Abstract

The Unergy Protocol aims to fund the development of clean energy generation assets on a large scale to address the issue of climate change. Estimates show that on top of the current annual investment of $0.7 trillion USD, an additional $1.7 trillion USD in climate-based initiatives such as clean energy infrastructure is needed to combat climate change. This means that the current worldwide investment in sustainability only accounts for less than 30% of what is really required.

Unergy believes that the creation of a financial ecosystem based on the climate issue is the best way in which humanity will have the most impact on solving this problem.

To build this energy-based financial ecosystem, the Unergy Protocol leverages on blockchain technology to tokenize investment opportunities in renewable energy Projects. Ownership over a specific Project is tokenized through the pWatt. One specific instance of pWatt is issued for each Project, and the total supply of pWatts of a Project is fixed and it is proportional to its generation capacity, so that the unit price of a pWatt resembles the cost of originating 1 watt-peak of capacity in a clean energy project. Initially, the pWatts serve as investment vehicle that enable the development of specific Projects, while in the operational phase of a Project, the energy generated by these Projects is monetized and the Unergy Protocol disburses the revenue to the pWatt holders proportionally to their ownership percentage.

Additionally, the Unergy Protocol implements a Reserve of operational Projects (a Reserve of pWatts) which — like any other holder of pWatts — receives the yields generated by them. This Reserve of clean energy-generating assets is used as a collateral for the creation of an energy-backed digital currency: the uWatt. Investors’ partial ownership of the Reserve is represented by the uWatt, and the issuance of new uWatts happens when new clean energy-generating assets are added into the Reserve.

A Reserve of real-world energy Projects, represented by the uWatt

The Unergy Protocol creates a different instance of pWatt token for every different Project, which means that pWatts from one project are not interchangeable with pWatts from another project.

On the other hand, the uWatt token is unique and represents the ownership over an entire Reserve of projects.

The origination of new uWatts happen when holders of pWatts of an operational Project swap their ownership in that specific Project — represented by their pWatts — for new uWatts. The amount of uWatts generated in the swap is calculated according to the intrinsic value of the Project that is being swapped. The Protocol computes the intrinsic value as the Net Present Value (NPV) of the future cash flow of the Project. This is an incentive for the pWatts holders to swap their pWatts, since, for example, the intrinsic value of a Project right after it starts to operate is usually 15% to 25% greater than the cost of originating the Project (i.e. the acquisition cost of the pWatts).

Participants in the protocol can either obtain uWatts and receive the passive yields by simply holding them or they can contribute to the origination of new clean energy-generating assets by acquiring pWatts of particular Projects, which they can later hold and receive yields from that specific Project (for up to 30 years) or they can swap them for uWatts to receive a combined yield from all the Projects in the Reserve. Acquiring pWatts means a more active role and also represents a higher risk, hence the rewards of those participants who purchase pWatts is greater.

Although each individual project has a limited lifespan, the protocol periodically computes the depreciation of each one of them, and a fraction of the Reserve’s income is used to compensate for the asset depreciation, ensuring that the Reserve as a whole doesn’t lose value over time. This is done through the acquisition of new pWatts that replace the value that is lost over time.

When Projects are included in the Reserve, new uWatts are created, and this maintains the unit value of the uWatt stable. Then, the uWatt behaves like a stable currency, which follows the value of a ready-to-operate energy asset, which people around the world could use and exchange in order to buy goods and services.

Being a digital currency whose value is supported on real-world clean energy generation assets, that is stable over time, which can be used as a reserve of value but also incentivizes participants that help the ecosystem to grow, we believe the uWatt is an ideal climate asset around which a new financial ecosystem, centered on sustainability, can eventually grow.