Solar Energy Expansion Via NFTs

A fund where a solar NFT is sold and recurring purchase proceeds used to fund needed infrastructure allowing for increased solar deployment.

The proponents have developed several gigawatts of solar projects globally and have 12 years experience with solar development and funding.

Blockchain Power, LLC is the Delaware (United States) limited liability company behind the NFT with the goal of offsetting 100% of the power used in blockchain creation and management. The two founders have developed several gigawatts of solar projects globally and have 12 years experience with solar development and funding.  Greg S.K. Ness created many of the contracts currently used by financial institutions, utilities and developers related to securing land rights, providing interconnection, purchasing and selling power and securing capital that are currently in the market.  Jon Downey currently serves as the CEO of one of the largest solar energy development companies in North America and has successfully led numerous capital raises in the renewable energy industry. 

Proposer LinkedIN Profile:

https://www.linkedin.com/in/gregness2021/

https://www.linkedin.com/in/jondowney1/

We are proposing a specific and recurring use case with NFTs to solve for the constraints to renewable energy development. The constraints are project realization uncertainty and pricing hurdles caused by the following: 1) the high costs to interconnect a renewable energy project to the utility grid; and 2) the lack of regulatory transparency.

Our non-art NFT based model will drive even greater demand for NFTs, increase adoption of Cardano, amplify use of the network, and show the public what's possible with NFTs.

Regarding Point 1 (the high costs to interconnect to the grid) - in many districts/states/territories, renewable energy project developers and owners must pay to build facilities and upgrade grid infrastructure in the areas they will be operating their renewable energy project. These costs are often the most significant expense outside of the construction of the power facility itself and cannot be controlled by the developer/operator. Pricing is typically set by grid operators or study boards with limited or opaque transparency in terms of their model and governance.

Additionally, and addressing Point 2, the regulatory authorities and government bodies in many states/countries/regions have been reluctant or have refused to provide transparency with respect to energy pricing models and interconnection procedures used by utility grid operators/owners. This has led to lower pricing for renewable power since it is hard to determine accurate market pricing for the power generated by the renewable energy facility.

Likewise, as government leaders are voted in and out of office, the shifting priorities within government administrations and between different levels of government create uncertainty during the years-long process of developing renewable energy facilities both in the United States and globally that increases both costs (due to capital risk premiums) and attrition rate. For example, Candidate A may have a strong interest in fossil fuels and create legislation that further allows the grid owners and operators to work in the shadows and set arbitrary pricing, while his/her predecessor may have done the opposite. In other words, two steps forward, one step back.

Further, in many regimes, any government support from a favorable regime only comes after the facility is operating which necessitates earlier rounds of expensive capital to bridge the time between development/construction start date and the commercial operation of the project.

The problem's financial cost is vast. 

The calculations below assume a total offset need of 170 terawatt hours tWh with all of the energy production coming through solar and solar+storage at an average efficiency rating of 22% and average cost of $1.00/kw.  For those outside of the energy space, a terawatt-hour (TWh) is one trillion Wh, or 1,000 GWh

Thus, according to these calculations, we would need 88GW of capacity at a cost of $88B to offset all energy usage. However, this analysis supposes that we are paying for 100% of the cost of the power facility. Instead, we will often only be granting/loaning the amount of capital necessary to make renewable energy facilities economic on an expedited schedule (by offsetting, for example, high Interconnection costs or equipment price spikes). Under this scenario, we anticipate funding only 10%-20% of the aggregate renewable energy facility development cost while relying on traditional funding mechanisms to provide the balance of the capital stack. With this strategy, we would need to deploy between $8.8B and $17.6B.

Going deeper regarding what's currently available in the market, there are generally two commonly used mechanisms to encourage renewable energy development globally – government tax credits/direct funding and Renewable Energy Credits (REC's/SREC's/carbon credits). While helpful, these tools are significantly constrained by their very structure as explored below.

Regarding Renewable energy and carbon credits (often referred to as "RECs"), they are often purchased by power generators and large corporations to offset their carbon-based energy production/usage (not for a profit motive). However, RECs and carbon credits have two major problems. First, is the timing of cash receipts which occurs as the power is produced, which, similar to tax credits, necessitates expensive bridge capital. Second, there are the inefficiencies of the market itself given relatively illiquid markets in many places which leads to substantial pricing variances between similarly situated renewable energy projects. Additionally, these markets tend to be relatively inaccessible to small investors looking to offset their own carbon footprint (indeed, how many of you reading this would know where to go to buy a REC in Europe or the United States?).

We believe that proof-of-stake blockchain technology is the best tool to use to solve the energy issues created by increased blockchain deployment, regulatory hurdles and fossil fuel centric political agendas. The ecosystem created by a solar energy NFT will directly make more renewable energy projects viable by injecting capital at early stages of the renewable energy project development life cycle and by offsetting high interconnection and equipment costs.

In addition, the ecosystem:

a. Provides a means for blockchain technology to directly offset CO2 emissions through USD or stable-coin currency transfers to renewable energy projects; and

b. Provides a means (NFT Badge) for companies and sustainability funds to readily show evidence of their support for CO2 offsetting renewable energy projects to all stakeholders.

Process:

1. ADA owners purchase the NFT at the level of their support which can be displayed on all social media or traditional media platforms.

2. Blockchain Power provides grants and low interest loans with the capital generated through NFT sales to developers and potential owners of solar energy projects globally.

3. If loans are provided, repayment of the loans provides additional capital to be re-deployed to additional projects.

4. The Blockchain Power team, using its expertise in global renewable energy project development will work with regulated utilities regarding payment of the upgrades, and collaborate with stakeholders on making sure the utilities use the capital for the required infrastructure upgrades.

In the future, we also have a strong interest in creating a solar token based off the Cardano blockchain that we call the "DEPWR" Token, and in such event, we'd use the structure below:

If and when we create the DEPWR token, with assistance from the community and others, the process would be:

1. Blockchain Power sells DEPWR token;

2. DEPWR token owners purchase the DEPWR NFT at the level of their support which can be displayed on all media (we can use https://www.cnft.io/ or other platforms as necessary). 

3. Tokens used to purchase NFT's are resold to market or added to reserves for other solar projects

4. Blockchain Power provides grants and loans with the capital generated through token sales to developers and owners of renewable energy projects (similar to Phase I);

5. If loans are provided, repayment of the loans provides additional capital to be re-deployed to projects (similar to Phase I).

For many funds and investors in the blockchain space (as well as outside of it), an easy means to communicate their support for renewable energy to offset their carbon footprint is a critical and missing piece. The solar NFT also solves this problem. By using ADA to purchase the solar NFT, supporters will be able to display their support on websites and marketing materials globally. It is the badge that proves your commitment to carbon-free energy production. Further, it can be easily validated by auditors through the blockchain itself.

The initial goal of the Blockchain Power ecosystem is to provide a safe, transparent and convenient source of liquidity to bring renewable power projects to fruition and to provide supporters of such enhanced renewable energy asset deployment and carbon reduction with a means to quickly show stakeholders and the general public the scale of their support. We can drastically hasten the adoption of renewable energy through our investments – greening the entire global grid and more than offsetting any negative CO2 impacts from non-renewable crypto mining.

An interesting recent article on some of the problems related to the United States power grid can be read here:

https://www.washingtonpost.com/business/2021/06/29/power-grid-problems/

One questions that might come up is how do you guys know where to target grid upgrades?

One quick way is as follows:

We can use a Power Flow software (PSSE, PowerWorld, etc.) to study the utility's grid and how the elements (substations, transmission lines, etc.) are impacted by the addition of the new solar energy generation. This approach can be used for a statewide or regional electricity "injection" analysis (higher level) or a specific point of interconnection Injection Analysis. Or we can receive proposals from communities and developers and help run the analysis as needed. 

Critics of the idea that renewable power can be used to "mine" crypto currencies because of time-of-use versus time-of-production inconsistencies (i.e., you can't produce solar power at night so any mining at night must be stopped to have a "green" coin), while technically correct, miss the larger picture – that renewable energy deployment within the current framework and its global adoption is still in the emerging stages. As such, the conversation around achieving a sustainable energy grid and matching a specific electron produced to its end use and calling it green or not makes no sense at this point. Our goal should be fully offsetting all energy used in blockchain production with renewable resources – regardless of when or where those electrons are produced.

Success is measured by the amount of NFT sales to users. As the community of users grows, greater awareness for Blockchain Power's mission and increase of capital for new development projects will result.

• During the development stage, Blockchain Power anticipates allotting six months for development of its entire ecosystem, including the NFT and possibly the DEPWR token.

• Once the ecosystem is operational, Blockchain aims to acquire at least ten corporate NFT purchasers and 100 individual purchasers.

• After a year of being operational, Blockchain aims to acquire a minimum of twenty corporate NFT purchasers and 500 individual purchasers.

-Depending on the success, we would deploy the proceeds directly to at least two high impact utility upgrades in communities that would otherwise have more solar energy (or sometimes any) solar energy providing power to the utility, individuals and businesses. 

We've already consulted with attorneys on any needed legal structuring, and have approached approached several energy developers and asset owners about this idea and have received substantial amounts of excitement.  As such, we would have a public launch date of 12-15-21.

The requested budget is as follows:

5,000 ADA equivalent for initial marketing of the platform, this will involve further outreach to asset owners, corporate sustainability directors and the wider blockchain community.

5,000 ADA equivalent for legal expenses incurred for corporate and tax structuring.

*10,000 ADA equivalent for consulting services related to minting the NFTs and making full use of the Smart Contracts deployment.  This is an area where I can use some additional technical assistance from the Cardano community. 

It is important to note that we've already spent approximately 20,000 ADA of our own to initiate this project.  Additionally, we have familiarized ourselves with the transmission issues that are problematic (but obviously a great deal more study is needed).  For instance, A solar congestion analysis is currently underway to identify transmission congestion patterns in the SPP and MISO energy market for the 2026 study year in the United States. The utilizes models developed using PROMOD TAM™ which is licensed from Ventyx (ABB)™.  Using an hourly commitment and dispatch algorithm, various scenarios and study years are analyzed to provide forward looking LMPs, basis differentials to relevant trading hubs, generation dispatch, transmission flow and congestion. Hourly solutions are evaluated to determine the most economic system solution given generation, transmission and operational limitations. For this analysis, the SCED analysis includes an 8,760- hour evaluation of the 2026 study year.  2026 was chosen because that's how ridiculously long it takes for the utilities to respond and process applications.