Token Sale

WePower Token Sale: Renewable Energy Crowdfunding and Trading on the Blockchain

Summary

WePower is a European-focused blockchain-based green energy trading platform that will enable investors and consumers to participate in the funding of clean energy projects. Specifically, it will allow anyone to crowdfund a portion of renewable energy projects and receive energy tokens representing 1 future kWh from that project. This portion of funding is designed to fill a gap left by declining government subsidies in Europe. WePower will also serve as a utility and agree to be a long-term offtaker for that energy, and will feature a consumer-facing dashboard to support energy analytics and energy trading in a more P2P-oriented grid that integrates small-scale power production.

They are selling a token that entitles holders to a fractional proportion of WePower’s share of 0.9% of all future energy production generated within the network. While the ultimate value this will represent for token holders will depend upon the volume of transactions occurring on the WePower network, sizeable network growth would strongly support the token.

Token Sale Report

WePower is a blockchain-based green energy trading platform that will enable investors and consumers to participate in the funding of clean energy projects, thereby partially filling an emerging gap in renewable project financing while also allowing consumers holding project related energy tokens to redeem them for discounted electricity. In addition, the company’s sophisticated energy information systems will support p2p energy trading and generally allow consumers to better understand their own electricity consumption habits and consider ways to orient them consumption towards a greater renewable mix.

WePower’s founders were inspired by several fundamental challenges facing the energy sector, including a recent move by banks to tighten lending standards for renewable projects as well as a general consumer desire for increased access to renewable energy for their own consumption. The first problem is related to the proliferation of renewable projects across Europe, combined with the expiration of government subsidies such as feed-in tariffs for renewable projects, which have resulted in banks that were previously loaning up to 80% of a project’s construction expenses reducing their lending to a mere 50% of development costs. The result has been a need for project developers to make up the shortfall with their own funds, or to turn to more expensive financing options, both of which increase the costs and timelines for project development. These realities also influence the larger development pipeline for renewable projects, for assuming a developer is somehow able to access the necessary capital to allow a project to proceed to the construction phase, developer’s find themselves with fewer resources with which to begin work on subsequent projects as more of their capital is tied up in ongoing projects.

WePower’s approach is to address this shortcoming by funding between 15-22% of a project’s expenses in return for an offtake agreement for a similar percentage of a project’s output. This will reduce the borrowing needs of developers, and allow individuals both to directly invest in supporting renewable energy production and to acquire tokens representing that future energy production that are themselves held in a smart contract. Project-based tokens will be linked to a proportional output from the funded installation, with each token representing 1 kWh of energy output. Investors, whether retail or corporate, will be able to either hold tokens until redemption, in effect pre-paying for discounted energy, or trade them on cryptocurrency exchanges if they desire liquidity or an early exit from their positions. In addition, each project receiving funding will be required to donate 0.9% of nameplate production capacity to the holders of the WPR tokens to be sold during the ICO.

As WePower is led by an experienced team of European energy professionals, they will initially concentrate on Europe. Specifically, they intend to focus on renewable projects like solar in countries where production costs are already competitive with grid prices, beginning in Spain and with Italy and Portugal likely as initial areas of expansion. While the retail aspect of WePower’s planned investments is integral, allowing individuals to directly express their desire to see more renewable projects built, this also forms a link with the second area of focus for WePower, that of functioning as a utility and providing energy directly to consumers via their sophisticated “Storm” and “Hurricane” energy dashboards that will allow consumers, or “prosumers” in the case of those clients who also produce energy, to easily monitor, trade, measure and analyze their own consumption, with smart contracts processing transactions.

The eventual widescale deployment of the Hurricane stage energy hub will not occur overnight, as it requires consumers be equipped with both smart meters and data hubs necessary for the full analytic suite of tools to be applied. Nevertheless, offering consumers more visibility and analytic capabilities, and potentially lower prices, could offer a meaningful alternative to existing power industry incumbents. WePower could achieve lower prices if WePower deploys its planned artificial intelligence and machine learning to more effectively forecast demand, allowing it to purchase a greater percentage of the network’s energy requirements in less expensive futures markets and less in the more expensive ‘spot’ markets. In addition, the promise of greener energy for consumers, and support for localized, green energy through the platform’s ability to incorporate small-scale energy trading from local installations like rooftop solar, would add to the network’s financial and efficiency-based appeal for consumers and prosumers.

What is the Token Being Sold?

During its ICO, WePower will be selling its ERC-20 compliant WPR token. The token is a type of exotic investment token that will accrue green energy from the ensemble of projects to be funded through WePower’s platform in the years ahead. Technically, WePower is referring to its sale as ‘a reward based crowdfunding campaign’, with contributors receiving WPR tokens in return for their investments. As described above, project developers will donate 0.9% of a project’s planned output to token holders, who will be able to use or sell the energy they receive for their fractional claims on this pool. The ability for WPR holders to sell their accrued energy was specifically designed to allow investors residing in areas not connected to WePower’s grid services to nevertheless participate in the process.

During the sale itself, WePower will sell up to 55% of the outstanding token supply. A sold out pre-sale and sale would see the company raise around $35 million USD at a $300 ETH price. The Wepower team will retain 20% of the token supply, subject to a 12 month vesting period. The entirety of the sale funds will be allocated to platform development in various forms including both technical, regulatory, and grid connection components.

Additional crowdfunding events to create additional classes of tradable tokens linked directly to the expected output of individual facilities, will take place once WePower has developed its platform and turns its attention to its ambitions to contribute to the financing of individual projects. The first of these events is anticipated sometime around the middle of 2018. This second general class of tokens, which will itself be divided into a series of distinct tokens, each linked to a specific project, will be interesting to observe; while potentially representing a confusing jumble of numerous tokens, they could also allow consumers seeking to acquire a claim on a specific project (whether local, a specific energy type, or reflecting some other value) from which they desire to redeem energy.

The State of WePower’s Technology

In their own words, WePower describes most of its use of the blockchain as relatively straightforward. In the initial stage, all energy offtake agreements the company will be entering into will be written into smart contracts. Subsequently, as the company enters the second phase and develops its Hurricane energy dashboard for consumers, the blockchain will play a key role in the processing of redemptions of project related tokens, as well as microtransactions related to small-scale sales and purchases related to retail prosumers selling locally-produced energy back to the grid. WePower is also looking forward to the eventual improvement of energy storage technologies such as batteries. More effective batteries will allow for more complex micro buy/sell transactions as individuals can both store their own energy production and purchase cheap grid energy to resell at peak hours. This too will have advanced energy management dashboards such as WePower’s Hurricane system playing core roles.

In addition to its strong energy leadership, Wepower is led by a strong blockchain team (discussed below,) and ICO funds will be largely focused on completion of the system, as well as  integration of its technology with the energy grid, arguably the most challenging task the company faces.

A Developing Space for Tokenized Energy Companies

While at this early stage WePower does not appear to have direct European competitors in the consumer-orientated blockchain space, recent ICO activity suggests the emergence of a small cluster of companies pursuing broadly similar objectives that can be evaluated comparatively. Two energy focused projects with only a thematic relationship to WePower are Sun Contract and Solar Dao. The former is a consumer-oriented energy trading platform, while Solar Dao is a renewables focused investment fund. The two completed ICOs in, respectively, late July and early September 2017. Neither appeared to get much traction, with Solar Dao raising just under $450,000, while Sun Contract raised $1.7 million.

Considerably more relevant are two companies focused on providing consumers reduced pricing and opportunities to move towards a greater use of renewable sources. Grid+, completed its pre-sale in September 2017, raising around $29 million. The late October crowdsale will likely move that total considerably higher for an ICO of what is, in effect, an energy coupon giving no access to or lasting staking in the functioning of the Grid+ project. Resembling WePower much more closely is Australia’s Power Ledger, which completed its own $32 million (USD) ICO earlier this month. While Power ledger too has a retail-facing energy interface, the company is also planning to participate in the financing of individual energy installations, for which it will offer a second class of tokens. Much like WePower, Power Ledger’s ICO funds are dedicated to the development of the retail platform, but its POWR tokens sold during the ICO also serve as access tokens for subsequent, renewable-installation specific token generating events.

While the above chart suggests that WePower’s proposed $35 million raise may be overly ambitious, that may be an overly simplistic interpretation. In terms of simple raise amounts, Grid+, for instance, will quite likely surpass $35 million in backing once its own public sale is complete, which would already make WePower’s goal appear more modest. Power Ledger, a more relevant direct comparison, only raised $32 million, but as much as the two companies are similar, substantial differences also exist. One is that as a European company, WePower has easier access to larger energy markets than is the case for Australia’s Power Ledger, a key point relative to future growth potential. (Power Ledger has indicated ambitions to expand internationally, but that presumably would be a secondary phase that could develop within a few years.) Arguably more importantly, WePower already has an agreement in place for an initial 1000 MW solar facility in Spain to join WePower’s platform, with expected green energy reward to WPR holders amounting to 7.9 million Euros over an initial three year period. While modest, this already elevates the network above a purely speculative level and provides at least a minimum backing to the tokens.

 

Another manner of comparing the above companies is not on the basis of ICO raise amount but rather the implied valuation at the time of ICO, a measure of the amount raised relative to the percentage of outstanding tokens sold. This metric is captured in the above chart, where the bubble size associated with each company represent the full valuation of its entire token economy. We exclude Grid+ from this consideration, as its pre-ICO raise represented only purchases of a coupon rather than investors acquiring a claim on or implying future valuation of the Grid+ platform. In the case of Power Ledger, it’s $32 million raise for 35% of the company’s tokens occurred at a $91 million valuation. WePower’s proposal to sell 55% of the company’s tokens at a $96 million valuation seems relatively in line with its peer company Power Ledger, even if there are differences in the exact functioning of the two tokens that render any comparative analysis merely approximative. Given the more concrete analysis possible with WePower, (because the token’s prospects are more directly linked to the development of the network) one can also calculate that around $10.5 billion in projects would need to be financed through the platform for token holders to see a positive return, assuming no speculative value is attached to the network or tokens. While growth of this scale should be expected to take three years at a minimum, the overall expectation seems like an achievable goal. The tokens could easily end up reflecting these expectations well prior to the actual achievement.

Who is the Team Behind the Project?

WePower is led by a strong and diverse team well-suited to the projects they are taking on. Focused on business development and project analysis, Cofounder and CEO Nikolaj Martyniuk is a founder of the Smart Energy Fund and possesses more than a decade’s worth of experience in the development of renewable energy internationally. WePower’s other cofounder Arturas Asakavicius is a lawyer with experience in Fintech, blockchain, and cryptocurrencies, is a chairman of the Lithuanian Fin-tech Association and two times recognized as the Lithuanian Crowdfunding Patron by the EU Commission. Co-founder and CTO Kaspar Kaarlep was CTO of a national DSO and has more than seven years experience working on different challenges related to the integration of green energy and smart grid systems. The company also has a strong blockchain team, with Jon Matonis serving as blockchain advisor, and Lukas Kairys, an experienced developer, focused on blockchain and smart contract issues. Energy market advisor Steven Meersman is also an experienced market analyst and consultant who has experience with commercial and trading strategies for groups ranging from hedge funds and energy majors to independent traders. The strength of WePower’s experienced team extends through its sales, AI, and payments concerns, each of which have experienced individuals in place, a testament to the team’s efforts to address a wide range of relevant issues, and their ability to attract competent individuals to key positions.

Project Details

Incorporation status WePower Network
Team openness Fully transparent
Blockchain Developer Lukas Kairys
Technical White Paper expected late October
Available Project Code https://github.com/WePowerNetwork
Prototype http://platform.wepower.network/landing;
https://wepower.network/#video-token- model

Token Details

Role of token Energy Dividend
Token supply Undetermined
Distributed in ICO 55% of total supply
Emission rate No new coins created
Blockchain Ethereum
Consensus method Proof of Work

Sale Details

Sale period Oct 21, 2017 to Nov 14th, 2017
First price 1 ETH = 1,100 WPR
Accepted currencies ETH
Investment Round First public offering
Token distribution date 2 weeks after crowdsale
Min investment goal $5 million
Max investment cap none
How are funds held Smart contract
Minimal Viable Product Q1 2017
Bonus schedule 1 ETH = 1,100 WPR until soft cap, 1 ETH = 1,000 WPR subsequently

Official Resources