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How Reneum benefits renewable energy producers

Reneum aims to send a wall of money to renewable energy producers in emerging market economies, where capital is more expensive and harder to raise. With many suppliers locked out of the traditional REC market, we’re taking this dinosaur system onto the blockchain for transparency, efficiency and real climate action.
31st August 2022

The full potential of renewables requires an increased investment of $700 billion USD per year. Despite reduced technology costs, financing renewable energy projects remains challenging because of the cost-structure of low-carbon power: 

  1. The high upfront capital investments can solely be underwritten by the cash flow from power sales, based on power prices provided.

  2. Power pricing for renewables is often controlled by government bodies that in many countries still favor fossil fuel generation.

Reneum’s objective is to increase cash flow stability to project developers so that they can reinvest faster and with larger volumes. Doubling investments to double renewable energy capacity globally is possible but depends on project developers being able to assure their investors of stable and predictable cash flows at competitive rates. 

Reneum is therefore intended to stabilize and increase a project’s revenue stream. 

Mechanisms to support financing

Environmental instruments like carbon offsets and RECs can act as bridge finance, subsidizing existing operations and stimulating new development. Most directly principally aligned for renewable energy, RECs act as ownership rights to the positive environmental attributes of 1 MWh of renewable energy generated. They provide a revenue stream to developers and send a price signal to capital markets to invest.

Purchased by energy sinners, like multinational companies operating on fossil fuels, or individuals who support the energy transition, properly designed RECs act as direct subsidies for developers. 

In legacy markets, these instruments are traded OTC via brokers and intermediaries. While a small market exists currently, multiple supply bottlenecks exist due to structural constraints: 

  • They are costly to register, and include multiple intermediaries taking cuts, which results in many stakeholders being excluded from the market.

  • Registries are centralized and do not exist in all markets, meaning many projects have no access to this market at all.

  • Many of the standards responsible for calculating credits suffer from a lack of transparency and inconsistent methodologies, leading to quality disparity and even fraud. This discredits their legitimacy and leads to stagnant demand.

How Reneum is different

In response to the historical market failures, Reneum leverages the principles of existing REC market infrastructure and improves upon it using the blockchain. Reneum is a vertically-integrated renewable energy marketplace, acting as both the generator of its bespoke REC instrument and the liquidity provider via its native marketplace.

Like RECs, the Reneum token (RENW) represents 1 MWh of renewable energy generated and sold. Audited and guaranteed by the Reneum Institute, RENW is a green stamp of approval that certifies the production of clean energy, issued to producers upon generation to allow them to monetize it in order to raise additional revenues which they can invest to accelerate renewable energy deployment. 

Furthermore, Reneum differs from other RECs in a number of significant ways:

  • FAST CERTIFICATION: Reneum’s registration and certification process is done mostly online, with certification-through-to-token issuance taking only four weeks.

  • RETROACTIVE CERTIFICATION: Reneum certifies from 2018 onwards, giving projects additional revenue opportunities.

  • NO UPFRONT COSTS: No upfront registration or certification fees.

  • LOW FEES: Acting as both the generator of the credits and the broker, Reneum is vertically integrated. This reduces broker costs and transaction fees dramatically.

  • EMERGING MARKET FOCUS: Unlike traditional RECs which are centralized and restrictive, Reneum certifies globally, which opens up this market for new projects. 

  • GLOBAL ACCESS FOR BUYERS: RENW are purchased by companies and individuals across the globe to demonstrate voluntary commitments, creating the first truly liquid market. 

  • INDEPENDENT: Reneum is tied to no central issuing authority, allowing it to maintain independence. It is therefore not hamstrung by local trading bureaucracy.

  • TRANSPARENT: All RENW transactions are transparently listed on the public database, removing the risk of double counting and fraud.

Eligibility to join Reneum

Reneum prioritizes certification in all markets, with preference given to underdeveloped countries and small-scale projects who benefit most from the tariff.

Eligibility includes the following criteria:

  • Producing 100% renewable power from an eligible source. Certification can occur prior to COD, but tokens only begin accruing following energy generation. Eligible sources include: 

    • solar (PV and concentrated solar thermal)

    • wind (onshore and offshore)

    • geothermal

    • run-of-the-river hydro

    • solar thermal

    • tidal and marine

  • Receive no other RECs (EACs, ROCs, GOs, etc.) that represent a property right to its non-power attributes or alternatively, supplier must cancel any other RECs previously received for a given MWh of generation that Reneum certifies. 

  • Receive no carbon credits associated with the emissions reduced compared to a fossil fuel alternative for the time period we are issuing tokens for.

  • Not have a PPA with a third-party that includes/bundles non-power attributes.

  • Must demonstrate environmental attribute ownership.

Certification & Token issuance process

Reneum provides quality attestations to off-chain and on-chain (physical and digital) data. This process helps us eliminate traditional data quality problems, such as double counting, that obscure both supply and demand.

Based on the essential characteristics of recognized leading standards like the EU’s Guarantee of Origin scheme, Reneum’s certification methodology takes accepted best practices and improves upon them further. The methodology will be publicly available for reference on the Reneum GitBook.

The certification process validates the following criteria:

  • The project is currently generating clean energy as per the eligibility requirements.

  • Satellite imagery validates project location and estimates potential output.

  • Energy produced is verified via six-month historical meter readings.

  • End consumer of power is not relevant for Reneum, but project must produce PPA or offtake agreement to evidence attribute ownership.

  • Contractually commit to no future double counting.

  • Produce any historical carbon or REC certification or transaction history.

  • Project shares plant schematics and monitoring system for online integration.

  • API SCADA connection to transit live generation data, preventing any meter tampering or data adjustment.

  • In countries where generation data is publicly available, a project’s existence and history will be confirmed through the local regulator’s website.

Once the project has satisfied our diligence, its meter or monitoring system will be connected to Reneum’s platform via API or IoT installation, depending on the plant schematics. Periodic data reviews will be conducted by independent auditors through a blockchain-specific attestation service. Opinions will be reported in the annual advisory report to offer an additional layer of data integrity.

Reneum will be automating its certification function to avail this market to a broader scope of projects. By employing oracles, IoT devices, satellite imagery and machine learning, Reneum’s marketplace will automatically certify project eligibility with no intermediaries. Once the automatic certification system is completed and tested, Reneum’s certification business will be discontinued and replaced by an entirely digital system.

Onboarding process

Once a project satisfies the Reneum certification process and a unique project data room has been developed to store all audit data, the plant’s monitoring system will be connected to Reneum’s decentralized database. Project SCADAs or equivalent monitoring systems will transmit key data points to the Reneum database via REST API, which will enable the automatic monitoring of generation data for token issuance. 

For projects without access to a SCADA, who outsource this function or operate distributed resources with limited WI-FI connection, Reneum will provide a custom IOT device which can be installed at the plant substation. 

Once projects are connected to the decentralized platform, they begin to accrue tokens for all MWh generated, which can be found in the Reneum marketplace account that all project owners initiate. This account hosts a dashboard for project owners to monitor their token balance, to initiate token sales and to settle payments of outstanding tokens. 

Supply & Demand of tokens

Traditional REC markets suffer from structural failures like illiquidity, with supply bottlenecks due to limitations in certified markets and due to geographical constraints on buyers. They are also transacted via multiple intermediaries via lengthy contract negotiations, costing both time and money. This makes them notoriously unreliable as a revenue stream, particularly in the smaller countries with lower renewable penetration that would benefit most. 

Commercially-speaking, the market lends itself best to interests of multinational corporations in developed or newly emerging economies, with smaller markets and stakeholders being overlooked entirely. 

Reneum addresses both the failures of the supply and the demand via its totally global and vertically-integrated marketplace. Reneum’s automatic token sale functionalities also reduce the transaction friction and minimize costs associated with token sales once certified. 

Monetizing tokens

Reneum’s goal is to simplify and streamline the process of generating and monetizing environmental instruments. Evolving from this modus operandi, Reneum alleviates the burden of transactions by automating the token sale process. 

On a monthly basis, accrued tokens will be minted and made available to be sold to the market. Reneum will custody all outstanding tokens and sell them via the Reneum.com marketplace. The entire transaction history of your tokens will be monitored and managed in the decentralized ledger and upon sale you will be automatically credited for the balance owed based on token sale price and outstanding tokens. 

When registering for your Reneum account, you will have the option to integrate either your bank account or cryptocurrency wallet, and to select the method of payment, which can be via direct deposit in fiat or stablecoin settlement.  

Buyers

Most buyers are purchasing for the green entitlements and will be incentivized to retire them from circulation (similar to legacy REC markets). This is achieved with Reneum by burning the tokens – a process of sending the unique token ID to a defunct account which cancels that individual token so it may not be double spent. 

In return for burning, buyers receive a green receipt in the form of a non-fungible token (NFT), which holds property rights to the project token and inks to the original certification data room so buyers may assess the project’s provenance. This is important for disclosures for some buyers, which is why Reneum takes such prudence in its onboarding process. 

Who buys Reneum?

As companies receive increased pressure to address their energy footprint, many initiatives like Science Based Targets, the Climate Pledge and the RE100, who help companies to manage their energy targets, have arisen. The volume of demand from companies pledged to these initiatives alone, is six times the global supply of RECs. Combined with the fast-growing needs of crypto miners, REC demand is choking for supply. And as individuals become more conscious of their own energy impact, they will look to Reneum as the first retail-focused REC market.

Fees to join

There are no upfront charges for inspection, certification and onboarding to Reneum. If an IoT installation is required, the costs will be borne by Reneum. In lieu of verification and onboarding fees, Reneum takes a 10% platform fee from all issued tokens at token sale for certification and onboarding. In this way, Reneum bears all upfront costs and commits time and resources to initiate token generation and in effect, only charges fees upon success. All fees are exacted via withholding rather than invoicing, to simplify processes for all parties. 

Additional Technicals

How do we guarantee against double counting?

Projects are contractually obliged to notify Reneum of any credit registration or sales via third-party registries so that Reneum may cancel credits issued for that time period. This refers to any form of natural capital credits. 

We conduct an initial project inspection to verify that the plant is green and all provided documentation aligns to their registration data. Once approved, the plant’s monitoring system will be linked into our platform directly, which feeds into the blockchain, and all audit data will be included in the project’s data room which will be available for buyers to download in the NFT memo.

As an added layer of security, projects are monitored retroactively on an annual basis through spot audits conducted by certified engineers. 

Lastly, the Reneum marketplace is unique in that it lists transaction history and project data on its public dashboard, meaning any stakeholder may cross-reference Reneum’s transaction feed to prevent double counting (double dipping). 

Regulatory Risks

Considering that buyers purchase these tokens to claim their positive environmental impact, they are intrinsically designed to be held, representing the entitlement of the buyer to claim the ‘greening’ of their footprint. Therefore, they do not fall under the scope of securities regulations and are not subject to standard financial instrument regulations. RENW tokens are qualified as utility tokens and are therefore exempt from regulatory oversight in most countries.

For project owners in markets where cryptocurrency is either illegal or regulation is undetermined, project owners can bypass any regulatory oversight by selecting a fiat currency payment integration. This limits any liability on the part of the project. Operationally, this means that Reneum will manage all transactions on your behalf, resulting in no cryptocurrency exposure to the project whatsoever. 

Additionality

Reneum supports IRENA’s recommendations for renewable-backed RECs. Reneum is designed to encourage the development of new renewable power projects, particularly in countries and regions that have no support mechanisms in place for renewables, do not reward the climate benefits of renewable power and/or actively support fossil fuel-generated power over clean alternatives.  

Reneum therefore exists to support the accelerated deployment of additional renewable energy projects that would not otherwise happen.

At the project level, however, there is no requirement for projects looking to receive Reneum to demonstrate additionality explicitly. This is because: 

  • Renewable energy consumption is currently at 18%, versus the 70-85% required by 2050.

  • Renewable energy projects are still disadvantaged with respect to fossil fuel alternatives in many countries with fossil fuel subsidies deeply embedded in public spending budgets.  

  • As countries introduce renewable energy obligations, RENW tokens will either be replaced by national RECs or adopted by said countries as part of their mechanisms for demonstrating compliance.

  • The renewable energy community in most countries still has no other means to bring their environmental attributes to market. 

Though additionality is not technically required for RECs, Reneum undertakes the following best practices to ensure it presents the most material impact to renewable energy deployment:

  • Recommending buyers to purchase RECs from new projects. 

  • Prioritizing project registration in under-developed or less structured markets.

  • Working with utilities to create green tariff options that bundle energy with the associated RECs.

  • Work with buyers and financial intermediaries to improve project bankability by accepting Reneum cash flows.

  • Issuing RENW only to projects that do not receive other certificates or tokens that embody their environmental attributes. 

  • Closely following accounting requirements as are emerging under the Paris Agreement to prevent double counting of results in more than one country.