ENERGY FINANCE


ENERGY AS WARRANTY


The coming massive energy transition investment wave will give a major boost to manufacturers of the needed products. Products where both innovation (specifications), quality and price are the tree main characteristics of. Products that of course also want (and maybe deserve) a place (based on the above three product characteristics) on the world market. Governments have two huge reasons to support the export of these products. Why? First: by their volume perspectives they could recover/emerge the industrial production of a nation in the right (as in 21st century adjusted) direction. Recovery and transition in one package. Something any government certainly wants. As soon as possible. Second: by there market volume in combination with the Energy as ROI concept the manufacturer could get besides the sales price also a part of the energy production. The combination of these two are attractive to every nation. Market driven research and production plus future energy supply. How does it works? Both distributing importers and project developers will do their purchase more and more by tenders. Tenders based on quantities with a price. For volumes there will be no price based tendering, but a more specifications focused tendering will be common. The reason why this will happen is to make benchmarking more easy/quick/simple, by fixing one side (the price side). The supply side than knows the budget per product and the volume and can offer the best specifications in terms of product function, product stability, product service, product warranty and product finance. The last two could be offered in cooperation with open arrangements (closed arrangements are bad economics, creating not fair play fields) with the own governments, as the governments wants voluminous actual production for recovery, industrial direction transition for the future and future energy diversity and supply. So all governments will install a) product functional warranty, b) product specification warranty, c) product service warranty, d) export transaction facilities and e) product finance facilities. The governmental backed warranty arrangements will be crucial for finance and therefore will become the default mode. The global economic turbulence and the 'Toyota' effect (manufacturing errors) has delivered this new demand to export. And governments will go along with it. Some from the start, some later-on after their industries haven't be able to acquire much sales. Governmental backed manufacturer warranty will become the default condition in any capital intensive product (or product part) that needs finance by its sale. Financiers just will demand it. The same is applicable to product service facilities, which are needed for more complex products. By these three warranty facilities the function of a product is ensured and that's what a financier wants to have as operational guarantee. As the financier often will be paid in outcome of the investment, the financier has a direct interest in product function guarantees and will weight these guarantees significant. The warranties will be limited to the own product function. Construction companies will also try to acquire this state warranties on their work and for them it will also be limited to their own work, so no overall warranty ever is issued in this model (as that would be a blank cheque policy of the warranty issuing state. Is this just an other scam that privatizes profits and socializes possible loses? No. Why? Manufacturers will also to deliver the best specifications for the requested price, in this contest they will transfer their profits into finance contributions based on the Energy as ROI model. They will share this ROI with their respectively governments, giving the governments an energy income as reward for the warranty issuing and the export transaction finance and giving themselves the profit on the manufacturing afterwards. Of course both the governments and the manufacturers each independent or joint together can sell this ROI any time they want. As it's just an income stream on a facility and thereby has an attractive market value. There will be enough financials specialized in trade or exploitation of these Energy as ROI rights. Energy as Warranty is a concept capable of generating a massive energy transition investment wave.


Author: Gijs Graafland


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