Seize the Moment! Cape Town startup offers blockchain-based solution to energy crisis

• Delmas High School in Mpumalanga is getting a solar plant that was funded via blockchain technology.
• The project is part of an initiative launched earlier this year by Cape Town-based technology startup Momint.
• The aim is to help increase the deployment of solar energy across the country as South Africans fight load shedding.
• For news and analysis on climate change, go to News24 Climate future.

As South Africans battle load shedding, a new initiative using blockchain technology could potentially help roll out more rooftop solar power for public institutions such as hospitals, schools and clinics.

Cape Town startup Momint launched the SunCash initiative in January 2023 to power the project.

The initiative relies on blockchain technology, a digital ledger that tracks information about transactions, which allows for transparency and security because it is harder to tamper with.

Investors can purchase non-fungible tokens (NFT), which are stored on a blockchain network and represent a unique digital asset such as a work of art, digital content or media. Each NFT has its own code that distinguishes it from another. In this case, the NFT is linked to solar cells (components of a solar panel) and can be purchased for a minimum of R150.

The solar cells are then leased to institutions – such as hospitals, factories, clinics and schools – which agree to buy the electricity produced through a standard power purchase agreement.

READ | Want to beat load shedding with solar power? Here’s how it works and how much it costs

Momint’s CEO, Ahren Posthumus, said the aim of the project is to accelerate the roll-out of solar energy across the country and allow South Africans to become their own energy provider. “We’re a technology company trying to build the next 15 years, but what we realized is that 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 solar installation. Posthumus said solar cells for this project are almost sold out, and installation at the school has begun.

According to Momint, Delmas has committed to renting the cells for 20 years. Although the figures were not readily available, Posthumus said the high school would pay slightly lower prices than what they wanted to Eskom for the solar energy produced.

Estimated annual output of the installation is 99.66 MWh (enough to power a large school), while each cell will produce approximately 4.87 kWh of electricity per year.

However, the school’s power supply will not be completely independent of the grid.

READ | Cape Town will pay cash for electricity – with the aim of reducing load shedding by 4 steps

The company put up about $30 000 (about R536 000*) to kick-start the project, but is likely to make a loss in the long term, says Posthumus. “It’s not financially sustainable. Our margins on this project are slim to none.”

While Momint will benefit from getting users on their platform, they say they have lost short-term revenue for the long-term goal of ensuring South Africa has reliable electricity in the future.

The solar project is being replicated in several other locations, including an apartment block in Tafelsee, Cape Town, a gender-based violence shelter and, in the future, car parks.

Blockchain as a financial vehicle

Posthumus said going the blockchain route with the project increases transparency and security and reduces risk for Momint.

“We take legal contracts that represent ownership of each individual cell, and we put those legal contracts into a file commonly referred to as the ‘token’ on the blockchain. It’s called a smart contract. The smart contract says: ‘whoever owns this token is entitled to the underlying asset’ and they are entitled to the income that the underlying asset generates.”

Despite the security blockchain transactions provide, with any financial investment, there are risks. Credit defaults are the biggest risk for investors, Posthumus said.

“By that I mean, if the school were to stop paying altogether, there is a risk of not getting a return on investment because of repayment.”

In addition, investors must secure their accounts into which their earnings will be deposited, to keep their assets safe.

*All amounts are based on the rand-dollar exchange rate on 10 February 2023.