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Tranched Tokenised Revenue Streams as a Tool for Renewable Energy Financiers and Electrical Offtakers
  • Almero de Villiers ,
  • Julie Byrne ,
  • Paul Cuffe
Almero de Villiers
University College Dublin

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Julie Byrne
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Paul Cuffe
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Renewable energy generation is non-dispatchable and notably unpredictable. Furthermore, a volatile electricity spot market means vulnerability to both price and volumetric risk for generation firms. As such, project financiers may be hesitant to invest in renewable energy projects. Electrical offtakers purchase from the same spot market, and thus also suffer its uncertainty. Ideas from the world of blockchain and decentralised finance may present solutions for these cases. This paper proposes tokenised revenue streams \textit{(RevToks)} as a novel mechanism for the electricity industry. A RevTok allows the owning party to directly claim a share of a specific generator’s revenue stream. This is combined with tranching, a technique from finance where priority on a revenue flow is divided based on seniority. Project financiers hold this senior RevTok that entitles them to precedence on generator incomes, ensuring loan repayments. A case study using real-world generation, pricing, and consumption data is formulated. A market simulation is performed in the form of optimisation problem to establish an idea market equilibrium. Junior tranch RevToks can be purchased by electrical offtakers to decrease their budget variance by offsetting fluctuations in their monthly energy bill. The tranched revenue profiles of generators are demonstrated visually. For offtakers, monthly variance is universally decreased. The case study market simulations shows evidence that tranched revenue sharing arrangements show benefits for generators, financiers, and offtakers.