Please describe your proposed solution.
Zero Citizen’s solution harnesses the power of blockchain technology to tokenize and fractionalize renewable energy assets, thus enhancing their accessibility and liquidity. At its core, the solution will represent each renewable energy asset as a unique token on the blockchain, with each token further divisible into smaller fractions. Traditional methods often involve intermediaries and extensive paperwork, resulting in high transaction costs and time delays. In contrast, the blockchain-based tokenization significantly reduces these complexities, resulting in a faster, more affordable process. Blockchain's immutable nature ensures all transactions are transparent and tamper-proof, thereby instilling greater trust amongst renewable energy market participants. Ultimately, the fusion of renewable energy assets with blockchain technology addresses the problem of accessibility and liquidity in renewable energy investments. It is not just the entirety of the solution but the individual innovative steps—tokenization, fractionalization, and blockchain application—that collectively contribute to solving the problem at a technical level.
A technical challenge to overcome is interoperability and standardization. Zero Citizen’s solution operates in a context that involves various stakeholders, including energy producers and investors. To ensure seamless user experience and platform functionality, Zero Citizen will use standardized protocols and interfaces, and will invest in the development and adoption of standard protocols that are widely accepted in the blockchain and energy sectors. Zero Citizen will collaborate with other stakeholders and industry consortiums to ensure the development of interoperable solutions. Another technical challenge to overcome is security. Whilst blockchain's inherent security mechanisms offer a high level of trust, vulnerabilities can still exist at various points, for example smart contract bugs. Zero Citizen will engage security experts to conduct regular audits of the entire system, including smart contracts, in addition to implementing best practices for coding and deploying smart contracts to minimize the possibility of bugs and vulnerabilities.
A 10% stake fractionalised across 1K non-fungible tokens (NFTs) means each NFT represents a 0.01% stake. Higher fractionalisation quantities lower the per-NFT price, meaning greater affordability, allowing investments as low as $20. Zero Citizen will use smart contracts to implement a rewards system utilising 0CZN, its cryptocurrency. Asset owners will be rewarded with cryptocurrency for the electricity their assets generate, which will be tradeable for ADA or useable to purchase Zero Citizen products/services. Leveraging core features of blockchain technology (decentralization/immutability/transparency) "will improve infrastructure project financing and management efficiency" (The World Bank,2023).
The core value-proposition is that the technology is responding to individual investor ambitions; the capital flowing into crowdfunding sites proves that >80% of individuals seek investment opportunities, and a survey of 3K individuals found that 69% supported increased UK investment in renewable energy and 57% wanted to invest themselves (Thrive Renewables,2022). Zero Citizen's fractionalisation additionally opens the market to individuals to participate in the sharing economy. A yield of 7-15% is expected for solar/wind farms.
The Catalyst funding will result in the delivery of Zero Citizen's minimum viable product (MVP) Fractionalised Renewable Energy Asset (FREA) dApp, which will include a user portal and mint/buy/sell interface for the FREA NFTs.
How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?
Zero Citizen will use Cardano's blockchain technology to tokenise and fractionalise assets in wind and solar farms. Holders of these Fractionalised Renewable Energy Assets (FREA) will not be required to become a customer of a utility company, and will be free to trade and sell their assets without restriction. Fractionalising stakes in renewable energy assets means greater affordability, opening investment up to a wider audience, enabling more people to part-own assets and become directly involved in working towards net-zero CO2 emissions by 2050.
Zero Citizen will tokenise and fractionalise wind and solar farms in the UK initially, with a view to expanding to other renewables and abroad by year 5. Investors will not be required to become a customer of a utility but will be free to trade and sell their assets. Fractionalising stakes means greater affordability, opening investment up to a wider audience, enabling more people to part-own assets and become directly involved in working towards net-zero CO2 emissions by 2050. Zero Citizen also plans to ensure that residents that are local to the renewable energy asset have an opportunity to partake in investment and the shared economy. In addition, by securing energy for the future, lower-income households that are more likely to experience fuel poverty will be supported. Zero Citizen's platform will be the first of its kind in the UK to focus on a variety of clean energy assets. The Fractionalised Renewable Energy Asset (FREA) platform combined with the other products/services being developed by Zero Citizen, including the Carbon Balance Service, will play an important role in enabling individuals and businesses of all sizes to directly tackle climate change.
Zero Citizen will on-board users to the Cardano blockchain as it seeks to target crowd investors not currently native to the Cardano blockchain, in addition to existing Cardano blockchain users. This will introduce new users to Cardano and its mainstays, such as Ada Handle, DEXs, as well as partnered organisations to Zero Citizen. To support and promote growth within the Cardano community, Zero Citizen will educate others within the space to navigate particular regulatory bodies and their requirements.
How do you intend to measure the success of your project?
Project objectives include creating a live platform; Zero Citizen's first FREA sale will launch with presales of 7.5K units.
Zero Citizen's primary impact is that its fractionalisation could account for 60% funding of renewable energy assets, and, consequently, over twice as many assets can be built (The World Bank,2023).
Zero Citizen's impact after launch will be determined by the project lead on a weekly basis via the speed and quantity of sales, the amount of renewable energy produced and the subsequent CO2 reduction.
To ensure equitable design principles, Zero Citizen will allocate 10% of fractionalised NFTs to the local community of the respective renewable energy asset, ensuring local residents are able to partake in the sharing economy. This 10% allocation will have a 5% discount.
Zero Citizen has a global reach to export its fractionalised renewable energy product and its Fractionalisation-as-a-Service, with global renewable energy investment reaching $495B in 2022 (BloombergNEF,2023), of which $28B was the UK (The Guardian,2023). European solar-derived energy is 75% cheaper than fossil gas (IRENA,2022).
The project's social outputs include Zero Citizen's direct support of the fight against climate change and alignment with the net-zero target of 2050. With 74% of adults worried about climate change (ONS,2022), enabling crowd investors to purchase fractionalised renewable energy assets means more people are able to part-own assets and make a direct impact.
Please describe your plans to share the outputs and results of your project?
We have created 5 time-based work packages with associated tasks and milestones, which will culminate with the delivery of our Fractionalised Renewable Energy Asset (FREA) platform MVP at the end of the 12 months. Zero Citizen intends to use the experience gained through fractionalising existing renewable energy assets to partner with a developer to develop and own a brand new solar or wind farm within 3-5 years.
Zero Citizen has a 5 year growth plan for its FREA product, including expansion across EMEA, which provides an opportunity to collaborate with other Cardano-based businesses currently working in areas such as East Africa.
Ensuring regulatory compliance for blockchain/renewable energy assets will be mitigated through Zero Citizen's in-house and external training, and seeking ongoing legal counsel. To support and promote growth within the Cardano community, Zero Citizen will educate others within the space to navigate particular regulatory bodies and their requirements.
The launch of the FREA platform will directly pave the way for a marketplace to trade FREA NFTs, and subsequently tokenised carbon credits - also in the pipeline for Zero Citizen. What's more, the FREA platform will also lead to Zero Citizen offering Fractionalisation as a Service (FaaS), to enable other projects/organisations to be able to fractionalise future/existing renewable energy assets that Zero Citizen would otherwise no desire/ability to invest in.