 million, with an annual IRR of 15% for 5 years.

According to Efforce, the first energy efficiency project is due to be completed in Q2 of 2021 when sharing of efficiency savings will start. The company also plans to expand its activities during 2021, in particular into the road and marine transport industries targeting the energy efficiency of company vehicle fleets and shipyards.

Starting from 2026, the ambition is to consolidate a global presence as the main platform bringing together supply and demand in the energy efficiency market.

Funding solar PV

As an example of a company that has stayed the course with a blockchain-based funding platform, among the most successful is Cape Town, South Africa-based Sun Exchange.

Sun Exchange uses its platform to crowdfund for solar PV projects on larger buildings such as schools or businesses. Investors gain a return on the energy generated by the number of PV cells that they have purchased, usually over a 20-year project lifetime. Currently Sun Exchange is running its 40th project crowdsale, as well as its first outside South Africa.

Other future opportunities include a secondary marketplace to trade operating solar cells.