Blockchain Boosting the Solar Industry
Blockchain is growing in use and diversity and even the energy sector is keen to embrace what it has to offer. Here, Noel Shannon, COO of Hyperion Fund, explains how the firm is connecting the sector with the power of blockchain, to expedite solar projects and industry growth
HYPERION FUND WAS SET UP IN 2017 TO ENABLE FASTER SOLAR PLANT DEVELOPMENT IN THE EMERGING MARKETS THROUGH BLOCKCHAIN. THE FIRM AIMS TO FUND PROJECTS THAT HAVE ALREADY ACHIEVED A POWER PURCHASE AGREEMENT (PPA).
Public and private investors will be able to buy tokens through an initial coin offering (ICO) that represents 1W of the solar power project. Through the sale of 72 million tokens, they can bypass the traditional capital raising routes, to gain funding quickly from a broad range of investors.
The blockchain digital ledger system records these transactions in a transparent, time stamped process, adding reassurance for investors keen to become part of the booming solar industry.
Noel Shannon, COO of Hyperion Fund.
Hyperion is a fund set up to invest in solar projects, addressing a problem and creating an opportunity. The challenge facing solar development companies is scale, being able to do a lot fast and grow fast. There are many limitations to this, in particular, it takes a lot of time to get funding, to get banks, debt, and equity, as there are a lot of negotiations that take forever.
Blockchain and an ICO offer a way of resolving that by effectively crowdfunding. So it solves a problem then the opportunity it creates is for the token holders to come into the Hyperion fund, and have transparent investment into solar projects where the coin is directly related to the solar watts produced. Hyperion has been set up to do that.
I joined Hyperion because I have experience in developing solar projects in the past. Using that, I’m going to develop projects that already have the PPA. The PPA is the critical piece because I know from my work in developing and getting PPAs that it takes a lot of time. But once you’ve got it you still need to get the finance to build the solar farm. What Hyperion will address is the financing of PPA projects and building, using my experience, these projects. Then we will either run the projects or sell them on.
/ Blockchain can allow a kind of a crowdfunding to take place /
It’s going to use the Ethereum platform, using smart contracts to give total transparency through the investor portion of the website to see how the projects are performing, what energy is being produced and what returns you are going to accrue at the end of the period. I think there’ll be dividends every six months, not sure if that’s defined by the financial team yet.
Ordinary people cannot invest in solar power at the moment; the only way a solar project can get funding is by going to the debt or equity markets, and that entails all of the traditional challenges of negotiating with multiple potential partners to decide who is going to team up with you on a potential project.
This is where smart contracts with blockchain can allow a kind of a crowdfunding to take place to alleviate all of that negotiation with equity partners, and then we can leverage the fund with debt through our debt partners. It gives us the ability to go at scale to address the opportunities in the market, whilst all the time giving the token holders total transparency.
/ Bring on the legislation and let everybody have access to invest /
I’m fascinated by how blockchain is beginning to pervade every aspect of what we do, removing middle men and disintermediating to allow ordinary investors to bypass all those intermediates and invest in asset-based projects. I think it’s the first step in a peer-to-peer relationship that an investor can have with an asset. What I think the next stage is, because blockchain permits it, is to allow trading of those coins in the market. Again, it’s not something I’m familiar with but blockchain permits it and I think it’s great.
I think legislation will come to make people more comfortable about investing in this marketplace; although, obviously, the early movers are probably the ones who get the biggest advantage, like in most things. I would welcome more legislation because it makes it better for people who worry if it’s going to be compliant with any future rules.
We’re seeing that at Davos already, there was also an article recently in the Financial Times saying that the banking community cannot ignore cryptocurrencies and ICOs, so it’s going to happen. Bring on the legislation and let everybody have access to invest in these projects without paying the intermediates big commissions.