Why is XCF Needed?

The energy industry faces multiple challenges due to legacy systems and infrastructure. A rapidly changing business environment requires process change to keep pace. For example, payments can be slow and costly. The Energy sector, for instance, has many different stakeholders, with each having different needs.

Existing energy payment and settlement systems are designed to fulfill the requirements of a few large, centralized energy producers that act locally within the same legal frameworks. Meanwhile, green energy production is becoming ever more distributed and cost-efficient, opening new opportunities to deliver clean energy to under-served populations.


Decentralized Energy

The use of renewable, green energy is increasing dramatically as the component prices for items such as solar panels drive lower by the year. As a result, a fundamental paradigm shift is taking place in the energy supply business model. Suddenly, energy is being produced closer to consumers, with some consumers also becoming producers themselves. It means more efficient energy delivery, lower transmission costs, a greener environment, and more energy available for previously unserved populations.


At the same time, it creates a massive challenge for existing energy companies.Traditionally, there have been only a few large-scale producers and many consumers. This traditional model has now been changed permanently since there are now many new, small-scale producers, i.e., microgrids. The result was that the existing financial processes and systems were not designed to handle this change.


Many Different Stakeholders

Each energy asset development project has several different stakeholders, each having different needs. For example, a single energy asset often has multiple investors to finance the creation of the asset including: Equity investors, Debt financiers, and Development Banks, etc. with their own needs. Also, governments are interested in energy security and taxation, having a different set of needs. Moreover, energy users, regulators, and operators have their own agenda.


Also, governments are interested in energy security and taxation, having a different set of needs. Moreover, energy users, regulators, and operators have their own needs. 


Traditional energy investments have been predominantly large-scale affairs. Legacy financial models were designed to accommodate one large provider servicing many outlying customers, thus easy to build and justify. If investment size is in tens or hundreds of millions of US dollars, yet only have the same stakeholders over and over, the same systems can be replicated to handle the data and information needs of the several different stakeholders. 


The new Decentralized energy infrastructure has led to smaller energy investments with many more different stakeholders who have the same data and information needs. An adapted fintech solution is required to handle decentralized energy production and infrastructure.


Lack of Transparency

Energy investments are long-term investments, often spanning over ten years. This is a fundamental issue for different stakeholders, how one can trust the production or the settlement data. A decentralized environment creates additional requirements, thus increasing the need for further transparency. 


Traditionally, most database solutions are centralized and lack transparency in delivering payment and energy settlement transactions, as only a few entities control and view the data. Transparency creates trust and goodwill which leads to sound and secure investments. Thus transparency, cost-efficiency, and secure processes are fundamental requirements to satisfy the future needs for green energy development from a funding perspective.


Energy Poverty

The lack of reliable access to electricity is known as “Energy Poverty.” Energy Poverty has been identified and recognized by the United Nations as a significant global problem that impacts nearly half of the world’s population.

Energy poverty is the main obstacle for providing education, creating employment opportunities, and improving health care in developing nations. To that end, the United Nations has set a goal to achieve universal energy access by 2030. Energy poverty is exacerbated by lack of investment.

Many of the places where it is prevalent are remote and traditionally would require immense amounts of investment to provide reliable and cost-effective
energy solutions. Traditionally, Energy poverty in rural areas has been managed with diesel generators which are very expensive to run and pollute the surrounding environment.

Typically, places served by these generators only run them for a few hours per day, making it impossible to have a functioning modern society with reliable access to energy. Urban areas are also affected as the energy grid is often unreliable and current providers cannot keep up with demand in most developing countries.

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