In the picturesque city of Perth, Western Australia, a small but growing team is fine-tuning a cryptocurrency product that could change the world’s energy marketplace forever.
Power Ledger, a blockchain focussed energy start-up endorsed by Sir Richard Branson, will tokenise energy producing assets, such as wind turbines, solar farms and community owned batteries, which will then be sold to investors.
For the first time, retail investors with a relatively low net worth, can purchase a fraction of those assets and reap the profits they generate.
What is it?
“It allows you to break up the asset into very small increments which means that mums and dads are able to purchase small chunks and also increase their stake as time goes on if they wish,” Dr Green said.
“Having the actual asset listed on an exchange means you’ll be able to buy more or trade in and out of different assets.”
The Asset Germination token (AGE) will be tradable when the product goes live in 2019.
AGE will pay a distribution, which is very similar to a dividend, through a ‘smart contract.’ It will be paid to the cryptocurrency wallet where investors hold their AGE tokens.
Power Ledger will soon release a product disclosure statement, which will outline crucial details, including which currency will be used to pay investors their profits. It’s unclear at this stage whether they’ll be paid in AGE, POWR (Power Ledger’s primary token) or perhaps Ethereum (ETH).
The company says it will choose energy assets that are responsibly managed, transparent and of course, profitable. It already has some projects in mind.
The point of difference
There is a unique feature of the AGE token that could attract investors who have so far shunned the cryptocurrency space.
As Power Ledger explains in a Medium post, the underlying value of the AGE token is “not tied to blockchain utilization … or the utilization of the platform, as is the case with most ERC20 tokens.”
“The value of the AGE token is related to the value of distributions generated by a renewable energy asset,” the post said.
“It’s a legal fraction of an economic benefit, the token nature of AGE is secondary.”
Power Ledger says it has worked hard to ensure the AGE token meets regulatory obligations and hopes it’ll lay the foundation for a new way of investing.
“We believe in the future it will be a requirement for most financial products to be tokenised due to the additional benefits to investors, such as liquidity and the record-keeping accuracy of the blockchain,” the company said.
“Accuracy is important and this point is clear when you look at recent issues with share registries; these situations have shown how vulnerable ordinary investors are to the back office foibles of legacy registry systems.”
What does this mean for POWR?
People who hold the Power Ledger token (POWR) do not have to participate in Asset Germination Events if they don’t want to.
“If you’re a POWR token holder you’re still going to benefit,” said Power Ledger’s Crypto Economist Anya Nova.
“As part of the AGE events we’re actually going to be reducing the circulating supply of the POWR token by funding POWR buy back and burn model.”
However, Power Ledger says POWR token holders who wish to participate in AGEs, will receive a “meaningful” discount.
“We’re not able to say exactly what the amount of that discount is until we issue a product disclosure statement, but it’s going to be meaningful,” Ms Nova said.
“(POWR holders) are also going to get priority access to participate in AGE events.
“We actually anticipate that – because we’re unlocking this new investment class – there’s going to be quite a demand for (the AGE token) and we’re going to dedicate a period of time that’s just for POWR token holders to get on board first,” Ms Nova said.
The Branson factor
Power Ledger says it is experiencing a new wave of interest from investors, after it won the 2018 Extreme Tech Challenge at Richard Branson’s Necker Island.
“Since that announcement we’ve been really overwhelmed and excited by the well wishes we’ve received from the community as well as many inbound queries from potential customers who want to work with us,” Dr Jemma Green said.
“So were are already starting to see the fruits associated with that kind of endorsement.
“It’s actually very powerful and valuable thing for Power Ledger to have at this stage in its life.
“In spite of us being the youngest company amongst the finalists, we were awarded the title because of the progress that we’ve made in such a short period of time and the potential for impact.
“In Sir Richard Branson’s closing remarks, as he awarded us the prize, he spoke about the Paris Climate Agreement and the need to reach the Paris Climate goals and carbon neutrality by 2050.
“The work that we are doing has really struck a chord with him.”