A new digital currency that rewards solar panel users could not only encourage more people to switch to solar energy but provide a new, more stable model for future alternative currencies.
SolarCoin debuted last month and builds on the same technology as Bitcoin — the popular cryptocurrency most notable for attracting an online criminal element. Like Bitcoin’s decentralized model, anyone can get SolarCoins by buying them via Twitter or helping create digital coins through mining. What separates the two is that instead of relying on mining, which involves solving complex math puzzles, SolarCoins are incentives for homeowners who use solar panels.
Consumers earn SolarCoins just by using the solar panels installed on their home or business. SolarCoin checks solar homeowners’ meters to verify that they are producing solar energy and rewards them with coins. That passive approach, where consumers can simply earn money just by doing something they believe in, could be what makes the new currency more sustainable than other alternative currencies.
Regardless of whether it succeeds, SolarCoin’s model of rewarding consumers for their actions could prove more advantageous for consumers and businesses in the future. Because it’s based on a renewable resource — the sun — rather than the work output from Bitcoin’s algorithm-cracking computer miners or traditional gold-backed currency.
How to get homeowners on board
The solar industry is in the midst of a major boom; almost every state added solar energy jobs in 2013. But buying and installing solar panels is still cost-prohibitive for many people. To mitigate that, most states give homeowners a break on their energy bills, a policy called net metering, when their solar panels produce extra energy. But as the number of solar homes continues to rise, utility companies have become apprehensive about how those rebates may erode their bottom line. Solar homeowners count on those kinds of rebates to offset the cost of installing the panels, Cory Honeyman, a solar analyst with GreenTech Media Research in Boston, told ThinkProgress.
SolarCoin aims to “complement that effort,” billing itself as “the private industry’s effort” to incentivize solar power adoption, John Dolan, chairman of the SolarCoin Foundation, explained to ThinkProgress. Solar-generating homeowners earn coins on top of any tax breaks or bill credits they get from their utility company.
Even though SolarCoin’s success relies heavily on the solar industry and current solar power users who can “get paid” for being green, it might be hard to sell the idea to homeowners who are used to receiving cash rebates from utility companies. That, coupled with the innate nebulousness of the future of cryptocurrency, may prevent the community’s buy-in.
The biggest question, however, is whether SolarCoin can make solar power more attractive to new consumers. SolarCoin can’t promise that and won’t necessarily make solar power cheaper. “It hasn’t been in place long enough. There’s not as much expectation to see it driving any growth,” Honeyman said.
Still, at minimum, SolarCoin, which says its model is 50 times more energy efficient than Bitcoin, is an altruistic way for renewable energy advocates to show support and grow the solar community, Honeyman said. “The good thing is that there’s a huge opportunity for homeowners,” apartment complex owners and those who aren’t solar generators to contribute to the cause, Honeyman said.
The hope, however, is that solar costs will eventually come down as more people turn to solar. It’s great if SolarCoin plays a part in that, Dolan said. But ultimately it’s about the future of digital currency and its place in a global economy.
The socially conscious cryptocurrency
Alternate currencies like Solarcoin and Bitcoin aren’t a new concept. Several towns across the world use their own money, some of which can be exchanged for traditional currency. But currencies are only as valuable as the community that uses them. Right now each coin represents 1 megawatt hour of solar electricity and is kept in a secure, encrypted online wallet. Because they are so new, SolarCoins haven’t yet attained any monetary value. But each coin is expected to be worth $20 to $30, according to SolarCoin’s website.
As with all cryptocurrencies, price is based on supply and demand. There are only a limited number of coins available to be in circulation, and just like traditional currencies such as the U.S. dollar, its worth can fluctuate. Bitcoin, known for its constant bubbles and busts, has painstakingly built a following over the past five years, and recent sign-ons by big retailers like Overstock.com have helped stabilize the currency. SolarCoin hopes to grow in a similar way, and its added stability and green appeal may help avoid some of the fluctuations Bitcoin has weathered.
“It’s up to the broader community to set a value for that coin,” Dolan said. Over time, the number of coins earned would increase and, theoretically, accumulate value. Also, the more businesses accept it, the higher their value grows. Because the solar generators get SolarCoins regardless, it’s in their interest to make sure they benefit from their investment by encouraging non-generators to join the exchange, making the coins accrue value like stocks, and trading or cashing in the coins for traditional currency or goods.
What sets SolarCoin apart from its counterpart, Bitcoin, is that it follows a more traditional model of currency: money is based on a physical asset. In this case, that asset is rooted in the renewable energy market, which is expanding. While both currencies cap how many coins can be in circulation at once, the fact that consumers can get SolarCoins through a deed — generating solar power — instead of mining, exchanging and trading, makes it a less volatile commodity. Yes, SolarCoin has the same risks as Bitcoin and its value could plummet, but by backing its worth with a steady source it may reduce sharp oscillations in price, thus making it more attractive to consumers and retailers.
“Non-generators [and retailers] can help by crafting services that they might exchange for [Solarcoins],” such as conferences, subscriptions, memberships and webinars,” Dolan said. All it takes is merchants accepting the cryptocoins at checkout as a way to boost their brand, especially if they represent a cause like solar energy. Cryptocurrencies would then become a bit more than just another form of money. They would tie monetary value to consumers’ and businesses’ core values. For example, a store can boost their credibility within the green community by accepting SolarCoin or a fictitious coin based on electric car ownership, kind of like having a LEED certification that shows a building meets certain environmental standards. In this way, coins with a moral hook can more easily attract customers unlike Bitcoin, which is primarily alluring because of its novelty and anonymity to both curious investors and criminals.
It’s unclear how long Bitcoin, SolarCoin, or any cryptocurrency will last. But future iterations may have a better chance of rivaling traditional currencies by following SolarCoin’s model and tying moral and social consciousness to global economics.