Power Ledger’s Asset Germination Events are Tangible, Real-World Investments
I have been very excited about Asset Germination Events since I first read the whitepaper.
I have not been able to find a detailed overview of Asset Germination Events, so I decided to write one up.
Asset Germination Events Summary
Asset Germination events are crowd-funded renewable energy assets tied to the Power Ledger blockchain. An Asset Germination Event could be a solar, wind, or battery farm. Participants in the crowd-fund will receive a portion of the asset’s profits. The portion is proportionate to the percent ownership of the asset. Ownership of these assets can be traded. This means that if liquidity is needed, you can sell off your ownership of the asset at any time. Assets that generate income do not easily depreciate in value.
The first Asset Germination Event is planned for Q3 2018. Frequent Asset Germination Events will occur beginning in Q2 2019. From the roadmap: “Asset Germination Events will be frequently conducted by Power Ledger and its Application Hosts, driving the intrinsic value of the token.” This is where the true value of Power Ledger lies. This will be one of the first and only crypto projects where the real-world value of the coin can be calculated.
Technical Assessment
Please note that these numbers are estimations, so please do not expect this assessment to be 100% accurate, nor am I an expert in solar farms. This is simply to generate discussion.
This assessment assumes several things:
- The first Asset Germination Event will be a solar farm in Australia; furthermore, it will be built in an area where the cost of electricity is above average.
- 10% of the profits will be set aside for maintenance of the solar farm (similar to the Autonomous Asset example that is used in section 5.5.7 of the whitepaper).
- For simplicity, I am assuming the profits will not be taxed. This will likely not be the case and will cut into the profits.
- The solar farm is capable of generating 1.4 MW and 2,050,000 kWh. The BCPG partnership project in Thailand will handle 1–2 MW of power, so we know Power Ledger can handle this trading capacity. I also chose this amount because I am using a real solar farm in Australia to compare to. However, I have no idea how large the Asset Germination Events will be, and this could greatly change the profits due to economies of scale. Small solar farms can cost 3–4 times more on a per-watt basis.
Last year, the average cost of electricity in Australia was $0.20-$0.25 kWh in USD ($0.29-$36 AUD).
Because of my first assumption, I think it is more than safe to say that we can use $0.15 USD as the average sale price of electricity for the solar farm. This would be roughly half the going-price for an above average household. This variable will obviously have a very large impact on profits.
2,050,000 kWh * $0.15 per kWh = $307,500 total profit per year
$30,750 will be set aside for maintenance of the solar farm.
This leaves $276,750 profit left to distribute to investors.
Solar farms cost roughly $1/watt to construct at this scale. Using this, we can estimate that our solar farm will cost roughly $1.4 million.
Investing $14,000 would equate to a 1% stake in the solar farm. This would net you 1% of the post-maintenance profits, which equals $2,767.50 in annual returns.
This means your investment would pay for itself in 5 years. Furthermore, you still have your share of the solar farm that you can sell at any time. I’m sure its value will depreciate slightly over time as the panels becomes outdated. But it will still hold value. People will be willing to purchase the rights to profit if you offer a fair price. Your investment will be made using POWR tokens. If the value of POWR increases, the value of your share in the solar farm should also increase.
Asset Germination Events will lock-up POWR in smart contracts and remove POWR from the circulating supply. In theory, this will drive the price of POWR up, due to the principals of digital scarcity.
Hopefully this can provide a rough estimate to assess the potential value of Asset Germination Events. However, that is not the point of this write up. I want to emphasize that it is possible to calculate the profits and value of the ownership of the asset. You can assign real-world value to Power Ledger.
One last thing to keep in mind: I am guessing that these asset germination events will take a long time to set up. They may not be operational for awhile, and investors may not begin to see the profits for several months.
Conclusion
I do not think many people have realized the gravity of these Asset Germination events. They will allow anyone to invest in a decentralized, tangible asset that generates green energy and is going to generate you profit.
Renewable energy production has a lot of room to grow (not just in Australia), wind and solar energy currently account for less than 10% of Australia’s electricity generation. There is real-world demand for what Power Ledger is doing, and I see great things in store for the project.
This is not investment advice. Please do your own research.
