Bitcoin-style digital currency aims to help mobilise investment in new solar projects
Bitcoin may still be dividing opinion between those who think it can revolutionise the way the world transacts and those who remain deeply sceptical about the stability and viability of the new digital currency. But could a similar approach help drive investment in renewable energy? That is the question being asked by a team of volunteers in the US who have launched a new digital currency to create greater incentives for solar energy generators.
Dubbed SolarCoin, the currency is a bitcoin-style asset, pegged to units of photovoltaic energy. Launched last month, SolarCoin operates in a similar way to bitcoin, the decentralised virtual currency that has captured the public's attention in recent months, at the same time as facing allegations that it helps to enable money laundering. But in addition to being publicly traded, SolarCoin will also be awarded to solar energy producers in exchange for Solar Renewable Energy Certificates (SRECs).
Nick Gogerty, the founder of the digital currency and principal of value creation consulting firm Thoughtful Capital Group, explained that each SolarCoin can be exchanged for 1MW/hr of solar energy. According to the SolarCoin Foundation, which is stewarding the coin, each unit equates to emissions savings of 1,500lbs of CO2.
Bitcoin is a currency based on mathematics. Instead of being physically printed, the world's collection of bitcoins is "mined" using a global network of computers, which compete with each other on computational challenges to effectively calculate the digital coins.
A small percentage of SolarCoins will be mined in a similar way, although using a far less energy-intensive computational protocol, while the rest will be pre-produced by the SolarCoin Foundation. The foundation, which is still reviewing its charter, will then award the coins to energy producers in exchange for their SREC IDs.
The idea is that the coins will gain value over time, as they are publicly traded on various digital currency exchanges. Canada-based virtual currency exchange Vault of Satoshi says it is currently considering support for SolarCoin.
Gogerty believes that a coin could be valued at between $20 and $30 within the first five years of the initiative. He also hopes that awarding the coins to solar energy producers will create fresh incentives for them to invest in solar PV capacity.
"International outreach is ongoing and the plans now involve a significant shift for even greater community and open source participation in the verification and granting procedure, using country-based volunteer chapters in an evolving hive type network structure," said Gogerty.
The coin's volunteer community currently includes people from Japan, the US, Scotland, Germany and Italy. Although the SolarCoin is designed to be awarded to US-based energy producers today, Gogerty envisages deals to make the coin awardable in other areas. Germany and the UK are high on his list of target markets.
SolarCoin could spur a global market for renewable energy investment, said Paul Herman, chief executive of impact investment firm HIP Investor. He argued that NGOs and family-office investors could team up to create additional monetary incentives and rewards for solar and wind energy.
"SolarCoin could be the first killer app for a broad-based usage of bitcoin-like currencies," he posited. "Beyond SolarCoin, other solution-focused coins could emerge: WindCoin, BioMassCoin and GeoThermalCoin."
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