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 thr...
Resource Resilience – Natural Grid
Since 1980 Denmark's GDP rose 78%
Energy use has been stable
Carbon fuel use has declin...
Resource Resilience - Natural Grid
Least Carbon Fuel Cost principle
- not 'least Danish Krone cost' (or least $, € or £ co...
Emerging Outcomes of Natural Grid policy
- decentralisation
- knowledge & knowhow base: Vestas the biggest
global wind tur...
Linlithgow Natural Grid (LNG)
Aim: enable Linlithgow to be independent in energy
Means: application of least carbon fuel c...
Systemic Funding Problem
Denmark's fiscally robust local government guaranteed
Co-op renewable finance & fund heat infrast...
Financial Resilience – Open Capital
Prepay – credit returnable in payment for value
Capital Partnership – production shari...
Prepay
Tax
Tax Prepay
Tax Prepay – credit returnable in payment of taxes
Tax Return – 'stock' part of tally stick returned to Treasur...
Energy Partnership
Custodian
(Community)
Custodian
(Community)
InvestorInvestor
ConsumerConsumer
Prepay %
%
ManagerManager...
Energy Partnership - Outcomes
Social Contract - relationship-based not transaction-based;
costs transformed to revenue sha...
Energy Prepay – the Value Proposition
Community
- sells value of future energy production or savings
- interest-free energ...
Energy Prepay – the Value Proposition
Investor
- energy loan investment directly “Peer to Asset”
- Consumers buy credits f...
Comparison of Western Isle community income
3 x 3 Mw Wind Turbines
Community Owned Farm
£110k pa/Mw community
profit
£ £33...
Mega Watts
Whoever owns renewable energy sells at wholesale bid
price (4p/Kwh) & buys back at retail price (13p/Kwh)
Priva...
Negawatts
Energy savings made by consumers at retail price
Well to Wheel savings: litre of diesel fuel saved might save
3 ...
Linlithgow Energy Pool
Investor pay £1k for credits in Linlithgow Energy Pool
- 20 x 1Mwh prepay Units @ £50 each
- 2000 x...
Linlithgow Energy Pool
Custodian
Energy Pool
Custodian
Energy PoolInvestors
Consumers
Manager
£ Energy
Loan
Buy units
at m...
21st
Century problems cannot be solved with 20th
century solutions.........
…....21st
century solutions pre-date modern finance
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

  1. 1. Funding the Natural Grid A Capital Partnership Approach Chris Cook All Energy Show 21st May 2014
  2. 2. “21st Century problems cannot be solved with 20th Century solutions”
  3. 3. 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
  4. 4. 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?
  5. 5. 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
  6. 6. 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
  7. 7. 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?
  8. 8. 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?
  9. 9. Financial Resilience – Open Capital Prepay – credit returnable in payment for value Capital Partnership – production sharing agreement
  10. 10. Prepay Tax
  11. 11. 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
  12. 12. Energy Partnership Custodian (Community) Custodian (Community) InvestorInvestor ConsumerConsumer Prepay % % ManagerManager Payment
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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 £
  20. 20. Linlithgow Energy Pool Custodian Energy Pool Custodian Energy PoolInvestors Consumers Manager £ Energy Loan Buy units at market price £ Prepay Prepay Units £ £
  21. 21. 21st Century problems cannot be solved with 20th century solutions.........
  22. 22. …....21st century solutions pre-date modern finance
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