- On 7 July 2022, BNP Paribas structured, tokenised and distributed a bond, the proceeds of which aim at refinancing a solar energy project sponsored by EDF through its subsidiary EDF ENR.
- This native digital asset, issued on the public blockchain, represents the first renewable energy bond tokenisation on the project financing market.
- This innovation will be instrumental in broadening the scope and increasing the efficiency of project financing, including better transparency of ESG data along the value chain.
Solar–based electricity production is the leading energy transition segment, with several trillions of financing needs in the near future. Almost half of these financing needs will come from smaller projects, which are currently being underserved.
Tokenisation has the potential to be a game-changer for ESG-linked financing. It provides better granularity for smaller amounts, which means that the approach can facilitate the development of smaller renewable energy projects by offering dynamic bundling opportunities to investors.
It also enables greater transparency and verifiability of data across the whole value chain, which is key for ESG projects. Both the bond term sheet and ESG data are embedded in the token, representing a strong improvement in terms of verifying investors’ ESG impact.
Arnaud Boyer, Chief Digital Officer at BNP Paribas Corporate and Institutional Banking (CIB) stated: “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”. 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.”
Benjamin Declas, President of EDF ENR stated: “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. Such experiment opens new financing opportunities for smaller photovoltaic projects under our sponsorship or sponsored by our clients.”
For this transaction, the BNP Paribas Group leveraged its tokenisation platform, AssetFoundry. BNP Paribas Securities Services managed the custody aspects of this token. In order to ensure clean energy usage of the blockchain, utility tokens were minted with low carbon energy by Exaion, the EDF subsidiary dedicated to Blockchain and High Performance Computing services. The issuance was performed on public Ethereum blockchain, under French law for unlisted securities, with legal advice from Jones Day. BNP Paribas Asset Management acted as the investor.
David Bouchoucha, Head of Private Debt & Real Assets at BNP Paribas Asset Management stated: ”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 developments”.
The transaction also tested token reversibility, as the tokenised bond was seamlessly switched back to a traditional bond within 48 hours, a key element for the interoperability with traditional systems.