Cryptocurrency set to power renewable energy in this tiny European country
Moldova, a small, landlocked country in eastern Europe, imports three-quarters of its energy and has seen its energy prices rise by more than half in the past five years.
But that could soon change, according to the United Nations Development Programme (UNDP), which this year will launch an innovative effort to power a Moldovan university with cryptocurrency-funded solar energy.
The initiative with Sun Exchange, a South African solar power marketplace, will allow people to buy solar cells using SolarCoin, a cryptocurrency launched by blockchain start-up ElectriCChain, and then lease them to the Technical University of Moldova, one of the country's largest universities.
Buyers also can pay for the solar cells using euros or bitcoin, Sun Exchange officials said.
The idea is to find new sources of finance to "help buildings go green overnight" - in this instance with rooftop solar panels, said Dumitru Vasilescu, a programme manager with UNDP inMoldova, one of Europe's poorest countries.
"One of the biggest obstacles to countries investing in renewable energy is a lack of finance, as you often have to wait 10 to 15 years before you get a return on your investment," he told the Thomson Reuters Foundation.
But the university will get a full 1 megawatt of energy installed in the summer, he said, as a result of the crowd-funding effort.
Owners of the solar cells, in turn, will receive SolarCoins as soon as the university produces energy, earning interest of about 4 percent on their investment, Vasilescu added.
Moldova currently has over 10,000 square metres of unused rooftop space on public buildings that could be potentially used for such efforts, he said.
Blockchain, which first emerged as the system underpinning the virtual currency bitcoin, is a digital shared record of transactions maintained by a network of computers on the internet, without the need of a centralised authority.
It has become a key technology in both the public and private sectors, given its ability to record and keep track of assets or transactions without the need for middlemen.
Research firm IDC estimates global investment in blockchain will more than double in 2018 to $2.1 billion from $945 million last year, most of it for banking. IDC expects "strong, double-digit growth" in the energy space between 2016 and 2021.
Kevin Treco, an associate director at the Carbon Trust, an environmental consultancy, said blockchain-based technologies could significantly change energy use in countries striving to decentralise power and boost renewable sources.
In Moldova, for example, cryptocurrency-funded renewable energy could reduce the country's dependence on energy imports such as oil and gas from Russia, Vasilescu said.
Darius Nassiry, a senior research associate at the Overseas Development Institute, a British think tank, predicted that most of the growth in cryptocurrency-funded energy would occur in the developing world.
"They have faster-growing energy needs… and a more accommodating legal and regulatory environment towards such innovations," he said by email.
But a lack of understanding on how blockchain applications such as cryptocurrencies work could slow their take-up in the energy sector, he added.
For Abraham Cambridge, the founder and CEO of Sun Exchange, the solar currency exchange system "has all the right incentives in place".
"It reduces the costs of going solar dramatically for the end user and makes it easy for anyone in the world to own a solar cell anywhere in the world and, from it, make a steady source of sunlight-powered income," he said in a statement.
Blockchain is also being used in the energy sector to facilitate carbon trading, with U.S. computing giant IBM announcing this week that it will partner with Veridium Labs, an environmental tech start-up, to turn carbon credits into digital tokens.
If the Moldovan solar currency pilot is successful, UNDP plans to replicate it in neighbouring countries, said Vasilescu, adding that it could "revolutionise the renewable energy market for Eastern Europe and Central Asia".