Interview with Leon-Gerard Vandenberg, CTO, Solara

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This is an abbreviated and minorly edited version of the original transcript:

On what premise was the company formed? Can you give us some sort of background on you and the company?

Leon-Gerard Vandenberg, CTO, Solara

That’s quite a good starting line! My background is defense – I dealt with digital money 20 years ago for the US Department of Navy and of course when Bitcoin came along I kind of looked at it, and I thought that’s interesting – then I really got in at around 2012-2013 at about 12 dollars. We did containerized mining in a factory in Shenzhen, and we were trying to find our way to do that. We burnt a lot of electrons trying to win blocks, and at the end of the day, we found we had picked the wrong chip, and it was a throw-away! So this is a hard lesson of capital spent on a minimal amount of block rewards. We got some capital back for our customers, but I always have this itch in the back of my head about how we could use blockchain math and not have to burn the electrons. I’m a fan of proof of work – especially the Bitcoin variety, it’s really trusted and it’s quite a unique protocol.

However, if you look at what we’re doing with Solara, we provide a SIM card that offers the crypto proof of the solar production in the solar panel installation, from the insulation event through its whole product lifecycle and to its eventual decommissioning. We want to track that asset and provide the crypto proofs. We call it the proof of fusion – this is really our approach that’s different to proof of work, and it’s different than proof of stake because every asset is creating unique crypto proofs.

Every asset can accumulate perfectly using blockchain math to accumulate those, and there are some new crypto proofs that are additive, that let us take interval data from one minute to five minutes and make just one record of that. With the accumulation of some of the new thought processes in the marketplace with blockchains such as Chia, we thought we could do a crypto proof that’s directly powered by the sun, and we don’t have to burn so much; just a few millivolts per panel in order to do this. And it really provides this utility of tracking the panel and providing these property rights services. That’s really how we got into it. We thought that we could bring this brand-new kernel of value by bringing crypto proofs right to the point of generation.

Great! That’s something very different than what I’ve seen in this area at the moment.

Yes, this is a unique thing. This is not just a Bitcoin/blockchain kind of thing bolted onto something else. This is really a possibility to create an energy generative or an energy positive blockchain because the incentives are quite complementary to the whole model of how blockchains should be decentralized. You can’t centralize solar energy, so this is going to be naturally decentralized as well. Our rewards will be basically around that whole community engagement, and it’s really this kind of structure that we’re trying to design. If we can get the community traction we want, then I really think it can go quite big. We’re starting at some of the best solar locations in the world, being Australia, and we’ve got the most expensive energy prices in the developed world, so there’s a reasonable profit margin that we can entertain in order to get our infrastructure to bear and to start to pass proof of concept into working solar farms and solar gardens.

So how large is Solara at the moment? Where do you see it being in five years or so?

So we’ve been going for two years really as the R&D company is Right’s fusion, so we are trying to make you know property rights around fusion energy, and Solara became the brand for all that. We’re now an unlisted public company, which means that we’ll be able to do some crowdfunding as well as our token sale. Under some of the jurisdictional constraints of Australia, we want to make sure that when we promote our token economy to Australian residents that we fall within the purview of the way that the regulators are looking at it now. So this is probably why we’ve changed the structure a little bit.

The company has about 30 people on the roster – about six of them are full-time. We’re gradually growing the team to be around twenty people full time. Because this is a convergence play, we’re really taking embedded systems and crypto proofs that run on SIM cards with LTE and then we’re baking this into one of the most complex physical systems around the world – the energy grid – and trying to make this work as a next-gen accounting system to provide proper incentivization of green energy and to reward people for green behavior. So there’s a mix of different talent on our team, but this is a real convergence of different disciplines.

So who are you targeting as customers in the first instance? Is it consumers, prosumers or businesses – or where are you headed?

We really have three prongs that we’re trying to kind of satisfy. First, market entry model: there’s sort of a no-fly zone on solar farms around community engagements – remote communities and communities of about 5,000 people or less. 50 kilowatts to maybe 40 megawatts are the solar farms that don’t get real attention from the bigger end of town – the Macquarie Bank and the more sophisticated finances. What happens is that the smaller solar farms are really struggling to get the equity plus the debt ratios working right so that they can capitalize on the build requirements for their solar farms. By using our project asset tokens, the tokens provide the financial returns to this kind of community: we can engage in a type of securitized debt model. We have a Solara token that turns on the infrastructure like a smart card turns on a set-top box, and we have a way that if you want to engage in a project – and if you’re a project of one and it’s a developer with ten solar panels on his own little garage then that’s a project asset token that he could use for his own test and trial.

However, if you’re going to organize a community of projects, either a virtual power plant or a solar garden for the community, then depending on the size of that, the product might become a financial product, and typically this is called a security token in the nomenclature of the industry. Now depending on that, it may need regulation, so we’re navigating how to do that and we’re targeting solar communities first, solar farms second. Then really, our residential bundle is for virtual power plants where communities act in concert with demand response programs in order to be rewarded for their green behavior and for having a battery at home that is available for dispatch.

Who do you see as the competition for you at the moment?

There’s no direct competition – no one is really doing our kind of “path to market” in the same way. There is some perceived competition around any “blockchain and energy system” so you know WePower has got a token where they did a lot of good marketing, and they’ve kind of built a token that has a promised return. So in a way, this is a kind of uncategorized security token where they provide a return based on your participation with WePower. Power Ledger is an early player in the industry, and they have great returns and wins in the industry. They take smart meter feeds from various different players, and they wrap them into a type of blockchain that can be used for peer-to-peer and also for asset germination.

In our projects, instead of it being called asset generation, we call it a project asset token, so we’re providing different paths to the market. It’s a separate bundle and a diverse mix of services. We’re trying to provide this by being a tracking point for green energy off solar farms or the right of the solar panels. WePower and other ones such as Power Ledger have to take their sense of truth from the smart meter. Here in Australia, the smart meter is owned by the energy retailer, and the smart meter energy retailer really holds back a lot of the information.

You have to invest in either a real-time monitoring system by yourself in order to get that information, or you just have to know when the green light is flashing on the inverter when you’re charging your battery. So what we’re trying to do is provide this type of information arbitrage that’s in the hands of the consumer. We want to be able to give solar asset ownership to a new community that traditionally doesn’t own a roof. So if you look at one-third of the population of Australia – millennials or people that rent, they can’t own solar directly – they have to have a roof in order to install solar. The only way that they could participate in solar would be to hold equity or maybe a cooperative share in a solar farm or solar community. What we’re doing is democratizing access so anyone who can own our project asset tokens will have a marketplace of various different projects that they could choose from and a secondary market where they can trade solar project tokens for Aussie dollars or for cryptocurrency or for another solar token.

We’re creating a marketplace of solar projects, and we’re trying to create them as a challenger type of “gen-tailers” we want to create little pop-up utilities all around Australia and all around the world – this is really in contrast to the generators or gen-tailers that have the power in the value chain. We’re trying to make sure that we provide this enablement for not just social proof but for real participation.

When do you expect you’re going to have your implementation open to the public?

We’re doing closed trials right now – we have a solar farm that’s a candidate farm in Singleton, which is north of Sydney. We’re a part of the sea battery scheme, which is a bundled solar project with battery storage for a number of communities here in South Australia. We also have a range of different smaller community solar farms in Victoria and Queensland. We’re bidding on, and we’ve got indications we’re successful doing that, so this requires us to build some hardware and build some of the energy web work that we have planned to do.

We’re also partnering with Restart Energy to build out their blockchain approach as well. Because the energy web foundation is more the whole industry ecosystem play and Restart Energy is really the neo-retailer and challenger type of play. Solara, however, is really blockchain agnostic. We provide crypto-proofs that are really the physics and the math of energy production from a solar panel, and we’re really agnostic as to how that is put together in a blockchain. There’s a range of solutions that are going to market, and we want to make sure that we have a solution that works for panel vendors and battery suppliers and can work across a number of industry ecosystems – so that’s really our plan.

What do you see needs to change before we get the widespread adoption of changing cryptocurrency in the energy sector?

Right now, the energy sector suffers from what is called “regulatory capture”, so in Australia, we cannot share our energy across the land title boundary unless you are a retailer. Sharing energy from one neighbor to another, the only way to do that is by having a common contract between each participant. They need to be on the same retailer network. The services can be kind of abrupted by providing up a solution for embedded networks, so townhouses embedded networks like gated communities, school campuses, and retirement villages all have this capability to allow the innovation behind the boundary and that’s really what Solara does: provide the proof of generation, storage, and the eventual use or load dissipation of the electrons from that transactive blockchain grid and what we can do behind the meter, but it requires a regulatory approval to do this outside of the boundary of the smart meter. So if we’re going to export energy and move it to someone else, we need to have a virtual way of doing that since we can’t deal with physical electrons. Restart Energy and their tokens allow that kind of trading in a virtual sense. This is exciting for us as well as the notion of trading energy across jurisdictions, and having this capability to do so in a virtual way, much like carbon credits allow you to do the same thing across a number of jurisdictional boundaries.

So do you think the old established energy giants and some government regulators will fight tooth and nail to hold on to what they’ve got, or do you think they’ll embrace the change?

I really think you’re going to get slow encroachment there just like the banks are pushing back against open banking. You’ll see that they’ll try some internal trials and they’ll try some – let’s call it – “safeguarded communities” where they may not promote that this is potentially possible. However, we know that they are looking at this – the banks are looking at ways to provide new financial structures for new suburb developments so we’ve been talking to some of the financial arms that build out this infrastructure. They’re looking for this type of utility approach that does have this blockchain feature set of being able to do transactions and being able to provide a more complete utility service, not just energy but other utility services, so we’re looking at water, a full, complete, services suite.

Well that’s all I have for today – thank you for your time!

Finally, I would like to mention that we are in the middle of a pre-sale and before Christmas, we’ll move to a public sale. We are doing that for our Solara tokens, and we’re working with Restart on some of those discussions, and we invite people to come to our community and our telegram chat.

Fantastic, thanks a lot for your time and thanks for letting me spend some time with you.

Thank you, keep going.

Images courtesy of Solara/Leon-Gerard Vandenberg

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