The Competitive Landscape — How the Green Power Exchange Plans to Succeed in the Face of Established ICO Power Companies
The Green Power Exchange has developed an elegant solution to power purchase, trading, and asset development based on the teams’ extensive knowledge of the renewable power industry.
The Power Market is Ripe for Disruption
Energy related cryptocurrencies, particularly peer-to-peer power-based tokens, have garnered significant interest of late. This is simply because the potential cost savings, customer choice, and opportunity for disruption of a multi trillion-dollar market is immense. In the last year we have seen multiple companies in our field, all tackling the massive opportunities that exist in decentralizing the very large power markets in a slightly different way.
Power Purchase Agreement Requirements are Cumbersome and Complex
Often the limiting factor in renewable energy development is a lack of a reliable off-takers for the electricity produced. A lender will not provide construction financing if there is no one to buy the power. Currently, a power purchase agreement (PPA) is required to demonstrate this. PPAs are complex legal documents that are cumbersome to negotiate and often come associated with several hundred thousand dollars of legal fees. This is all to ensure that there is sufficient counterparty risk consideration, essentially meaning the producers will get paid and the consumers will get power. Additionally, these agreements are often for the serviceable life of the project (20 years or so) and are incredibly rigid.
Current Proposed Solutions don’t Deal with the Real Issue
One company has put forward a potential solution to this problem of both capital requirement and power off-taker.This method is to forward-sell a large portion of the power produced by a renewable energy plant at private auctions with a significant discount as a way to generate needed capital. While this method is enticing on the surface as a cost-free way to meet lenders capital requirements, it is risky to investors. The possibilities that the project will not get built or the developer will run away with the money have not been addressed sufficiently and this method tries to install a trust component into a trustless system. Moreover, the option to buy power ahead of time to be used at some point in the future is not an enticing proposition. People are not in the habit of buying power before they use it; this represents a dramatic shift in the purchasing habits of consumers.
GPX Solves Both Bankability and Off-Taker Requirements
The GPX model is an elegant solution to the problem of bankability. With our patented smart power purchase agreements, producers can demonstrate a reliable off-taker of power without the need for the considerable negotiation period. With smart contracts, the money flow and counterparty risk requirements are automatic, demonstrating the kind of surety that lenders require. Additionally, the scalability of these contracts allows for the individual consumer to participate in the direct energy purchase market like never before. This method has several clear advantages over the previous solution, as it does not require consumers to forward-pay large amounts of money for power blocks, but it still allows for projects that have demonstrated they meet all lender requirements to be built. Moreover, since the direct peer-to-peer transaction cuts down on inefficiency and waste, producers can charge more while consumers pay significantly less. This increases the profitability and thus the attractiveness of projects to investors.
