Can Blockchain Finance the Energy Transition?

The shift towards renewable energy is a crucial response to the climate emergency, yet it faces significant financing and logistical challenges. Blockchain technology emerges as a promising solution to overcome these hurdles. By leveraging these technologies, Dowgo positions itself as an innovative player to accelerate this transition. This article explores the challenges of the renewable energy market and how Dowgo, through blockchain and tokenization, proposes a revolution in financing the energy transition.

The Climate Emergency is Undeniable

The climate emergency and the need to reduce greenhouse gas emissions have pushed renewable energies to the forefront of global discussions. It's no secret that the future of the planet relies on a deep and sustainable energy transition.

At the COP28 summit, a general awareness was felt as a hundred participating countries committed to reducing the use of fossil fuels and to triple their renewable energy production capacities by 2030, especially through wind and solar power.

To achieve carbon neutrality goals, significant investments are expected in the coming years. Investments are estimated to reach $4.55 trillion per year by 2030, and $7.87 trillion by 2040 to achieve carbon neutrality by 2050, according to a Bloomberg NEF report. The ecological transition will not happen without considerable efforts and, as it stands, there are immense challenges to overcome.

🔗 For more details - Renewable Energy: An Expanding Investment Market

Challenges of the Ecological Transition

Limited Access to Financing

One of the major challenges for deploying renewable energy is access to financing. Green energy projects require substantial initial investments, with returns on investment that can take several years to materialize. Traditional investors are often reluctant to commit funds to projects considered too risky or too long to bear fruit.

Moreover, it’s a sector relatively closed and reserved for institutional investors. Although it is possible for an individual to invest via crowdfunding platforms, the fees are around 5%. In short, it is complicated for project holders to find the necessary financing to create a wind or solar power production park.

Transport and Storage Issues

In theory, it would be ideal to develop a vast solar farm the size of the Sahara desert. This park would produce more energy than the world consumes, as explained by the media outlet Futura-Sciences: "The amount of solar energy received by the Earth each year is immense. […] Exploiting only 0.01% of this solar energy would be enough to cover the planet's energy needs."

So why don't we do it? Simply because renewable energy presents logistical challenges, particularly in terms of transport and storage. The production of energy from renewable sources, such as solar or wind, is not always close to consumption areas. In other words, the majority of the production would be instantly lost because it is not used.

Need for a Decentralized Approach

This is why it is necessary to develop renewable energy with a decentralized vision. It is essential that renewable energy production be scattered throughout the territory to efficiently meet demand and not be exposed to transport or storage problems.

This premise is where Dowgo was born, with a clear ambition: to finance medium-sized wind and solar parks in the French and European territory.

Dowgo Brings Blockchain Revolution to Renewable Energies

Decentralized Financing Through Blockchain

Blockchain offers a unique opportunity for financing the energy transition thanks to its ability to execute secure, transparent transactions without intermediaries. It is essential to understand that blockchain is the building block that replaces traditional financial intermediaries, those who apply exorbitant fees preventing individuals from investing.

This is why Dowgo uses blockchain to facilitate decentralized financing of renewable energy projects, allowing investors to contribute directly to projects without going through trusted third parties.

🔗 Still curious about Dowgo? Discover our full presentation!

Tokenization, Fractionalization, and Liquidity

Dowgo relies on a particularly unique mechanism: the tokenization of real-world assets. Simply put, this allows any asset to be digitally represented on the blockchain to be more easily traceable and exchangeable.

The benefits of tokenization for financing the transition to renewable energies are numerous:

• Accessibility: By fractionalizing a share of an investment in a wind or solar park, Dowgo reduces the entry cost for investors. While it is about 100,000 euros for a share of a fund specialized in investment for the transition, it will now be reduced to 1 euro and open to all profiles.

• Liquidity: The blockchain is accessible 24/7 and allows for a secondary market where investors can trade a token on Dowgo without constraints, enabling them to get exposure even after the fundraising or sell their tokens before the end of the period.

• Transparency: Blockchain is an open and transparent world, allowing for easy tracking of producer payments.

🔗 Learn more about asset tokenization, the technology that will revolutionize finance

Support for Project Developers

Dowgo steps in once the developers have identified land, built, and connected the parks to the energy network. The platform offers project bearers the opportunity to refinance on their initial investment, thus enabling them to repay equity contributions and bank debts.

This approach aims to free developers from any financial constraint, allowing them to fully focus on developing new parks.

Supporting Energy Projects

As explained in the first part of this article, the global demand for renewable energies requires tripling capacities by 2030. Dowgo aims to support developers in this expansion, ensuring that financing is no longer an obstacle.

By transferring financial risk to investors, who are looking for a stable and secure return over the long term, Dowgo facilitates the sustainable development of the energy sector.

Conclusion

Blockchain and tokenization offer innovative solutions to the challenges of financing the energy transition. Dowgo, by exploiting these technologies, presents itself as an essential catalyst for the development of renewable energies across Europe.