Green Bonds on the blockchain

The tokenization of real assets represents the next revolution enabled by blockchain technology. In the field of renewable energies, Dowgo positions itself as a pioneer by allowing investors to invest in native green bond tokens, which are digital representations of debt on wind or solar parks. Here's 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 green bond token, is issued through the Dowgo platform to finance wind or solar projects. It represents a credit that will be repaid through the proceeds of energy production. The token offers holders quarterly interest payments and principal repayment at maturity.

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How Renewable Energy Tokens (REYT) Work

Green Bond issuance

Dowgo is a platform that facilitates investment in the renewable energy market by connecting wind or solar project owners with investors. This process is known as private debt fundraising, as it involves the participation of numerous non-bank actors.

Fixed Interest Payments

After raising funds from private investors via the Dowgo platform, the project owner will pay quarterly interest to all token holders until the principal is repaid. This operates similarly to a bond in stock markets.

The project owner must secure the asset's revenue by signing a Power Purchase Agreement (PPA) for the renewable electricity produced. When selling the production to the grid, the asset owner signs a PPA with the grid manager, such as EDF in France, which sets the price at which EDF will buy all the kWh produced for a number of years.

Once the asset has produced enough electricity and generated sufficient revenue, Dowgo processes the principal repayment to all current token holders through smart contracts. However, the asset owner must still validate this transaction to repay its debt.

A Use Case

Initial Investment/Principal:

• €1,000,000 for the setup and operation of a 1,000 kWc PV plant.

Annual Production and Revenue:

• The PV plant produces 1,200 MWh per year.

• With a PPA rate of €135 per MWh, this results in an annual revenue of €162,000.

Quarterly Interest Payments:

• Based on an 8% annual borrowing rate, the quarterly interest payment is €20,000.

Maturity of the Loan:

• After taxes and expenses, the principal is fully repaid within a maximum of 10 years.

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