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All energy show 2014 introducing the natural grid
 

All energy show 2014 introducing the natural grid

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    All energy show 2014 introducing the natural grid All energy show 2014 introducing the natural grid Presentation Transcript

    • Funding the Natural Grid A Capital Partnership Approach Chris Cook All Energy Show 21st May 2014
    • “21st Century problems cannot be solved with 20th Century solutions”
    • Introduction - Resilience Resilience - the enduring power of a body or bodies for transformation, renewal and recovery through the flux of interactions and flow of events Resource Resilience – Natural Grid Financial Resilience – Open Capital
    • Resource Resilience – Natural Grid Since 1980 Denmark's GDP rose 78% Energy use has been stable Carbon fuel use has declined How did Denmark achieve this?
    • Resource Resilience - Natural Grid Least Carbon Fuel Cost principle - not 'least Danish Krone cost' (or least $, € or £ cost) - minimum carbon fuel input for a given output of electricity, heat or power - investment in renewables, heat, transport, energy efficiency
    • Emerging Outcomes of Natural Grid policy - decentralisation - knowledge & knowhow base: Vestas the biggest global wind turbine company in country of 6m people - trend to energy security and energy independence - not forgetting........reduction in carbon use
    • Linlithgow Natural Grid (LNG) Aim: enable Linlithgow to be independent in energy Means: application of least carbon fuel cost principle Enlisted Mainstreaming Innovation for academic input CARES funded study carried out by Dr Mohammed Imbabi of Aberdeen University Objective 1 – map energy use in Linlithgow Cross Objective 2 – identify & prioritise viable least carbon fuel cost interventions leading to energy descent Q. How can we fund Linlithgow Natural Grid?
    • Systemic Funding Problem Denmark's fiscally robust local government guaranteed Co-op renewable finance & fund heat infrastructure UK renewables – kill Big 6 profitable production UK energy savings – kill Big 6 customer consumption If Big 6 won't & local government can't, how can renewables &energy savings be funded?
    • Financial Resilience – Open Capital Prepay – credit returnable in payment for value Capital Partnership – production sharing agreement
    • Prepay Tax
    • Tax Prepay Tax Prepay – credit returnable in payment of taxes Tax Return – 'stock' part of tally stick returned to Treasury Rate of Return - rate over time at which stock is returnable for cancellation eg Prepay £8 for £10 tax - £2 profit 25% pa rate of return - not fixed - depends on existence & quantity of flow
    • Energy Partnership Custodian (Community) Custodian (Community) InvestorInvestor ConsumerConsumer Prepay % % ManagerManager Payment
    • Energy Partnership - Outcomes Social Contract - relationship-based not transaction-based; costs transformed to revenue shares Neutrality – removes ego and politics Collaborative - stakeholder interests aligned Sustainable - all have interest in minimising cost over time
    • Energy Prepay – the Value Proposition Community - sells value of future energy production or savings - interest-free energy loan until credit cancelled by return vs supply or repurchase from energy savings Consumer - prepays for energy and locks in price
    • Energy Prepay – the Value Proposition Investor - energy loan investment directly “Peer to Asset” - Consumers buy credits from Investors at best price below physical energy price & return against supply Manager - shares in gross revenues or production - interests aligned with Investor - no 'Principal/Agency' problem
    • Comparison of Western Isle community income 3 x 3 Mw Wind Turbines Community Owned Farm £110k pa/Mw community profit £ £330k pa per turbine £1m pa to Community Adjacent Private Wind Farm – £6k pa /Mw community benefit = £18k pa per turbine = £54k pa to Community
    • Mega Watts Whoever owns renewable energy sells at wholesale bid price (4p/Kwh) & buys back at retail price (13p/Kwh) Private wire or local use wherever possible
    • Negawatts Energy savings made by consumers at retail price Well to Wheel savings: litre of diesel fuel saved might save 3 litres of crude oil Conventional funding (Green Deal) has two problems - compound interest on bank £ loans - even if £ is saved, no guarantee energy will be saved
    • Linlithgow Energy Pool Investor pay £1k for credits in Linlithgow Energy Pool - 20 x 1Mwh prepay Units @ £50 each - 2000 x 10 Kwh prepay Units @ 50p each Fund invests at community level through energy loans eg community CHP/co-generation Loan repaid via energy bills through buying prepay energy units at market price Interest-free loan – return to investor in energy Unless consumers save energy they will not save £
    • Linlithgow Energy Pool Custodian Energy Pool Custodian Energy PoolInvestors Consumers Manager £ Energy Loan Buy units at market price £ Prepay Prepay Units £ £
    • 21st Century problems cannot be solved with 20th century solutions.........
    • …....21st century solutions pre-date modern finance