[ACCI-CAVIE] As South Africans battle load shedding, a new initiative using blockchain technology could potentially help roll out more rooftop solar PV for public institutions like hospitals, schools and clinics.
Cape Town startup, Momint, launched the SunCash initiative in January 2023 to drive the project.
The initiative relies on blockchain technology, a digital ledger that tracks information on transactions, allowing for transparency and security because it is more difficult to tamper with.
Investors can buy non-fungible tokens (NFTs), which are stored on a blockchain network and represent a unique digital asset like a piece of art, digital content, or media. Each NFT has its own code distinguishing it from another. In this case, the NFT is linked to solar cells (components of a solar panel) and can be bought for a minimum of R150.
The solar cells are then leased to institutions – like hospitals, factories, clinics and schools – that agree to buy the electricity generated through a standard power purchase agreement.
Momint CEO, Ahren Posthumus, said the goal of the project is to accelerate the rollout of solar across the country and allow South Africans to become their own energy provider. “We are a technology company that’s trying to build for the next 15 years, but what we realised is we can’t build a technology company in a country that doesn’t have electricity,” he said.
Delmas High School in Mpumalanga is the initiative’s flagship site for a solar PV system installation. Posthumus said solar cells for this project are nearly sold out, and installation at the school has begun.
According to Momint, Delmas has committed to leasing the cells for 20 years. Although figures weren’t readily available, Posthumus said the high school would be paying slightly lower rates than what they would to Eskom for the solar energy produced.
The estimated annual generation of the installation is 99.66MWh (enough to power a large school), while each cell will produce approximately 4.87kWh of electricity per year.
The school’s electricity supply will, however, not be completely independent from the grid.
The company put forward about $30 000 (about R536 000*) to kickstart the project, but will likely make a loss long-term, says Posthumus. “It’s not financially sustainable. Our margins on this project are slim to none.”
Although Momint will benefit by gaining users on their platform, they say they’ve forfeited short-term revenues for the long-term goal of ensuring South Africa has reliable electricity in the future.
The solar project is being replicated at several other sites, including an apartment block in Tafelsee, Cape Town, a gender-based violence shelter and, in future, parking lots.
Blockchain as a finance vehicle
Posthumus said going the blockchain route with the project increases transparency and security and lowers risk for Momint.
“We take legal contracts that represent ownership of each individual cell, and we put those legal contracts into a file that’s typically referred to as ‘the token’ on the blockchain. It’s called a smart contract. That smart contract says, ‘whoever owns this token has the right to the underlying asset’ and they have the right to the revenues that the underlying asset generates.”
Despite the security blockchain transactions provide, with any financial investment, there are risks. Credit default is the biggest risk for investors, said Posthumus.
“By that, I mean, if the school were to stop paying completely, there is a risk of not receiving the return on investment because of back-payment.”
In addition, investors need to secure their accounts where their earnings will be paid into, to keep their assets safe.
By Sandisiwe Shoba & LB