Image by SolarCoin
Moldova is one of the poorest countries in Eastern Europe and also a land-locked nation that has seen skyrocketing energy prices over the last decade. With over 75% of its energy imported, the former Soviet republic is desperate for new ideas to jumpstart its economy. The innovative use of cryptocurrency to lower the cost of cross-border financing for energy infrastructure is therefore getting its chance in Chisinau.
In an effort to help Moldova with renewable solar power, the United Nations Development Program (UNDP) is sponsoring a program to partner with South Africa’s ‘Sun Exchange’ to allow buyers around the world to invest in Moldovan solar energy via SolarCoin, a cryptocurrency started by ElectriCChain, and receive recurring payments in SolarCoin once the project starts creating electricity. Buyers can also use Bitcoin or euros.
“Sun Exchange, a peer-to-peer solar equipment leasing marketplace based in South Africa, has raised $1.6 million (m) in seed financing from strategic partners including New York-based Network Society Ventures and three globally leading technology accelerators from the U.S. to “accelerate global access” to solar power. They are also combining blockchain technology and cryptocurrency with solar leases,” writes Forbes.
The panels bought by investors will be leased to the Technical University of Moldova, one of the country’s largest universities, reported Reuters.
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 program manager with UNDP in Moldova, 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,” wrote Reuters.
The project is essentially a crowdfunding effort using cryptocurrency as a finance vehicle. As the crypto-craze winds down, the blockchain technology is shifting from speculation, to actual use in business and global finance. Many analysts in the field have predicted this change over time. Investors are predicted to receive approximately a 4% rate of return on investment. Backers of the project also hope the program, and others like it in the future, will help Moldova reduce its dependency on hydrocarbons from adversarial Russia. The trick will be to convince investors to place funds in Moldova via the UN-backed program.