What is a Renewable Energy Yield Token (REYT) on Dowgo?

Jan 23, 2024

What is a Renewable Energy Yield Token (REYT) on Dowgo?

The tokenization of real assets is the next revolution enabled by blockchain technologies. In the field of renewable energies, Dowgo positions itself as a pioneer by allowing investors to own a green energy token, a digital representation of a share in a wind or solar park. An overview of Dowgo's Renewable Energy Yield Token (REYT).

Definition of a Renewable Energy Yield Token (REYT)

A Renewable Energy Yield Token (REYT), also known as a renewable energy token, is issued by Dowgo to finance a wind or solar park. It represents a credit on the future energy production of the facility. It offers holders a monthly yield correlated with the price at which the park manager resells the produced electricity.

Renewable energy tokens (REYT) are issued via the Dowgo app. The first step in the process is the selection of a reliable energy production site. Then, it aims to raise funds on the Dowgo platform in exchange for sharing a part of its energy production capacity over a predefined period. In return for their investments, fund-raising participants receive tokens representing their shares in the park.

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How Renewable Energy Tokens (REYT) Work

Private Debt Fundraising

Dowgo is a platform facilitating investment in the renewable energy market by connecting wind or solar production sites with investors. This is what is called a private debt fundraising, as it involves the participation of a multitude of non-bank actors.

Sharing of Produced Energy

After raising funds from private investors via the Dowgo protocol, the park owner will share a portion of its future energy production with the token holders. Specifically, this corresponds to the profits generated from reselling this electricity. In France, production sites primarily sell their energy to the network managed by EDF and receive a monthly transfer based on the number of kWh they inject.

For the renewable energy sector, there is an interesting particularity. Production sites sign an agreement with EDF - called a PPA (Purchasing Power Agreement) - that sets the price at which EDF will buy the kWh for a number of years. This is a way to secure themselves over time and ensure they are not too dependent on fluctuations in electricity prices.

Holders of renewable energy tokens (REYT) receive a portion of the profits generated by the activity following the sale of energy to EDF. In addition, during the life of the token, they receive interest paid by the production site following the fundraising.

The Returns of REYTs

Here are the key elements to know about renewable energy tokens (REYT) on Dowgo:

  • The total amount raised by the wind or solar park;

  • The funding rate of the loan, namely the interest it will pay annually;

  • The maturity of the loan, that is, the number of months over which it is repaid.

Through the Dowgo platform, investors have access to all the information about the production site as well as these three key elements, allowing them to estimate the yield they will generate each month and thus easily resell their participation. Here is the calculation:

Total amount to be repaid (R) = Total amount of fundraising + the sum of interests.

Amount to be repaid each month (C) = Total amount to be repaid (R) / the maturity of the loan.

To clarify:

  • The renewable energy park raises ~€205,000 at an 8% annual interest rate.

  • The loan term is for 2 years (24 months).

  • The park then repays €10,000 per month over the 24-month period.

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Join the Green Revolution

Dowgo Aligns Financial Growth with Environmental Goals.

© 2024 DOWGO

5 rue de la Manutention

75016 Paris, FR