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Applecross Natural Grid

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  • 1. An Applecross Natural Grid A Capital Partnership Approach Chris Cook Applecross 20th February 2014
  • 2. “21st Century problems cannot be solved with 20th Century solutions”
  • 3. Market Paradigms Market 1.0 – decentralised, disconnected, physical Market 2.0 – centralised, connected, intermediated - Debt (Banks) and Equity (Joint Stock Company) - October 2008 – the Market 2.0 paradigm broke How do we achieve a resilient Market 3.0 ?
  • 4. 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
  • 5. 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?
  • 6. Resource Resilience - Natural Grid Least Energy 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
  • 7. Emerging Outcomes of Natural Grid policy - decentralisation - skills base of knowledge and knowhow: eg Vestas is the biggest global wind turbine manufacturer......in a country of 6m people - trend to energy security and energy independence - not forgetting........reduction in carbon use
  • 8. Financial Resilience – Open Capital Prepay – credit returnable in payment for value Nondominium - People-based (P2P) Credit – Guarantee Society - Asset-based Credit – Capital Partnership
  • 9. Prepay Tax
  • 10. 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
  • 11. 21st Century Prepay Land – credit returnable in payment for land rental or production from land Energy – credit returnable in payment for energy
  • 12. Land Partnership Occupier Occupier Rental % Custodian Custodian (Community) (Community) Rental Prepay Investor Investor % Manager Manager
  • 13. Land Prepay – the Value Proposition Community - sells rentals forward and locks in price - interest-free loan until prepay unit returned vs rental Occupier - prepays rental and locks in price
  • 14. Land Prepay – the Value Proposition Investor - direct 'inflation hedge' investment in land - Occupiers buy prepay credits from Investors at best price below issue price & return against rental Manager - shares in gross rentals or production - interests aligned with Investor - no 'Principal/Agency' problem
  • 15. Land Partnership - Outcomes Social Contract - relationship-based not transaction-based “4 B's” model - costs transformed to revenue shares Neutral – removes ego and politics Collaborative - stakeholder interests aligned Sustainable - all have interest in minimising cost over time
  • 16. Energy Partnership Consumer Consumer Payment % Custodian Custodian (Community) (Community) Prepay Investor Investor % Manager Manager
  • 17. Energy Prepay – the Value Proposition Community - sells energy forward and locks in price - interest-free loan until prepay unit returned vs supply Consumer - prepays for energy and locks in price
  • 18. Energy Prepay – the Value Proposition Investor - direct 'inflation hedge' investment in energy - 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
  • 19. 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
  • 20. Mega Watts and Negawatts Mega Watt production of renewable energy sells at the wholesale market 'bid' price Nega Watt production is made by consumers at the retail market price But Green Deal has two problems - compound interest on bank £ loans - even if £ is saved, no guarantee energy will be saved
  • 21. Applecross Green Deal Investor paying £1k for Units in Applecross Energy Pool - 20 1Mwh prepay Units @ £50 each - 2000 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 £
  • 22. Applecross Green Deal Consumers Prepay £ Buy at market units price Custodian Custodian Investors Applecross Energy Pool Applecross Energy Pool £ Prepay £ Energy Loan Units £ Manager
  • 23. 21st Century problems cannot be solved with 20th century solutions.........
  • 24. …....21st century solutions pre-date modern finance