What is DeFi and how can it support the renewable energy sector ?

Introduction

The total global energy consumption is around 4 TW and, it has been steadily increasing for decades. The share of renewables in this total energy consumption has reached around 14% and the share of sustainable energy is rising exponentially: the demand for sustainable energy will reach 62% by 2035. Using decentralised financing models like that of crowdfunding, can play an important part in the energy transition, energy accessibility and the global related against climate change.

 But first, we should know that, what actually DeFi is? So here we go.

What is Decentralized Finance (DeFi)?

The term was first popularized by ConsenSys with the launch of its DeFi Launch Pad in 2017, which served as an accelerator for blockchain-based startups building decentralized financial applications.

DeFi obtained by decentralized peer-to-peer financial applications leveraged on blockchain and smart contract technology. This technology can be used for raising capital to renewable energy projects, digitalisation of the projects equity and increase projects liquidity.

Is DeFi for renewable energy sector a safe and easy investment method?

DeFi is a broad term for financial applications that run on open source software. They help users deposit, borrow and lend, trade, and access other crypto-related services independent of a third party. This allows them to take advantage of the security features and transparency that comes with blockchain technology while also maintaining privacy. DeFi apps are set up to be more accessible than traditional banking systems, so users can get up and running without needing to go through the same hurdles as credit checks and background verification.

What is Decentralized Finance (DeFi) for renewable energy projects and its use case examples ?

Decentralized Finance (DeFi) is a subset of fintech services. There are few notable off-chain, or decentralized services for capital raising, each offering distinct characteristics and advantages. Green certificates are used to finance renewable energy projects. Tokenizing project through blockchain gives the investor an ownership of that project, which will boost overall confidence in the marketplace. Investors could lend money to projects to earn interest based on their own risk appetite.

 In the future, renewable energy sector and block-chain will have a closer relationship. Here I am going to mention most important use case examples of DeFi in renewable energy industry.

Power Purchase Agreement (PPA) platform;

It provides PPA service for corporations, institutional investors, and consumers for renewable energy projects.

Alternative financing of solar or other renewable project

In DEFI, the loan is provided by many individuals instead of banks for green energy projects.

Greeneum DeFi Services:

GREEN Energy Tokens: GREEN tokens are issued to renewable energy projects owners for green energy generation. Green energy companies can purchase GREEN tokens for their create local energy network and Greeneum P2P Decentralised Applications (D-APPS). This way, users can buy these energy tokens in exchange for electricity, offer their services. For example, if you invest in a wind farm and purchase its GREEN tokens, then you can use this token to buy electricity from the wind farm in the future or buy a product in Greeneum marketplace. Through the use of Greeneum smart contracts and blockchain technology, GREEN token can be used by anyone anywhere on this blockchain network.

Greeneum Green Certificates: Greeneum Green Certificate (GGC) is actually a way to issue digital certify data of renewable energy projects securely with the help of Greeneum’s blockchain technology. Greeneum users can verify that they have purchased green energy sources through the issuance of these digital certificates, and they can also be used as some form of credit by users who have purchased such electricity sources in the future. For example, if you invest in a wind farm project that has obtained a green certificate, then when you consume this electricity in the future, you can get discounts or other benefits through it.

Tokenisation of your green certificates, loans and bonds will increase your project ROI !!

With Greeneum green certificates (GGC), loans and bonds can be issued in order to fund future renewable energy projects. These certificates are essentially digital assets that represent ownership over a physical asset which is renewable energy production. The digital asset can be traded on different platforms to provide liquidity which will ease pressure off governments who usually have to finance these projects.  You can now easily get your Greeneum GREEN tokens and Green Certificates (GCC) as a reward to your green energy projects. 

GREEN Fund for renewable energy projects

Renewable energy projects might have a problem with liquidity, but with Greeneum DeFi, this problem is solved by tokenising green certificates and utilising them as collateral for loans. Tokenisation would make it very easy for organisations, institutions and individuals to invest in renewable energy projects. 

Greeneum’s GREEN Fund is a crowdfunding platform for renewable energy projects. Crowdfunding platform empowers people to raise funds, help across organisations to raise money and get connected with investors through the platform and community.

Final Verdict

Greeneum DeFi platform open up a variety of opportunities for renewable energy projects and individuals who want to invest or interact with the renewable energy market, or who want to facilitate such an interaction on behalf of third parties. Speaking from limited experience working with these projects, DeFi platforms are an essential component in the financing process of any renewable energy project. Keeping track and recording information from multiple sources through a crowdsourced process can be extremely helpful in making sure that a project gets financed. And with some platforms having government backing and even doing direct investments, this could be the future for financing renewable energy projects on a larger scale and doing so much more transparently. Greeneum is a such platform providing you with DeFi Services for your projects. Click on the link to register yourself and impact the renewable energy market.