This document discusses funding models for transitioning to a natural grid system in the UK. It proposes using open capital models like capital partnerships and prepayment to finance decentralized energy infrastructure. Capital partnerships would align stakeholder interests through a cooperative structure. Prepayment models would allow exchanging value now for discounted future energy or taxes, providing returns. Examples from Denmark show community-based district heating and renewable energy cooperatives can work. The natural grid needs people-focused financing and asset-based funding beyond traditional public/private models.
3. Denmark – and the Natural Grid
Since 1980 – Danish GDP increased by 78%;
energy use stable; carbon fuel use declined
Over-riding criterion - what happens in the system if
the consumer uses one more KwH or Mmbtu?
Least energy cost - not least $, £ or € cost which
gave the Dash for Gas & now the Roll for Coal
Outcomes - decentralised production, storage,
distribution and use of energy
Natural Grid – not National Grid
4. Denmark
Community-based
– 60% district heating of which 80% is CHP
mainly urban
– Heat storage, solar heat, ground & air
source heating
– But UK very different institutionally from
Denmark
– 86% of wind turbines are co-ops mainly
debt financed with municipal guarantees
– Municipal heat infrastructure
5. Funding the Natural Grid
Financing – short term, high risk, people-based
Funding – long term, low risk, asset-based
Conventional Financing and Funding
- either Public=State or Private='for profit'
- Public sector - can't or won't afford it
- Private sector - terminal shortage of bank credit
So how do we finance and fund the Natural Grid?
- it's not a case of either/or; +1 or -1; +ve or -ve
- there is, and has always been, Open Capital
6. Open Capital
Capital Partnership – neutral 'co-operative of co-
operatives' framework for productive assets
Prepay – forward sale at a discount of production or
use value
8. Capital Partnership - Outcomes
Neutral – removes ego and politics
Collaborative - stakeholder interests aligned in co-
operative of co-operatives: no principal/agent problem
Social – shared surplus/ 'not for loss' - relationship-based
not transaction-based
Sustainable - everyone has an interest in minimising costs
over time
10. Pre 1700 - Tax Prepay
Stock – part of a tally stick, used either as a receipt
(memorandum tally) or as an IOU (loan tally)
Issued by the Exchequer to tax-payers at a discount in
exchange for value received
Tax Prepay – undated credit returnable in payment of taxes
Tax Return – stock returned to Exchequer
Rate of Return - rate over time at which stock is returnable
for cancellation
Prepay £8 for £10 tax gave £2 profit. £10 tax pa = 25% p.a.
rate of return: £5 tax pa = 12.5% pa rate of return etc
11. Back to the Future - 21st
Century Prepay
Rental Prepay – units returnable in payment for rentals
Energy Prepay - units returnable in payment for energy
issued and exchanged for value by producers
Rate of Return - literally the rate at which prepay Units
may be returned to the issuer against use
Rate of Return - not fixed, but depends on the
existence and quantity of the flow
12. Natural Grid Policies & Projects
Linear Eden
Real Green Deal
Many other policies eg Ultra Light Rail, Fuel Pool
14. North South Canal – a Linear Eden?
Amenity Value
- people don't want to live next door to the M99; to HS2
or to Runway Three......
….but they will pay a lot of money to live by water
Land Rental Value
- capturing a small part of increased land rental value
will fund the canal
- a linear – non-statutory - development corporation
- funding through land rental Prepay eg 50 years'
rentals sold to investors at a discount
15. A Real Green Deal - Energy Loans
Energy investors invest in Energy Pool fund
Return in energy
Energy Loans made to properties and projects
Loans repaid by buying back Units from the Pool at the
energy market retail price
Efficient - no compound interest
Effective – unless energy borrower saves energy he will
not save £
17. Natural Grid – and the Transition Trade
Two Big Trades of the 21st
Century
Resolution Trade – older generation 'long' of Land and
'short' of Care for themselves and the Land
- so exchange value of care for value of land use
Transition Trade – need for a low carbon economy
- so exchange intellectual value (skills, knowhow and
IP) for the value of carbon fuels saved
Transition to a low carbon economy through energy
prepay; energy accounting; and energy co-operation
