EDF ENR, a leader in solar energy production on buildings and on canopy structures over parking lots and a wholly owned subsidiary of French power company EDF, has issued a tokenised bond for a solar energy project financing, representing one of the first renewable energy bond tokenisations on the market.
What is tokenisation?
Tokenisation in finance refers to the issuance of securities as native digital assets which means that they can be recorded, moved and stored on the blockchain in a transparent way. Simply put, a token is a wrapper that encapsulates value and/or data.
This technology broadens market opportunities for smaller assets, improve data transparency as well as having the potential to bring liquidity thanks to its digital format.
Blockchain, or distributed ledger technology, uses cryptography to ensure immutability and trust of a ledger maintained within an ecosystem (be it private or public).
The native digital asset, which was structured, tokenised and distributed by BNP Paribas CIB, was issued on the public Ethereum blockchain using AssetFoundryTM, the Bank’s digital assets platform. AssetFoundryTM is fully integrated into the Bank’s systems and business processes to offer scalable digital assets solutions, and covering all elements of tokenisation from legal and compliance, to technology and business processes.
This trade, based on tokenisation for renewable financing, is the first of its kind, and fully aligned with the Bank’s development plan: “Growth, Technology and Sustainability 2025Arnaud Boyer, Chief Digital Officer at BNP Paribas Corporate and Institutional Banking (CIB)
“This trade, based on tokenisation for renewable financing, is the first of its kind, and fully aligned with the Bank’s development plan: “Growth, Technology and Sustainability 2025”, comments Arnaud Boyer, Chief Digital Officer at BNP Paribas Corporate and Institutional Banking (CIB). “This innovation creates further bridges between issuers and investors, bringing a unique end-to-end ESG financing solution to our clients – from origination to distribution, to custody.”
EDF ENR, 100%-owned subsidiary of EDF dedicated to rooftop and shadehouse solar plants in France, is pleased to contribute to this unique project financing tokenisation, thanks to the cooperation between EDF and BNP Paribas.Benjamin Declas, President of EDF ENR
“EDF ENR, 100%-owned subsidiary of EDF dedicated to rooftop and shadehouse solar plants in France, is pleased to contribute to this unique project financing tokenisation, thanks to the cooperation between EDF and BNP Paribas, says Benjamin Declas, President of EDF ENR. Such an experiment opens new financing opportunities for smaller photovoltaic projects under our sponsorship or sponsored by our clients.”
A new frontier for green financing
Solar-based financing is the leading segment of the energy transition, with several trillions of financing needs in the near future. Almost half of these financing needs will deal with smaller projects, which are currently underserved. Transactions based on tokenised assets have the potential to bridge the size gap between those projects and the scale expected by investors.
Additionally, both the bond term sheet and ESG data are embedded in the token; a strong improvement in terms of verifying investors’ ESG impact.
Tokenisation will transform ESG-linked financing. It provides transparency, scale, better granularity for smaller amounts, and verifiability of ESG data across the whole value chainKhoi-Ahn Berger-Luong, Head of BNP Paribas Real Assets
“Tokenisation will transform ESG-linked financing. It provides transparency, scale, better granularity for smaller amounts, and verifiability of ESG data across the whole value chain”, explains Khoi-Ahn Berger-Luong, Head of BNP Paribas Real Assets. “This could introduce a more efficient financing system to facilitate development of these smaller renewable energy projects offering dynamic bundling opportunities to investors.”
In order to ensure clean energy usage of the blockchain, utility tokens were minted with renewable energy by Exaion, an EDF subsidiary. The transaction also tested token reversibility as the tokenised bond was seamlessly switched back to a traditional bond, a key element for the continuity plan.
The issuance was performed on Ethereum blockchain, under French law for unlisted securities, with BNP Paribas Securities Services managing the custody aspects of the token. Jones Day provided legal advice.
Innovation and sustainability are at the heart of our investment philosophy for private debt investing. Tokenisation and blockchain are opening exciting new opportunities to diversify portfolios for our clients hence our commitment to work with strong partners on those new developmentsDavid Bouchoucha, Head of Private Debt & Real Assets commenting