Cassio J. Krupinsk, CEO of BlockBr, explains the advantages of using Blockchain in energy tokenization.
The commercialization of renewable energy certificates (RECs) is generating a lot of interest among entrepreneurs in Brazil and throughout Latin America, especially with the possibility of tokenizing these assets.
With these certificates, companies can attest that the energy was generated from renewable sources. An alternative to this greater transparency is the tokenization of RECs on Blockchains.
RECs: Brief Definition
Renewable energy certificates (RECs), are tradable, invisible, non-tangible energy commodities that verify that one-megawatt hour of electricity was generated from a renewable energy source like wind, solar or hydro. RECs makes it possible to measure progress on clean energy. They can be considered as a receipt, ensuring the benefits associated with renewable energy.
Entrepreneurs’ interest in RECs may be due to three clear benefits or advantages.
First, purchasing RECs ensures the reduction of emissions to save the planet and make it greener.
Second, renewable generators make money from selling RECs. Such income allows for the development of renewable energy projects, maintenance, as well as job growth.
Third, renewable generators are relatively less expensive than fossil fuel generators. The cost savings thus achieve the goal of reducing customers’ electricity rates, thus boosting future endeavors to become realities.
What Tokenization Refers to
Tokenization, in the field of payments, is a process that protects customers’ sensitive banking information in a secure vault. In addition, it works by replacing payment card data with a token (series of numbers and letters associated with the user’s card).
Five Advantages of Tokenization in the Renewable Energy Market
Cassio J. Krupinsk, CEO of BlockBr, an expert on the subject, lists five advantages of investing in tokenization in the renewable energy market, which are summarized below:
1 – Flexibility and accessibility: “Tokenization will allow greater flexibility in the possibilities of products and will solve, among other things, liquidity problems in the energy sector by allowing the exchange of tokenized assets every day, 24 hours a day, and seven days a week, without borders.”
2 – Without Intermediaries: “Reduction of indirect costs with bureaucracy and intermediaries, since smart contracts make the entire investment process faster and safer”.
3 – Governance: “It will transform the sale process from static to dynamic, improving the transparency and automation of the process, even allowing the international transfer of tokens in seconds.”
4 – Investment Fractionalization: “With tokenization, true portfolio diversification can be achieved. In this way, investors can better mitigate their risks by not having to buy 100% of an asset and instead can partially participate.
5 – Security: “Audit of assets and legal documents in accordance with standards that guarantee the soundness of the investment. Tokenization requires compliance with KYC (Know-Your-Customer) and AML (Anti-Money Laundering) procedures, as well as other actions and disclosures required by applicable legislation protecting investors.”
It should be remembered that last May, the Youtuber Rodrix Digital expressed that in the electricity sector, Blockchain is directly related to a greater use of renewable energies. According to him, “with this technology it is possible for consumers to obtain certificates of origin, which guarantee the registration and traceability of these sources.”
By Audy Castaneda