sardinia energy economy
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TRANSCRIPT
Towards Energy Independence
A Green Deal for Sardinia
Chris Cook
La Terza Via 14th June 2013
“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 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
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
Financial Resilience – Open Capital
Market 2.0 – centralised, intermediated market paradigm
- proprietary finance capital and 'for profit' transactions
- Debt (Banks) and Equity (Joint Stock Company)
- October 2008 – the Market 2.0 paradigm broke
What Market 3.0 will replace it?
Financial Resilience – Open Capital
Market 3.0
- networked, decentralised and dis-intermediated market paradigm
- transition from intermediation to service provision
- Reason? Market risk is distributed to 'end users' & so finance capital is limited to operating costs
Financial Resilience – Open Capital
Financial Instrument – Prepay Instrument
- not the Next Big Thing...but the Last Big Thing
Financial Framework – Nondominium Agreement
- Maths: +1, -1 and 0 : Physics +ve, -ve and neutral
- Economics there is Public or Private; Debt or Equity
- There is no zero: La Terza Via
Financial Resilience – Open Capital
Prepay – Credit unit returnable in payment for value
Nondominium
- People-based (P2P) Credit – Clearing Union
- Asset-based Credit – Capital Partnership
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
21st Century Prepay
Land – returnable in payment for rental or produce
Energy - returnable in payment for energy
Rate of Return
- literally the rate at which prepay Units may be returned to the issuer against use
- not fixed - depends on existence & quantity of flow
Energy Loans
ProducerProducerInvestors
Consumers
Manager
Energy £ or Units Returned
Prepay
Units
Units
Units Prepay
Energy Loans – the Value Proposition
Producer
- sells energy forward and locks in price
- interest-free loan until prepay unit returned vs supply
Consumer
- prepays for energy and locks in price
Energy Loans – 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
Sardinia Energy Production
Non renewable - Carbon Fuelled
- major use of coal
- potential for Algerian gas (GALSI)
- Sardinia exports electricity & metals (eg aluminium)
Renewables
- solar – 300 days sun per year
- wind – good resources
- hydro
- anaerobic digestion & biomass
Prepay - Issues
Costs - producer who sells future revenues using Prepay will have a problem if costs rise
Liquidity – producer will not accept another producer's prepay units
Misappropriation – producer may conceal and 'skim' revenues or production so that rate of return is lower
Power Partnership
CustodianCustodian
InvestorInvestor
SupplierSupplier
EnergyPrepay
%
%
ManagerManager
Fuel
Aluminium Partnership
CustodianCustodian
InvestorInvestor
Energy(Sardinia)Energy
(Sardinia)
AluminiumPrepay
%
%
ManagerManager
Energy
Bauxite(Sardinia)Bauxite(Sardinia)
Bauxite %
Capital Partnership - Outcomes
Neutrality – removes ego and politics
Collaborative - stakeholder interests aligned
Social - relationship-based not transaction-based; costs transformed to revenue shares
Sustainable - all have interest in minimising cost over time
Solution 2 – Clearing Union
Producers accept each other's prepay units and settle balances within 'Guarantee Society' agreement
Producers, Investors and Consumers all pay a guarantee charge and share costs
Manager allocates guarantee limits, manages platform, ensures transparency, handles defaults
Clearing Union
Producer Consumer
Prepay or €
Supply
Pool GuaranteeGuarantee
Fee Fee
Manager(Sardex?)
FeeService
Sardinia Green Deal
Carbon Levy
- levy on non-renewable carbon fuel creates Pool
- Pool distributed as energy dividend to all Sardinians
Energy Loans
- Mega Watts - renewable infrastructure: Sardinia Supergrid; wind, solar, hydro
- Nega Watts energy efficiency: least energy cost heating, cooling, transport, spatial infrastructure
21st Century problems cannot be solved with 20th century solutions.........
…....21st century solutions pre-date modern finance