Intro & Summary:
The OpenSolar Project and platform leverages the Stellar ecosystem to host loT-driven smart contracts for disintermediation and contractual automation in financial processes. It hosts a three-sided marketplace (investors, developers and recipients) to drive deployment of community-owned solar energy projects.
Over the last two years, we have been developing the open source platform to streamline the flow of securitized crowd-investment funds (eg. bonds and equity) to finance the deployment of solar assets , and allow the end-users to own these resources through regular utility-like payments, driven by energy generation and consumption data retrieved from IoT sensors. We built the architecture so as to extend applications beyond solar to include other SDG critical infrastructure such as water purification, sanitation, and internet connectivity.
The OpenSolar project was initially incubated at Yale and MIT by a group of engineers after hurricane Irma and Maria devastated the electricity grid of Puerto Rico and its surrounding Caribbean islands. The project’s model received significant traction, deployed high impact pilots in the island and span off as an independent nonprofit project and organization. We are now creating partnerships with programs at the United Nations to roll-out pilots in Asia-Pacific. For this, we will need to scale software efforts and new features— which is what this grant will support.
Applications, Tools & Infrastructure
Opensolar’s goals are to:
- Remove investment frictions to provide a reliable, green and affordable source of energy to regions having limited energy options
- Demonstrate the efficiencies, improved energy security and broader social gains to be extracted from the automation afforded by IoT devices, smart contracts and digital currencies
- Investigate the effectiveness of the Stellar blockchain for decentralised and securitized crowd investments
- Provide a stable source of income and financial sovereignty for marginalised regions and groups through solar energy and digital technology.
Problem statement & project motivation
Financial frictions preventing a sustainable energy transition
By 2050, the world needs to achieve a net-zero carbon emission state. The transition to renewable energy is accelerating, but is still not on pace to meet this global target. Solar energy is now affordable and increasingly accepted as a viable alternative to legacy energy systems. It's also a solid generator of jobs.
There are many options for financing solar energy around the world. However, the underlying contractual frameworks to finance renewable energy are not fit for the purpose of a radical mobilization of capital to achieve global SDG goals. Most long-term power purchase agreements (PPA), lease-to-own models and procedures to capture tax benefits and green attribute credits are cumbersome and require economies of scale to be affordable. The result leave the needed decentralized community projects will little access to capital.
Furthermore, the industry lacks a common platform and standard to seamlessly integrate a full array of investors— overseas, institutional, public and private— with beneficiaries using accessible debt and equity securities.
Below are the specific impact investing frictions that open solar directly addresses:
Towards a just financing model of critical infrastructure for communities
Investors should be able to finance solar photovoltaic systems around the world using a seamless and low-cost cross-border payment network. Multiple project finance and blended capital features should be used to de-risk investments and certify the social and environmental value of projects. End-users (or 'receivers') should receive the solar systems with no down payment, pay for the energy per kWh just like they do with the current utility, but once they pay off the cost of the system plus a low interest (i.e. a return to investors), they would fully and legally own the system (zero energy cost thereafter). This is the model we believe we can democratize and roll-out at low-cost through full digitization and automations. This blueprint has motivated the development of OpenSolar and its use of Stellar’s functionalities.
Solution Summary: The OpenSolar Platform
Opensolar enables accredited and non-accredited impact investors to invest in green energy projects, and helps offset their carbon emissions. With a Kickstarter-like interface, users can navigate through projects they like, choose the project they are interested in, and invest upwards of $5 in any project instantaneously. We designed the platform to be compatible with securitized investments so that, with the right approvals, investors can acquire equity or bonds from projects structured as security issuers.
Through Opensolar, people can publicly advertise investable solar projects at different stages of development, and leverage the power of decentralised funding to make a positive impact on Earth. In addition, projects can create and offer Renewable Energy Certificates (RECs), which they can use to offset their emissions or sell on a marketplace to others wanting to offset carbon emissions.
Opensolar also provides solar developers and contractors with a central platform they can solicit projects from. All legal contracts for projects are turned to digital templates, such as those associated with security issuance, power-purchase agreements, blended finance insurance and installation process. These are handled from within the platform and stored on IPFS, a decentralised database. As a result, Opensolar avoids and automates costly legal processes when doing robust financing of solar devices. We wish to democratize sophisticated project finance deals so that marginalized communities around the world can benefit from their investment structures.
Opensolar is built on openx, a broader "platform of platforms" architecture we developed for generic project investments using Stellar. Opensolar’s web interface is built using React.js and a pilot version of Opensolar is up at https://www.openx.solar. Opensolar’s backend API and smart contract is written using Go.
Openx is a modular framework that can be used to build platforms seeking Stellar investments in different projects. Openx possesses handlers for cryptocurrency operations, KYC verification, buying and selling stablecoins, and more. Openx is built on Stellar, and currently supports ComplyAdvantage and AnchorUSD for the above mentioned operations, and is looking to add more partners.
Opensolar uses Stellar smart contracts and has various entities like investors, recipients, developers, and more performing different roles on the platform. These entities interact with the Stellar blockchain through the React.js web interface. The platform makes extensive use of Stellar Assets for investment confirmation, for debt tracking, and to potentially enable secondary markets where people can trade debts and investments.
The web interface performs its interactions with the backend through JSON-RPC APIs. Entities on Opensolar can also choose to interact with the backend directly, and a detailed list of supported endpoints is available at https://apidocs.openx.solar/.
Opensolar currently supports AnchorUSD as a dollar anchor in the US. Users are required to perform KYC on anchorusd.com in order to transact and invest using AnchorUSD. AnchorUSD purchases and withdrawals are processed on https://www.anchorusd.com.
IoT-to-Smart Contract integration for financial automation
A piece of software called the “teller” is installed on the IoT device, which is responsible for transmitting energy production data to the Opensolar platform. Energy payment transactions occur between the electricity end-users (Recipient) and the escrow smart contract that accrues funds, pays back investors and coordinate payments flow (i.e. the central circle in the diagram) . Once the accrued funds can cover the original principle, the contracts pays off investors and the bonds or security issuance matures.
How Opensolar uses Stellar
- Opensolar uses Stellar to provide almost-instant project investments, faster than fiat processing on any crowdfunding (eg. Kickstarter) or crowdinvestment platform (eg. StartEngine).
- Opensolar works with stablecoin providers like AnchorUSD to enable USD payments for listed projects, and plans to work with other anchors in the future.
- Opensolar uses Stellar Assets to tokenize investments and debts, and makes use of trust limits, flags and multisig.
Benefits of Opensolar to the Stellar Network
- Opensolar spreads adoption of Stellar by familiarising a huge market of climate conscious, non crypto native audience with Stellar and its concrete functionalities for the finance world.
- Opensolar works closely with anchors to enable fiat payments, and helps improve their revenue streams and overall market liquidity.
- Opensolar partners with the United Nations bodies and leading climate change organisations around the world to both integrate carbon and climate accounting procedures, as well as roll out high impact real-world pilots.
- Opensolar will run its own validator and Horizon instance once it transitions from the pilot stage.
Opensolar has deployed two pilots (Jan ‘20 and Oct ‘18) in Puerto Rico, with one on standby to deploy real funds, pursuant to SEC and legal authorization. The pilot is live at https://www.openx.solar
September 2017 - Hurricane Irma & Maria destroys the electric grid in Puerto Rico. This sparks the need for a low cost way to finance distributed solar in communities and restore power supply.
February-May 2018 - Yale and MIT blockchain engineers start working with a local network of schools in Puerto Rico to device a financing solution: the OpenSolar concept is born
June18-Jan 2020 - Project development scales and deploys two solar projects in schools and community centers in Puerto Rico to ensure robustness of the platform.
February 2020 - Open Solar launches as an independent non-profit and open source project.
Aug 2020 - Design, development and integration of a content management system (CMS) for project originators
Sep 2020 - Improved web interface - backend integration, new IoT Teller App functionalities: offline functions, data economy controllers, spatial domain logics and UX improvements; Quality Assurance.
Oct 2020 - End-to-end pilot deployment on MainNet (hardware+software+currency), enrich documentation, publish SDKs (beta version)
Nov 2020 - Begin international pilot programs with a focus on island economies in the Asia-Pacific region.
Jan 2021 - FINRA and SEC application and authorization with go-to market partners for securitized investments with U.S. investors.
Feb-Mar 2021 - Production launch (first release version)
Puerto Rico, USA; California Microgrids, USA; UNDP programs in Indonesia/Philippines; Rwanda solar accessibility plan with Rwanda Gov & Yale Univesity; Water equity deployments to extend from just solar functions.
Puerto Rico Pilot Site* (testnet contract): https://www.openx.solar
Pilot Health Dashboard: https://dashboard.openx.solar
Openx backend API: https://api.openx.solar
Opensolar backend API: https://api2.openx.solar
API docs only: https://apidocs.openx.solar
MQTT broker: https://mqtt.openx.solar
Docker: openx and opensolar
- Access code for pilot site is: ‘demodemo’
Puerto Rico Pilot Website: https://github.com/YaleOpenLab/openx-frontend
API Docs: https://github.com/YaleOpenLab/openx-apidocs
For more info, visit https://dci.mit.edu/opensolar
Stellar, climate change, solar energy, community finance, crowd impact investment, asset, Renewable Energy Certificates