Getting involved in the funding of the global solar power transition has never been easier. I started with micro solar projects in Africa through SunFunder before moving onto community solar projects in Ontario, Canada via SolarShare. The Sun Exchange is the next step in that progression by enabling global participation through leveraging distributed solar PV generation and blockchain technology, in one of the sunniest places on the planet. This Sun Exchange review will provide a comprehensive review of the platform based on my experience with it so far.
TL;DR: If this Sun Exchange review is too lengthy, you can jump straight to signing up and receive a free solar cell ☀️.
Sun Exchange History
The founder, Abraham Cambridge, moved from the UK to South Africa in 2014 to work as a solar engineering consultant. He was puzzled by the number of empty rooftops that did not have solar panels on them, despite the abundant sunshine. Investigating further, he found that the major obstacle preventing solar development was financing; there was a funding gap between very small systems and utility scale systems.
Around the same time, Abraham learned how to use cryptocurrency to send money from South Africa back to the UK. The process was surprisingly fast, easy and inexpensive which lead to the realization that the technology could be used to move money around the world more efficiently. Combining these two concepts lead to the idea for a global peer-to-peer solar cell leasing platform. In 2015, Sun Exchange was launched.
Highlights
- 3.5MW of installed capacity
- 2,062,372 kWh of generated electricity
- 1598 metric tons of CO2 offset
- 15,000+ members
- 164 countries represented by members
- 31 projects funded
- Projects include: schools, retirements homes, wildlife centres and supermarkets
What is the Sun Exchange?
The Sun Exchange is the world’s first peer-to-peer solar panel micro-leasing platform. Anyone in the world can purchase solar cells in listed projects. Individuals can buy solar cells (solar panels at their most granular level) in a variety of projects such as schools, retirements homes, supermarkets and other businesses. The cells then enter a buy-to-lease arrangement. As part of a complete system, those purchased cells generate electricity which is bought by the host facility at a lower cost than regular grid electricity.
How Does Sun Exchange Work?
- Project Sourcing and Site Evaluation. Businesses or organizations that want to go solar are identified. The Sun Exchange team review the proposed solar project and assess it for economic and technical viability along with social and environmental responsibility.
- Solar Cell Crowdsale. After a project passes due diligence it is hosted on the Sun Exchange buy-to-lease solar marketplace. Solar cells can typically be purchased for US$4-5 per cell. These are then leased to the project.
- Solar Cell Installation. When all solar cells have been purchased, a local construction partner installs the solar photovoltaic system. Construction is usually completed in 4-6 weeks but larger projects require more time to complete.
- Generating electricity. The system is connected to the grid and goes live, which starts the lease. The business or organization pays to consume the electricity being generated from the cells. Lease rental payments are paid automatically every month, after insurance and servicing fees have been taken out. Payment is made either in South African Rand (ZAR) or Bitcoin (BTC) into the online Sun Exchange wallet. The money can either be withdrawn or used to purchase solar cells in future projects.
Why cryptocurrency?
I won’t try to explain the intricacies of blockchain and cryptocurrencies in this Sun Exchange review, but the main reason Bitcoin is listed as a receiving option is to facilitate smooth cross border payments. Usually when people talk about Bitcoin and other cryptocurrencies, they are referring to mining, holding (hodling), and trading. In this context all it is being used for is to transfer value quickly and efficiently. Think of it as generating solar energy in one part of the world and receiving a gold coin for payment. Then flying to your home country and trading that gold coin for your local currency. All those benefits of interchangeability without the hassle and time of catching a plane.
Where are the projects located?
At the moment, all Sun Exchange projects are located in South Africa. However, the company plans to expand to Latin America and Southeast Asia in the medium to long term.
What are the project sizes?
Project sizes have generally been in the 30kW – 530kW range.
What is the minimum purchase?
The minimum purchase is 1 solar cell or approximately US$4-5, making it accessible to anyone.
How can I buy solar cells on the Sun Exchange?
New users can purchase solar cells by credit card or Bitcoins. South African buyers can purchase via a bank transfer.
Existing users can use accumulated earnings in either ZAR or BTC in their Sun Exchange wallet.
How are solar lease payments paid back?
Solar lease payments are made in either BTC or ZAR based on the accumulation currency option you selected when the solar cells were purchased. The payments go into your Sun Exchange wallet which can either be withdrawn directly into a South African bank account or withdrawn as Bitcoin.
How often are solar earnings paid out?
Solar earnings are paid in the first week of each month. You will receive an email with your monthly solar earnings statement.
What is the rate of return of solar cells bought on the Sun Exchange?
10-12% internal rate of return (IRR) for 20 years. For a detailed definition of IRR and how it is calculated you can read this Investopedia article. Please note, IRR is not the same as the interest rate you would receive in a bank account. The equivalent interest rate is about 5.7% compounded annually for 20 years. Try finding that rate at your bank in this pandemic fuelled low interest environment.
Is there a secondary market for trading solar cells?
Not at the moment, but in the future Sun Exchange plans to introduce a secondary market for trading operating solar cells.
How to purchase solar cells on the Sun Exchange
- Sign up on Sun Exchange
- Visit the Solar Projects page to see if any projects have solar cells available to buy.
- Watch the crowdsale video and read the Detailed Information Document PDF to understand the specifics of a particular project.
- Choose the number of solar cells to purchase.
- Select an accumulation currency, either Bitcoin (BTC) or South African Rand (ZAR).
- Donate a portion of your solar lease rental income to a nominated charity (optional).
- Place the order and pay via credit card, Bitcoin or wire transfer.
Accumulation Currency (BTC, ZAR)
There are two options to accumulate your solar income, either in South African Rand or in Bitcoin. For those in South Africa it is likely simpler to keep everything in the same currency either to withdraw or to purchase new solar cells.
Receiving lease payments in Bitcoin is a good idea if you believe it will appreciate in value over time. A helpful analogy is thinking of it as being paid in gold and keeping it, assuming it will increase in value. The price of Bitcoin is volatile however, so depending on your time frame the value may have fallen since it was accumulated. To prevent this from happening, lease payments can be withdrawn as soon as they are paid and converted into your local fiat currency. But if the price of Bitcoin does increase over time the opportunity to benefit from that is diminished. A compromise is to chose BTC accumulation on some projects and ZAR on others.
Withdrawal (KYC)
If you live in South Africa, withdrawing ZAR to your bank account is straightforward. For those of us in the rest of the world, the solar income has to be withdrawn via Bitcoin. If you are new to cryptocurrencies and the seamless exchange of money across borders you might be thinking that it would lead to unscrupulous activities such as money laundering. Sun Exchange is one step ahead of that threat and is in compliance with international financial regulations. Know Your Customer (KYC) identity verification is required before withdrawals are activated on your account. It is all part of anti-money laundering regulations which Sun Exchange complies with.
In order to withdraw BTC you will need a Bitcoin wallet address and a local cryptocurrency to complete the conversion to fiat currency. An explanation of a Bitcoin wallet can be found on this Investopedia article.
SUNEX
If you come across the term SUNEX in your research, you may be wondering what it is. It is a member rewards program which will be launched in the near future. Sun Exchange members will be awarded points based on certain achievements. Accumulating points will unlock different statuses which will translate into benefits such as early access to sales, discounts on solar cell purchases and solar cell bonus lease rates.
Risks
This would not be a balanced Sun Exchange review without addressing the risks.
I am not concerned about the equipment being used and the installation as the projects use reputable components such as Schletter for racking, Canadian Solar for solar modules and Soventix for installation. (Not all projects use these same components or installer). Helioscope is used for the solar design.
Host facility risk
What type of facility is it and will it be around in 20 years? A large proportion of the projects are schools, which are stable institutions with a long history and intend to be open for many years to come. Perhaps for this reason, and the social benefit, solar cells for schools are bought the quickest. Other stable locations are long term care facilities or retirement residences, for which there is always a need. Businesses are potentially the riskiest category as they may or may not stay in business for 20 years.
Sun Exchange company risk
What is the stability of the company? Is Sun Exchange legit? Not having lived in South Africa, nor having done business there, I was initially skeptical about Sun Exchange and therefore did more research on them. Based on the various media coverage, awards, team bios and advisors it quickly became clear that this was a legitimate company. VC funds think so as well, in June 2020 Sun Exchange closed a $4 million Series A funding round.
Inflation risk
In the previous solar lease rental graph, you will see that the solar lease rates are increasing year over year at an astounding 7%. However, the value of the Rand may change due to inflation which is currently 5-6% annually.
My Sun Exchange Review and Results
I am always on the lookout for new opportunities in solar energy and found Sun Exchange while doing that research. Other organizations have a project by project approach for solar projects but are limited to users from a certain geographical area or accredited investor status. Their approach leverages Bitcoin to unlock those barriers and opens up solar PV ownership to anyone, anywhere. An incredible advantage is the platform infrastructure. In the same way that Uber and AirBnB have scaled their platforms and user bases, I think Sun Exchange is building a framework that can scale massively. The speed at which solar cells can be purchased is quite remarkable. Some of the solar projects for schools had their solar cells bought up by members in just 3 hours. That is the power of platforms.
I have been a Sun Exchange member since 2017 and own solar cells in 16 projects which have returned the payments below.
The projects have been performing in line with the energy forecasts. An annual energy report is emailed which provides details on the forecasted energy production, actual energy production, earnings and savings to the energy consumer. Whenever I had any questions or concerns, the Sun Exchange team was able to respond quickly and professionally.
The time and effort that goes into presenting each project is noteworthy. The Sun Exchange media team create a high production value, 4-minute video shot on site where the host facility describes why they chose to go solar. Each project has a Detailed Information Document, around 60 pages in length, which contains specifics such as lease rates, lease term, installer, project location, equipment and risks. Don’t be alarmed when you see solar panels on the north facing roofs, remember the projects are in the Southern Hemisphere. During the construction process, email updates are provided on the status of the installation and drone photos show the completed solar array.
As the company expands throughout Africa and to other sunny parts of the world, Sun Exchange will likely reach Latin America and the Caribbean eventually. A model such as theirs could unlock the solar rooftop potential in the region and Barbados in ways that current financing cannot. It would also allow greater local engagement by making solar ownership accessible to everyone.
Hopefully this Sun Exchange review has informed you of a new opportunity and answered any questions you may have had. Try out the platform for yourself; if you are going to own solar panels, why not have them generating electricity in one of the sunniest places on the planet?
Sign up with Sun Exchange through my affiliate link or via the button below, and receive a free solar cell ☀️. Take the first step to converting sunshine into passive income.
