ENERGY FINANCE


ENERGY AS OUTPUT


From out the perspective of a financier new energy investments are very interesting: a) they are fuel-less by design, nature supplies the 'fuel' for free, by this the business model is mainly capital driven, that's something financiers understand and is a home game for them and b) both the asset and the output can be collateral for the financier: this means that amortization and interest payments are safe and solid in this type of investment. No earlier investment model in history has given that. Not by some proven to be phony CDO insurance that not capable to deliver when it's called, but covered by the general economy and its endless energy demand. Free insurance by the market. Output that have a rising market price. Output that will turned into cash without any extra needed action. By the signing of the finance contract the collateral already is signed. Banks will use own or third party cleaning houses to redirect the output income to them if the debtor doesn't pay. The facility can be covered with insurance. The payments are handled by the grid operator, so the grid operator act (if necessary) as free payment collector. Absolute certainty on receiving the payments, regardless the well-being or attitude of the debtor, is every financiers dream. When bankers starts to understand Energy as Output, they will change the direction of their capital streams very much towards new energy investments. If banks, pension funds, central banks and governments start to understand the concept, the new energy industry will become demand driven funded. Energy as Output will be the main driver to a massive capital flow towards new (fuel-less) energy facility finance. The Energy as Output model needs transparency of a central registration point like the land registry is for property. This could be an extra record adding in the land registry, this could be the grid operators database, this could be both (to ensure the ownership of the installation and the beneficiary of the energy output). Energy as Output is a concept capable of generating a massive energy transition investment wave.


Author: Gijs Graafland


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