ENERGY AS ESCROW
As energy investments gives an output this output can be handle separate of the investment vehicle in an escrow. First this will be done if there are multiple owners but later-on this will be done by almost all energy generating/harvesting facilities. It makes them easier to sell, as in case of a sale of the investment nothing by use of an escrow nothing changes except some ownership records in the land registry record and some ownership records in the grid registry, but the payment data still will be the same. From finance perspectives this is positive: ensures the cash flow on facilities and by that the cash flow on investments. Finance structures can learn a lot of object orientated programming: the best/fast outcome for the lowest costs. Currently escrows are relatively expensive (as they are no commodity). This will change as they get more common tools. This also will change as banks start to understand that escrows ensures steady cash flows to them. Escrowing will even become cost neutral if the money must not be directly paid forward. This will give them the liquidities they like/need. Providing escrow services than will become a way to pay interest. Financials with good contacts with the project developer will always ask them to use their escrow services (fixed is possible). Escrow delivers certainty to the financiers. Certainly in case of renewable energy finance: due the fact that these investments don't need fuel and are almost totally capital/investment driven. Insuring the cash flow is an important facet for financiers. By the Energy as Collateral concept there even can be a backup escrow (contracts already signed as part of the finance deal) if an escrow party defaults. The beauty of renewable energy projects is that its possible to cover each risk and thereby the facility will produce fuel less each day of its existence. Escrowing is an important part part in creating this circle/chain of trust. The grid administration another part of this chain. The land registry records also. Escrowing (based on grid administration database) is ensuring the financiers that they will get paid. Period. That's quite a facet on an investment case. Energy as Escrow is a concept capable of generating a massive energy transition investment wave.
Author: Gijs Graafland
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