Innovation

Selling sunlight

Over 600 million people live without access to electricity in sub-Saharan Africa. The Sun Exchange startup may have a solution.


13 February 2017
Abraham Cambridge, The Sun Exchange

It was only after Abraham Cambridge had completed his geography degree, and was a term into his master’s, when he realised renewable energy ‘is the solution to all of this’.

He then 'got into' solar energy.

In 2007 he set up a solar energy installation company in Cornwall and six years later moved to South Africa, initially as a consultant advising banks on solar projects.

It was here that he noticed the gap.

“There’s very few solar panels on the roofs of factories and school and malls, which is a massive shame because you’ve got such ideal conditions. And the reason there’s no solar panels is that there’s practically no access to funding, or at least affordable, flexible finance options,” Cambridge (32) tells Brainstorm.

In addition, there’s little government policy that’s driving solar energy production.

“But the rest of the world wants to help Africa turn solar-powered. Setting up a peer-to-peer funding platform for solar power seemed to be the solution for it, so we set up the Sun Exchange.”

Its first crowd funded solar energy project was at the Waldorf School in Stellenbosch, which started operating towards the end of last year.

“That was the first time in the world that bitcoin has been used to finance a solar plant. That was what we were always trying to gear towards, to utilise digital currency and its properties. It’s such a perfect match for solar power – which, like bitcoin is decentralised and democratic,” he says.

It’s just finished funding a R1.1-million, 45kW solar plant, for a tyre recycling plant in Rustenburg and is now moving on to solar power a wildlife rehabilitation centre.

'Solar real estate'

The Sun Exchange crowd-sells the solar cells, of which there are 60 in a solar panel. At the moment, it costs R105 per cell, and buyers can purchase as many they wish. Or as Cambridge puts it, they’re selling ‘little pieces of solar real estate’.

While the Sun Exchange finances the rest of the plant, the cells remain the property of the purchasers. They lease the cells to the Sun Exchange, which in turn leases the equipment to the end user under a single lease agreement.

“Our platform binds together all the ownership of those cells, and this is where the blockchain becomes very important, because the actual value of each cell is miniscule,” says Cambridge.

The payments are also miniscule, typically a thousandth of a cent, but bitcoin and blockchain technology enables this kind of ‘nano-investing’ because a bitcoin can be divided down into eight decimal places.

While the solar cell’s buyer would only receive about R280 over the 20 year period, Cambridge says this would provide an internal rate of return of 10%, ‘which means it’s better than receiving interest in a bank account’.

As he says, “We never pertain to offer returns that will set the world on fire, just modest solar powered income.”

Buyers provide the exchange with their bitcoin wallet address, to which it sends the rental income in bitcoin. The record of cell ownership is held on the blockchain, which can’t be changed unless someone swaps their ownership. Importantly for transparency, the transactions are all stored on a public ledger, and with an upcoming software upgrade payments will be autonomous.

More philosophically, Cambridge asks what the world was doing with this bitcoin.

‘If you’re just buying and holding, buying and holding, that’s just pointless’, and eventually, ‘someone’s going to have to do something with bitcoin’.

“What we’re saying is, if you’re using bitcoin for financing solar panels, then solar energy generators are being brought into life that never existed before. A physical solar cell will produce more energy than it took to mine the bitcoin in the first place. Then you’re in a positive feedback loop.”

Cambridge says while no one knows for sure how much energy the bitcoin network requires to run, it’s been estimated -- with most of the mining taking place in coal reliant China -- that the annual carbon emissions run to 3 066 000 metric tonnes.

Likewise, the electricity grid in South Africa is also coal intensive, meaning the carbon content per kilowatt is double that of Europe. But a solar panel here also produces double the amount of electricity as it would in Europe, which all means a local panel saves four times the carbon.

“There’s no point putting solar panels in Europe, when they could be installed in South Africa and we’ve now got the payment system that connects the owners to the panels. Someone in a London flat can own solar panels powering Africa and they’re getting the same income if they had it on their own roof.”

 

  • Cambridge will be speaking at this year's Blockchain Africa conference, to be held at the Focus Rooms in Sunninghill, Johannesburg. A standard ticket to the conference on March 2 and 3 costs R3 500, or if your company is a startup, it will cost R1 750. There is also a workshop on March 1 at which training on blockchain and digital currencies will be offered. A ticket to the workshop costs R2 350.