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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.
The Unergy Protocol addresses this gap in financing by creating the uWatt, a stable currency collateralized with a Reserve of clean energy-generating assets, including solar and wind power plants. The energy yield of these Projects is sold to consumers such as companies or utility companies, and the revenue is used to invest in development of new clean energy-generating assets. 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 origination of new Projects is made through the issuance of tokens called the pWatt. The funds raised from selling pWatts of a specific project to investors is then used to originate that Project. The total supply of pWatts of a Project is proportional to the nominal peak power of its clean energy-generating asset, so the unit price of a pWatt resembles the cost of originating 1 watt-peak of capacity in a clean energy project.
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.
Thus, as pWatts are sold, the capital needed for originating the new Project is collected. Investors are incentivized to provide capital earlier in the funding and installation stages with a lower unit cost of pWatts. When the Project starts to generate power, the protocol automatically swap the pWatts for new uWatts. Investors that purchase pWatts are rewarded during the swap for taking the risk of investing in the origination of a new Project. This reward comes from the gain of value of a new ready-to-operate project compared to the cost of the materials and work required for its construction.
By default, all pWatts will be automatically swapped for uWatts. If a holder opts to retain their pWatts after a Project starts its operation, some validations depending on regulatory requirements must be made as. In this case, the pWatts will generate revenue directly to the holder, either in fiat currency or stablecoins.
All pWatts that were swapped into uWatts will be held inside the Reserve, which means that the Reserve acts like an equity holder of the Projects. The income received by the Reserve coming from the revenue of the Projects is used by the Protocol to originate even more Projects, by purchasing pWatts. Once the pWatts purchased by the Reserve are “swapped in”, the uWatts that the Reserve would receive will be distributed among all current uWatt holders in proportion to the amount of uWatts they have.
Participants in the protocol can either purchase uWatts and receive the passive yields by simply holding them or they can purchase pWatts of particular Projects, contributing to the origination of new clean energy-generating assets, and then swapping them for uWatts when those Projects begin to generate energy. The latter requires a more active role and also represents a higher risk, hence the rewards of those participants who purchase pWatts is greater.
To account for the limited lifespan of the Projects, the protocol estimates the current value of the Projects as the Net Present Value of all their expected future cash flow, and computes the depreciation of each one of them. 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. Moreover, the surplus income helps to grow its value. 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.
Last modified 2mo ago