ENERGY FINANCE


ENERGY AS LEASING


As the energy price rise, energy investments will emerge and leasecos will develop a wide range of financial constructions. These lease constructions can be divided in mainly two groups: pure financial focused and product focused. As it's a new market the product focus market approach will grow harder. Product focused market approach stands for the fact that not the financial construction is the demand creator, but the product marketing. Product focused group will be driven by a) manufacturers/importers (delivering both products and finance to their distribution channel, of (mainly in case of new market parties) trying to eliminate the need for a distribution channel or b) by products/solutions focused turn-key marketing, sales, installation and service/maintenance parties. Leasecos will use the third party driven products/solutions driven dynamic and the turn-key case model (that's covers anything by design) to the max. Leaseco are banks and banks employees are more legal officers than marketing giants. The cooperation between leasecos and the products/solutions driven third parties with their turn-key focus will be voluminous, as both sides do what they do the best. Leaseco have some problems these days. First: Due to the Economic Crunch their market demand has plunged and by this turnover has declined severely. Second: Their operational costs haven't changed very much. Third: Due to the Credit Crunch their capital 'purchase' (finance and refinance of existing short term loans) has become much more difficult. Fourth: Due the Credit Crunch capital 'purchase' has become more expensive for those that could not access the Central Banks 0.X discount rates directly. Fifth: Due to the Economic Crunch the rest value of each contract product has plunged due to severely lower market demand (making almost each contract not profitable), we have facet PeakMobility and PeakTransport in the Western World and that's something front operators in these two sectors (as the leasecos are) will feel the most. The health status of the car manufactures tells something on the health status of the lease companies. As results of these five influences their results are quite different than they used to be and by this the operational direction had to be changes (from growth to survive). Not strange that by almost all leasecos a change of leadership took place after these effects of the Credit Crunch came to the surface. The new leaders are in the new realities with the legacies of the past. They must cut severe in the costs (adjusting overhead with turnover). They must arrange (re)finance. The value decline of each leased subject is considered as a beyond management influence economic climate fact. The coming energy transition investment wave is a 'blessing for the sky'. The energy investment wave will deliver the leasecos Business Phase 2.0. Down by PeakOil, saved by PeakOil. Just a matter of adding a new sector. Beside Transport and Mobility now also Energy. Energy investment in general (with all the extra beneficiary models from this Energy Finance paper) has three very attractive general upsides for the leasecos. These are: 1) complete new market sector (the winners could take it all: huge turnover perspectives), 2) a free market hedge against heavenly energy prices effected sectors like transport and mobility (better ratings) and 3) severe longer period contracts (less cost, more future stability). On top of that leaseco can benefit of all the in this Energy Finance mentioned energy finance models. Energy as Fee gives them a direct a substantial income for each signed contract (plus solve Tier One demand issues). Energy as Output in combination with Energy as Collateral gives them a grip on the investment output (something very important: eliminates debtor risks completely). Energy as QE could deliver them the liquidities needed (as the Central Bank would accept these contracts as collateral in exchange for loans of 90 cents on the dollar). Energy as ROI can give them extra income and (if needed) a hedge against assets in week foreign currencies (like the dollar). For leasecos in the euro zone and dollar zone this is not that important, as the euro and the dollar are since 2010 officially married by currency swaps (without any democratic vote) and if they go down, they will go together. Leasecos are good in funding, contracts and collecting. Product focused sales organizations with turn-key solutions will conquer the market and will use leasecos for the financial/legal facets. Besides these new and aggressive/smart turn-key sales/marketing companies, there also will be case product focused case builders, that makes turn-key product/finance case and sell these to leasecos and marketcos. Of course the leasecos will make deals with the manufacturers and importers (dealer networks or direct marketing driven), but due the complexity of the case the turn-key parties will win with a head start. They do everything both the leasecos and the customers want. Turn-key. EnergyIndus is a company that makes such a turn-key models for leasecos and manufacturers and targets to build as much certainties into each model. Certainties is what finance drives. Marketing is what sales drives. Together they'll power energy transition severely. Energy as Leasing is a concept capable of generating a massive energy transition investment wave.


Author: Gijs Graafland


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