Cape Town-based solar leasing company The Sun Exchange uses crowdfunding-based finance on a pico scale that can be as small as individual solar cells to drive PV installations for schools, businesses and other organizations in the developing world.
CEO and founder Abe Cambridge spoke to pv magazine about the company's investment model and project pipeline, and the solar financing outlook in African schools.
pv magazine: How does The Sun Exchange operate and what is its role and vision in meeting the demand for affordable clean power while cutting emissions in Africa?
Abe Cambridge: [The] Sun Exchange is the world's first peer-to-peer solar leasing marketplace. We leverage financial innovation and the power of the crowd to drive sustainable energy development and make the environmental, social, and economic benefits of solar accessible and affordable for all.
Through The Sun Exchange online platform anyone, anywhere in the world, can buy remotely-located solar cells and then lease them to power businesses and organizations in sunny emerging markets. Solar cell owners earn income from the generated electricity while schools, businesses, clinics, and other organizations gain access to affordable clean energy, reducing electricity costs and carbon emissions.
Our vision is to have all businesses and organizations in sunny emerging markets powered by clean, affordable, and decentralized solar energy–owned and financed by millions of people worldwide.
pv magazine: How do you run the ‘people-powered-solar' financing model at The Sun Exchange?
AC: First, [The] Sun Exchange identifies solar consumers such as businesses or organizations that want to ‘go solar'. Our engineers then work with local construction partners to determine the proposed solar projects' economic and technical feasibility, as well as environmental and social responsibility.
If the solar projects are accepted, [The] Sun Exchange then hosts online ‘crowdsales' of the solar cells tied to the project through our buy-to-lease solar marketplace. Individuals or organizations from anywhere across the world can sign up to be Sun Exchange members and purchase these solar cells for as little as $5 per cell. Once all cells needed for that particular project are purchased, the project then moves to the installation phase. Here, all the assets are fully insured for fire, theft, and damage for the 20-year lease term.
The business or organization where these solar cells are installed, also known as the offtaker, pays for the solar power at a pre-agreed price, billed per kilowatt-hour. Solar cell owners, or ‘asset owners,' receive a predictable and inflation-adjusted income for the 20-year lease period, paid in either local currency or Bitcoin. The payments are made through a convenient dashboard complete with digital wallets. This income stream is equivalent to a 10-12% internal rate of return (IRR).
Also, the consumer pays no upfront fee. [The] Sun Exchange covers installation, insurance, and operation costs. This results in an immediate cost reduction of at least 20%, with an average savings [figure] of over 40% for the 20 years.
pv magazine: What kind of solar projects, on-grid or off-grid, do you focus on at The Sun Exchange?
AC: [The] Sun Exchange focuses on commercial and industrial solar projects. To date, most projects have been grid connected. However, the Nhimbe Fresh project in Zimbabwe includes storage, to eliminate the farm's reliance on unreliable and expensive grid electricity.
pv magazine: What projects do you have ongoing and completed, and do you look forward to in the future?
AC: [The] Sun Exchange has facilitated solar financing for close to 40 projects to date. In addition to Zimbabwe, where the crowdsale for the Nhimbe Fresh solar project is under way, we have plans to expand into Botswana, Namibia, and several other countries.
pv magazine: Considering that most of the consumers you've connected with solar power in South Africa are schools, what impact do you feel your company has created?
AC: Schools that go solar through [The] Sun Exchange benefit extensively from solar power. In addition to cost savings, the schools reduce their carbon footprint and create valuable educational opportunities for learners to study renewable energy … blockchain, cryptocurrencies, and fintech [financial technology].
For instance, the solar project at Wynberg Junior School will offset 1,479.94 tons of CO2 emissions over its 20-year lifespan. The school can also use the monetary savings on [its] electricity bill to focus on [its] core mission: raising the future … leaders of South Africa.
pv magazine: From the solar projects you've completed in various schools across South Africa, how long does it take to implement solar energy usage in learning institutions?
AC: From the close of the crowdsale, it usually takes 6-12 weeks to bring the solar project online. The pandemic has caused delays in government departments, so projects currently take a little longer to roll out.
pv magazine: What are your thoughts on solar energy's potential on the African continent, especially for schools and small-to-medium-sized businesses?
AC: Africa has some of the highest solar irradiation globally but lacks traditional grid infrastructure and many countries are experiencing energy shortages that hamper economic growth. Solar can be quickly rolled out and it offers a clean and affordable way to power economies. Solar can reduce energy poverty and inequality and bring power to rural areas, farms, and schools that are not connected to the national grid.
The main challenge to date, for small-to-medium-sized solar projects, is a lack of financing. Most solar crowdfunding providers only offer debt financing solutions that are [neither] available nor viable for organizations such as schools, small-to-medium[-sized] businesses, and non-profits. High debt costs in emerging markets often increase running costs to businesses in the short term when borrowing money to go solar.
Through the Sun Exchange buy-to-lease approach, energy consumers access solar power at zero upfront cost and [secure] guaranteed energy cost savings, enabling NGOs, charities, and schools to go solar when, previously, finance was unavailable.
pv magazine: What is your take on combating climate change and how is The Sun Exchange actively involved in this effort?
AC: We can no longer delay action on climate change and it is up to every global citizen to take steps to mitigate climate change by reducing their carbon footprint.
Individuals worldwide who were previously unable to own solar–due to lack of funds or roofspace–can now own [and] earn income [from]–and offset carbon emissions [using]–solar cells located in emerging markets.
With the cost of solar falling exponentially over recent years, solar is now the cheapest form of energy available and this [is] the best way for businesses and organizations to reduce their carbon footprint while immediately saving on their electricity bill.
By connecting these organizations with people around the world who want to invest in solar, we provide a highly innovative and scalable solution that allows individuals and organizations to take proactive action on climate change.
Note: This interview has been edited for length and clarity
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