Lately, we have seen many blockchain companies trying to bring blockchain technology into energy sector. We are observing huge shift in energy production from fossil fuels, as traditional source, to sustainable and environmental friendly sources, such as solar, wind and hydro. World is facing hazard from pollution and global warming effect that could change the world as we know it today. This could be the biggest challenge humanity has ever encounter. Will we preserve the planet or destroy it?

For purposes of this article I will took as an example project SunContract that I know more in details. I believe project is on the right path to achieve something significant on the field of energy usage.

SunContract project is building an energy-trading platform that will take advantage of decentralized nature of blockchain, bring transparency and traceability into energy sector and promote local production, clear energy sources and P2P relationship between producer and consumer.

How big is energy market?

Bellow you can find some information on how big is actually energy market. Those data are took from IEA (International Energy Agency) page and main Wikipedia page about “World energy consumption”.

Table 1 World energy consumption

Source: IEA

We can see from the table above that energy demand is in the rise since first oil shock in the beginning of 1970s. We can say the same for electricity generation, which is more important for our case study here. From 1973 to 2010 electricity generation rose for 3.5x which is huge surge in production. It is expected that with electrical mobility and abandoning fossil fuels demand for electricity will rise furthermore. Already today world generates more than 23,000 TWh (Tera Watt hours) of energy. Now imagine how much revenue is made by selling this electricity to households and industry.

On the next figure, you can find percentage of individual energy source:

Figure 1 Percentage of energy source usage worldwide

Source: BP: Statistical Review of World Energy

On Figure 2, you can find growth trend throughout the past.

Figure 2 Energy consumption since 1965

Source: BP: Statistical Review of World Energy

From both figures, we can see that major energy sources are classic fossil fuels that are polluting our world. This will have to change if we want to preserve nature for our descendants. World is slowly shifting to sustainable sources that will stop harming planet Earth and local communities. Transformation of energy sources from fossil fuels to renewables will have to speed up in the future if humankind wants to catch the train that is living the station very fast.

Electricity demand is in constant growth. Population needs are bigger and bigger and with energy production shift fully underway demand will grow even more. For example, according to statistical data of Enerdata web page China’s power generation doubled from 2004 until 2016. In 2016, China consumed 5,219 TWh while whole world consumed roughly 21,000 TWh of electricity, which puts second biggest economy on the first place by electricity generation and consumption.

Relevant numbers for SunContract project

Now let us focus on Europe, first major market place for SunContract platform. Europe generated in 2016 3,831 TWh of electricity and consumed 3,342 TWh. Average price of kWh (kilo Watt-hours) for household in EU in 2016 was 0.205 EUR by statistical figures of Eurostat. Industrial price was 50% lower, 0.114 EUR per kWh. If we take middle price, 0.16 EUR per kWh than we can make rough approximation of European electricity market. 3,342 TWh accounts for 3 342 000 000 000 kWh annually. That would mean European electricity market solely is worth more than half a trillion of EUR (535 billion EUR).

This is a huge market. And we only took into account Europe which is not even the biggest electricity market. Chinese market is almost twice as big and still growing rapidly. USA is second biggest and on the third place is another emerging market, India. First three markets account for half of all electricity consumption on the world.

Now let us focus back on SunContract project. SunContract plan is NOT to become the biggest energy player on the world. People behind the project believe in decentralization. This is why overall plan is to be a smaller player on numerous markets. Goal is to achieve somewhere between 0.5% to 2% market share. Numbers depend on market size, smaller percent on big markets and slightly bigger percent on small markets, like Slovenia — launch pad of this project.

If this plan succeed, what would that mean for SunContract annual revenue?

I will take into calculation the most conservative numbers. Firstly, I will estimate what would mean if SunContract would be presented on whole European market and later I will estimate goals in first few years.

0.5% of total European market would mean yearly revenue close to 2.7 billion EUR. Current market price of SNC token, used for trading on SunContract platform, is 3.5 EUR cents or market cap of 4 million EUR. Market cap right now is 675 smaller from overall revenue goal of 0.5% European market share.

Case for Slovenia

SunContract’s plan is to test and present product first in Slovenia. How big is Slovenian electricity markets?

Below are provided some figures.

Table 2 Electricity consumption in Slovenia

Source: Statistical office of the Republic of Slovenia.

As we can see from Table 2 electricity demand in Slovenia in last 20 years rose for a third since 1996. In a Figure 3, you can see information graphically presented.

Figure 3 Electricity consumption in Slovenia

Source: Statistical office of the Republic of Slovenia.

What is important for SunContract token holders is the fact that electricity demand is rising in all countries SunContract plans to enter. More important, Slovenia as a small country can be perfect base for future market entries. If SunContract project achieves 2% Slovenian market share than market values would be as follows:

Price of kWh in Slovenia is 0.163 EUR (0.083 EUR for industrial consumers) — middle price 0.123 EUR (Eurostat).

Annual production in kWh: 12,895,000,000 (Statistical office of the Republic of Slovenia).

Rough estimation of revenue: 1.6 billion EUR annually.

2% SunContract market share: 32 million EUR of annual revenue.

More realistic revenue (SunContract will not include trading for industry subjects): 42 million EUR of annual revenue.

This kind of annual revenue would be 8/11 times higher than current capitalization of SNC token. In addition, by my knowledge no other crowdfunded crypto project currently generates so much annual revenue.

Now you calculate your market price estimation and capitalization of SunContract project.

Explore SunContract project: https://suncontract.org

SNC markets: https://hitbtc.com/exchange/SNC-to-ETH and https://etherdelta.com/#SNC-ETH

Slack: https://join.slack.com/t/suncontractteam/shared_invite/MjMyNDE0MzQ5NDc1LTE1MDM5MDQzMzctOGI2OTQ0N2U5Mw

Telegram: https://t.me/joinchat/DWLYBkLsRTQuMQS8_ckgEw

SubReddit: https://www.reddit.com/r/suncontract/