Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
You need €1.5M, because the manufacturer is not participating in any way (which we will come back to).

At €50 per Mwh that's 30,000 redeemable units you sell.

At €30 per MwH that's 50,000 redeemable units.

The price you can sell them at depends upon the existing market price, and people's perceptions of where it's going.

These units are redeemed (or not, many will not be, in the same way that a large proportion of gift vouchers never get used) against energy used over the life of the turbine.

Investors can sell these units at the market price at any time.

It's like buying gold (or rather, units in gold ETF's). No income, but a punt on the gold price.

Who thinks energy is going to get cheaper in the long term? And if it does, we gain as consumers from that fact anyway. It's a hedge against energy price inflation.

Investors can exchange these units against electricity consumed. If they are local investors, connected via a "private wire" (eg Woking) then they are  getting energy at cost without the grid mark-up.

There will always be a market price since electricity is being consumed all the time.

It's a question of managing the liquidity pool and ensuring that the project is viable in the first place (your job as an investment banker, as opposed to a credit creator).

Moreover, you could look at the relationship with the supplier of kit as well (ie to a leasing model), since an investment in such a supplier could then be reconfigured into an investment into the electricity their kit produces.

Also infrastructure: an energy pool could also invest in the infrastructure (but using a partnership model, not a limited company) that brings the electricity to market, and that way you can extend the "private wire".

Of course, you don't just do this with one turbine: you create a pool which invests in thousands of them. And the only risk, which is pretty much known these days, is the development risk.

A major participant will be government, at local and national level, who are major energy consumers and whose investment in such Pools would essentially "hedge" their future energy requirements and fund necessary infrastructure.

Such an energy pool can also be used to invest in energy savings (NegaWatts) but that's another story.

The first key point is the idea of "equity" redeemable in "money's worth", rather than money.

The second is that this is how you create a non-toxic form of fungible "asset-based" energy currency.

The third is that Banks need not be credit intermediaries putting their capital at risk, but service providers sharing in the value created.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jan 19th, 2008 at 06:12:44 AM EST
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