German solar inverter maker SMA Solar Technology this month gave 260,000 customers the ability to claim a cryptocurrency called SolarCoin in exchange for solar energy.
The scheme, available as a feature in SMA’s Sunny Portal software for Webconnect and Sunny Home Manager customers, allows PV system owners to collect a SolarCoin for every megawatt-hour of solar energy produced.
The SolarCoin payment is in addition to whatever the solar installation owner might receive for the sale or exchange of their energy. Like most cryptocurrencies, the value of SolarCoin is highly volatile. Unlike bitcoin, however, SolarCoin’s value has remained at modest levels so far.
As of mid-February, the coins were trading at less than $0.03 per megawatt-hour of output. At its peak, in January 2018, each SolarCoin was worth a little over $2. The low value of the cryptocurrency hasn’t stopped solar producers from signing up, however.
In January 2018, the renewable energy developer ACWA Power announced it was adopting SolarCoin for its 50-megawatt Bokpoort concentrating solar power plant in South Africa and a similar-sized PV plant in Bulgaria.
With SolarCoin at an all-time high, a GTM analysis showed the adoption of the cryptocurrency scheme could have been worth an extra 1.2 percent in revenue at Bokpoort.
While the revenue stream is far from guaranteed, claiming it does not present much of a downside, other than some involvement from a company’s legal, financial and IT departments.
Users do not even have to have a digital wallet, since the SolarCoin Foundation, which manages the scheme, has committed to manage the wallets until a customer decides to redeem the value they have accrued.
According to an SMA press release, customers can even backdate SolarCoin claims to January 2010. “At SMA, we constantly look for new opportunities and business models for our customers,” said Matthias Victor, head of SMA’s innovation center.
“Over the last few months we have examined the benefits and possibilities posed by SolarCoin within this context," he said in a statement. "We are convinced that making this cryptocurrency easily available through Sunny Portal gives an added value to our customers.”
The network effect
SolarCoin was launched five years ago with the aim of encouraging distributed renewable energy generation.
While later energy blockchain initiatives, such as those being pushed by Electron or Energy Web Foundation, have focused on platforms and mechanisms for trading, SolarCoin simply rewards production.
The value of SolarCoin is ultimately governed by what is called the network effect. This says that the value of a good or service increases in line with the number of people who use it.
According to an October 2018 paper, if just 1 percent of all of the 20 million or so solar facilities in the world were included in the SolarCoin scheme, the network effect would drive the price of each coin up to between $7.63 and $38.16.
Because solar's levelized cost of energy is continuing to fall, the authors note there could be a point at which the value of each SolarCoin exceeds the per-megawatt-hour LCOE. At that point, the energy would effectively be free.
The point could potentially be reached thanks to SMA. In September 2018, as SMA was still testing the cryptocurrency concept, it is understood there were around 15,000 SolarCoin wallets in circulation.
Of these, around 9,000 were with cryptocurrency traders and 6,000 were attached to solar installations.
If all 260,000 Sunny Portal customers agree to accept SolarCoin, then that would bring the total number of network participants to around 266,000, well above the 200,000 mark needed to bring the cryptocurrency up to double-digit dollar levels.
This potential alone could be enough to boost interest in the cryptocoin.