Using DeFi to finance the clean energy transition
Using Plural, renewable energy companies can access new sources of funds, achieve lower costs of capital, and finance projects faster than ever.
Written by
Plural Energy
Plural Energy makes financing renewable energy projects better, faster, and cheaper than ever. With Plural, renewable energy companies can fund projects via decentralized finance (DeFi) to access new sources of capital and achieve significantly lower costs of capital. Plural partners with renewable energy companies to create security tokens that can be purchased by anyone (accredited or unaccredited investors) and will eventually be composable as collateral for DeFi originated loans.
By using Plural, renewable energy companies will be able to lower their cost of capital and finance their projects faster than ever by accessing direct sources of equity and debt.
Today's energy capital markets lack liquidity and accessibility
Currently the renewable energy space has limited liquidity and lacks broader accessibility for a number of different investors.
Lack of liquidity: Investing in renewable energy projects is a long, complex process involving months of time, energy, and legal costs. The time required to access data for investments spans weeks, and the underwriting of the asset requires longer term revenue projections (20+ years) due to the scarcity of liquidity options.
Limited Accessibility: Renewable energy infrastructure offers lucrative and stable IRRs with low default rates. However, most investors either lack the access (if unaccredited) or capacity (as a minimum investment of $50,000 is required) to invest in renewable assets. Even institutional investors suffer from access issues. Generalist institutional investors with ESG mandates often face long diligence times before they can deploy capital into the space and inefficient portfolio management capabilities afterwards.
These problems result in a particularly challenging financing environment for small to midsized developers. Unlike large developers, they do not have large finance teams, connections to investment and commercial banks, lobbying capabilities, and large balance sheets to borrow against.
The impact of Plural enabled DeFi
Using Plural, renewable energy companies can access new sources of capital and achieve a lower cost of capital. Plural's blockchain enabled financing mechanisms require fewer financial intermediaries and allow for easier and cheaper underwriting. The resulting savings on transaction fees and management fees are delivered as yield to investors and a lower cost of capital to renewable energy companies.
Plural's approach is oriented around the belief that equity is the wedge into the world of decentralized finance for many real world assets. Renewable energy companies work with Plural to create security tokens (essentially digital shares of equity) on the blockchain. They can then complete a security token offering and raise capital via Plural's liquidity network. Renewable energy companies that work with Plural use the capital they raise to reinvest in their assets, fund their development pipelines, or refinance existing debt. Meanwhile, investors in the DeFi ecosystem can achieve high, uncorrelated yield.
Over time, Plural will begin allowing stakeholders, including renewable energy companies that are part of the network, to borrow against security tokens that they hold. These loans, originated on the blockchain, will have lower interests rates than they can find off-chain.
Plural brings accessibility and liquidity to the renewable energy industry. Small to mid sized renewable energy companies can achieve a cost of capital that is competitive (and even better than!) the largest developers in the world.
