DappCon 2023: Solar Assets On Chain - What We Need To Make It There - Sebnem Rusitschka

Transcript

thank you that was perfect pronunciation of my first name and next year ritka will be also perfect I keep it until then so um I am seum and today I will tell you a bit of a brief history of energy and blockchain as well um I want to get into this whole real world assets refi if you've been into defi um then you definitely know what those mean and I want to help you to locate solar Assets in on that Spectrum uh I will get into adoption barriers I mean you heard Louise before

we're not there yet uh and the crypto innovators need to innovate a bit more but I would say uh definitely we know now applicable D5 Primitives they've been tried and tested by the very brave in the wild wide west of web 3 um and those are definitely also applicable to solar assets you will see it's a it's almost a no-brainer but uh there are adoption barriers obviously and there are Trailblazers and interestingly most of them are clustering around the nois uh chain ecosystem and I do believe we are I'm very optimistic 80% there

okay and I want to show uh what we need uh and and have a call for collaboration call for action for participation active participation to bring those solar assets on chain so that uh self Sovereign solar fund can emerge good now I have to you know um brace myself or you have to brace yourself and I have to uh stop myself into going into too much detail but it's also a retrospective of the past seven years I went into uh crypto or blockchain and energy because in 2016 there were already

energy applications visible through ethereum uh and smart contracts and I only got into blockchain because of those energy applications so just for reference um by the time when Satoshi published the Bitcoin paper uh an electronic peer-to-peer Cash System I published actually with colleagues at seens a paper on peer-to-peer energy sharing using um peer-to-peer Technologies and smart metering so that's how much I'm into peer-to-peer and energy but crypto was a game changer and it come from you know the the periphery and you feel this that

it's a real game changer and people have difficulties to really grasp what is the game changer anyways now just I try to make it brief um as you see already in 2014 we had solar k which was conceived as um loyalty program one SLR for one megawatt hour it was based on the on a Bitcoin Fork but with a proof of stake of time uh adoption of the consens mechanisms because it doesn't make sense to put uh well energy digital assets on chain on a chain that actually you know uses up all

that benefits at once anyways now there for example on the energy web chain um that came years and years later when I went into the space in 2016 2017 grid plus and power Ledger had their fantastic icos just a month uh apart I don't know if anyone of you have participated in those token sales and uh the networks n okay well anyways grid plus had to do a pivot they realized um just going after peer-to-peer wholesale and disrupting an entire industry that is as old as uh you

can anything think of like hundreds of years established and critical infrastructure you don't just come around and disrupt it so they made a pivot into this Hardware wallet company and let's see what will come out of that power uh the token of power Ledger is still trading but not for the originally conceived idealized uh reasons and you might know it from the recent uh SEC case again coinbase it was one of the uh tokens deemed Securities on that on that list so um again I'm a researcher and I'm always very

skeptical um I definitely see like we we see the benefits um the idealized benefits of this technology and especially in clean energy access where there is literally nothing to disrupt these texts could make a real difference so one year after having left seens I went into working uh on the sun protocol with the Africa Green Tech um uh startup or scale up back then and that was purely for funding the solar uh containers um to bring clean energy access and back then you have to imagine these assets the issue with with that was the assets are

being deployed in um difficult regions think War and the token canot not do anything with that or help uh remedy any of that risk and back then we didn't have decentralized exchanges we didn't have any notable risk management on protocols so um you know approaching that we saw the dead end in a sense that you have to be able to diversify those risks um at the same time we power had uh actually a nice with the concept that could have worked namely um a Marketplace for trading

buying selling and trading um um Power purchase agreements now I want to keep that in mind they raised I think 40 million but just in the second crypto winter they didn't make it so since last year they're not around as is um and we'll get into that how you could burn through 40 million in four years um energy web Foundation is still around they um you know built this since 2016 2017 they uh issued um in 2019 their token which is native token to proof of

authority uh chain energy webchain what's wrong with that um number one it's working right but I personally believe there is an issue of incentive misalignment if um energy web Foundation exists to bring decentralized energy to reality but all of the or most of members of that Foundation are actually big oil companies like shell or centralized grid operators so there's this obvious clash and just 40 validators or authorities is not really decentral ization well anyways and the last Point um where we went into around that time

was actually seeing that uh this whole pooling um amms smart pools um Concept in the balancer ecosystem back then for example could actually be used to pull solar projects in developing countries with solar projects in developed regions to the risk and maximize the social and environmental impact of the whole pool so that was electric Seed where I went into around that time and um we kept developing but it was so early that the smart uh contract developers even had difficulties to grasp what is it and

then apply it to solar power so we did need all that excitement hype and experimentation of Def summer good and maybe I won't even go into caow but just to say that um also the environmental value of these solar assets namely that you're replacing fossil fuel power with solar power directly and you can account for that that is an asset and CLA da basically created a protocol for um yeah issuing a carbon backed coin which is a nice concept the problem was

that the um carbon credits they used were actually junk and the issue is they were junk in the real world so crypto once again just showed what's faulty in the existing system but got uh the full credit for it um of course as with every innov ation and there were many other issues or are many other issues but the concept itself is really interesting and around that time also unii uh approached me uh Pedro and the CEO and said all of these things that you've been developing are they happening for for real and we went into it we developed uh we

definitely showed that you can tokenize that environmental value as well alongside the revenue shares however again I will get into that why that's a problem but before we get into the problems please you know watch this uh yeah the side okay so every time I take a flight I take a picture of these unused roof spaces and I say you know one of us has a choice air flights fossil fuel is going to be stay like that for the first foreseeable future but those uh commercial and Industrial rooftops actually should have solar on them

because it's a lucrative choice so these um commercial industrial actors could uh save off of their electricity bills 40 to 60% or and at the same time also reduce their CO2 emissions and of the whole economy by 60 to 80% by not using the dirty grid power and that's where you hopefully see how the real world asset value is there and that we can also tokenize the what we call regenerative Finance or the environmental and social aspects value of these uh solar

assets um the real world aspect is pretty straightforward we have the revenue shares U from sale of solar and those are long-term contracts the PPA so that is an asset or a value stability that is pretty scarce in the volatile crypto Market um and pretty scars anywhere else for that matter these contracts are inflation adjusted so you have these Revenue shares for the next 10 15 years that you can tokenize and share and use for Revenue based financing on generative Finance side uh we have the environmental value of directly replacing kilowatt hour for

kilowatt hour with clean solar and replacing and displacing the energy mix that is mostly for example coal still in Germany so um and REI um can take that environmental value as well as the social value but the other aspect is once you tokenize that you monetize it and you use it for regeneration meaning you reinvest that into more solar replacing more fossil uh fueled power sources if that was so easy why didn't we power make it right so it comes down to this old

wisdom timing and talent and in 2000 or you've heard all of the issues uh that we still have today and in 2018 it was really bad timing we needed All Those Years and we're still not there when it comes to regulatory issues and if you think Financial regulations is a nightmare you don't want to meet the Energy Regulatory regions so um you your assets are rooted in those jurisdictions so we need to really come uh and create a solution that is globally and easily adaptable and then we have two other

issues that are really big anywhere even or especially in the developed regions skilled labor shortage and then the basic very obvious coordination failures between many uh parties that have business transactions with each other now all of these issues can be remedied with education and with making technology accessible that they can really transact in a peer-to-peer manner if I'm a individual participant or if I'm a business to business uh transacting party now um this is an overview okay and it was

so much more complex just half a year ago because half a year ago I had to explain how people need to you know uh get die get on a bridge get X die to get on nosis chain where the contracts are deployed and actually participate uh however already within the last uh couple of months so many um again Trailblazers entered the market or offered their solutions that we can now use and all of a sudden I can show that you know the solar asset managers are going to do their business as usual they do the financial and Technical due diligence of those clients and

coordinate installers and all of those assets are organized in an SPV a special purpose vehicle or entity that is just founded for that matter now those um asset managers when they participate in an association that makes uh these smart contracts and the interaction with them available to All State stakeholders that need to coordinate they can then um offer these projects for participation and anyone with an account on blockchain can participate in a um in a self- sovereign manner so that participation smart contract um handles you know how much I

participate how much tokens do I have and how much of that Revenue share I will get along the 10 15 years of this um Power purchase agreement and I can claim that uh Euro on chain or I can stake that back into funding more solar now claiming is a taxable uh taxable event staking it would keep the value in the network uh however if I wanted to trade for example my participation token then I can do that on um any decentralized exchanges but we would as a network need to provide liquidity for those tokens so these are all the def5 Primitives that

have been tried and tested and that we know they work they just don't work for everyone so these people will be people who are not full full-time crypto Traders and I won't go into more of the details because I don't that have time but if you're interested uh definitely happy to share more of those aspects with you and I will also um share at the end a link um now the other aspect the environmental value that we also learned you know uh in traditional Finance or decentralized Finance or

refi people want to commodify it and trade it as a commodity however these are not Commodities and no one really wants to buy kilograms of of CO2 other than Traders but those are not the ones who actually capture or exchange that value so um what we can do as an association actually is to um make that value accessible to brands in the way they can make use of it which is at this stage just digital they could uh connect it to their websites or to shopping carts but that's a service that the

association provides for its members and users of that value and not something that can or needs to be traded however this whole value can be captured in the participation token if people participate and um again there are Trailblazers especially in the sosis ecosystem uh who enable participation of mainstream uh number one monium by now hopefully everyone is a fan uh where we can actually have I band to our accounts and that's good for individual participants

and especially for the solar asset managers because we need those eye bands to really have no intermediation and no convoluted how tos to transact the revenue share then we have save um right with they're integrating all these onramps like monium and also social login email login that will help so much on both sides again because we need those solar asset managers actually do their business and not you know jump through hoops which they're not going to do and for the self soverign solar front to emerge we really need decentralized

participation so for that for example um we see features for mainstream usage of decentralized exchanges in call protocol and cbob we need more of those um usability features especially also for liquidity provision if these things become actions where you need sophisticated strategies we're not going to have self sare and participation at scale we're going to have a better trading system and on the other side facing the real world again there are so many Trailblazers Um Google pay with the

credit cards that could be easily you know received the solar cash back from the credits that have been integrated in the shopping experience of these products that have been generated produced using clean energy the invoicing part is super important and one interesting thing that just happened I don't know if you heard of about it but Hopper actually uh succeeded in uh having the Swiss trade register accept the multi wallet and account and money on it um instead of a bank account now this is an

amazing time lapse for actually creating those spvs right because for example now we waiting weeks up to eight weeks to actually get a bank account for this commercial uh solar pools that need a legal entity good 80% and as you know the last mile is always the toughest but definitely it will pay off to stay connected I just for myself also need to accept that there will be many worlds and we need to create those SS associations in which the you know value creators in the real world

actually can come and learn about how to use these new Trans means and mechanisms of transactions and how to actually participate in a self- soverign manner so if you want um take your QR shot and then you will be part of this evolving explanation and and sharing of what that Association needs to enable so we can actually democratize access to solar Investments with that thank you very much and I don't know if we have time for questions or if you thank you so much sh then to wrap up

the conference at studioa