Volos 3.0

21st Century Financing & Funding

Chris Cook

Volos 16th July 2014

“21st Century problems cannot be solved with 20th Century solutions”

Volos 3.0 ?

Volos 1.0 – decentralised but disconnected, physical market presence

Volos 2.0 – centralised and connected, market presence through intermediaries

Volos 3.0 – decentralised but connected, network market presence

Volos Economy

Land – Volos as a location or place

Physical – resources embedded in (eg buildings) and passing to/through (eg solar energy) Volos

Intellectual – people of Volos and intellectual value created over millennia

Financing & Funding Financing

- short/medium term credit needed for circulation of goods & services and creation of productive assets

- people-based credit (P2P) issued by people individually or jointly (eg Company)

Funding

- long term credit embedded/invested in productive asset

- asset-based (Peer to Asset) credit

Protocols & Prepay

Protocols

- People-based (P2P) Credit – Guarantee Society

- Asset-based Credit – Capital Partnership

Prepay – asset-based credit returnable in payment for use value over time (utility) of productive asset

Prepay

Tax

Tax Prepay

Tax Prepay – credit returnable in payment of taxes

Tax Return – 'stock' part of tally stick returned to Treasury

Rate of Return - rate over time at which stock is returnable for cancellation

eg Prepay £8 for £10 tax - £2 profit 25% pa rate of return

- not fixed - depends on existence & quantity of flow

21st Century Prepay

Land – credit returnable in payment for land rental or production from land

Energy – credit returnable in payment for energy use

Intellect – credit returnable in payment for use of intellectual property eg knowledge, software, video

Resource Resilience – Natural Grid

Since 1980 Denmark's GDP rose 78%

Energy use has been stable

Carbon fuel use has declined

How did Denmark achieve this?

Resource Resilience - Natural Grid

Least Carbon Fuel Cost principle

- not 'least Danish Krone cost' (or least $, € or £ cost)

- minimum carbon fuel input for a given output of electricity, heat or power

- investment in renewables, heat, transport, energy efficiency

Emerging Outcomes of Natural Grid policy

- decentralisation

- skills base of knowledge and knowhow: eg Vestas is the biggest global wind turbine manufacturer......in a country of 6m people

- trend to energy security and energy independence

- not forgetting........reduction in carbon use

Protocol - Land Partnership

Custodian(Community)Custodian(Community)

InvestorInvestor

OccupierOccupier

RentalPrepay

%

%

ManagerManager

Rental

Land Prepay – Value Proposition

Community

- sells rentals forward and locks in price

- interest-free loan until prepay unit returned vs rental

Occupier

- prepays rental and locks in price

Land Prepay – the Value Proposition

Investor

- direct 'inflation hedge' investment in land

- Occupiers buy prepay credits from Investors at best price below issue price & return against rental

Manager

- shares in gross rentals or production

- interests aligned with Investor

- no 'Principal/Agency' problem

Land Partnership - Outcomes

Housing as a Service - relationship-based not transaction-based model - costs transformed to revenue shares

Neutral – removes ego and politics

Collaborative - stakeholder interests aligned

Sustainable - all have interest in minimising cost over time

Protocol - Energy Partnership

Custodian(Community)Custodian(Community)

InvestorInvestor

ConsumerConsumer

Prepay %

%

ManagerManager

Payment

Energy Prepay – Value Proposition

Community

- sells energy forward and locks in price

- interest-free loan until prepay unit returned vs supply

Consumer

- prepays for energy and locks in price

Energy Prepay – the Value Proposition

Investor

- direct 'inflation hedge' investment in energy

- Consumers buy credits from Investors at best price below physical energy price & return against supply

Manager

- shares in gross revenues or production

- interests aligned with Investor

- no 'Principal/Agency' problem

Energy Partnership - Outcomes

Energy as Service - relationship-based not transaction-based; costs transformed to revenue shares

Neutrality – removes ego and politics

Collaborative - stakeholder interests aligned

Sustainable - all have interest in minimising cost over time

Mega Watts and Negawatts

Mega Watt production of renewable energy sells at the wholesale market 'bid' price

Nega Watt production is made by consumers at the retail market price

Uk Green Deal (bank loans to fund energy efficiency measures) has two problems

- compound interest on bank £ loans

- even if £ is saved, no guarantee energy will be saved

Volos Natural Grid

Investor pays £1k for Units in Volos Energy Pool

- 20 1Mwh prepay Units @ €50 each

- 2000 10 Kwh prepay Units @ 50c each

Fund invests through energy loans eg Volos hydro power; CHP/co-generation; cooling

Loan repaid via energy bills through buying prepay energy units at market price

Interest-free loan – return to investor in energy

Unless consumers save energy they will not save €

Volos Green Deal

CustodianVolos Energy Pool

CustodianVolos Energy PoolInvestors

Consumers

Manager

€ EnergyLoan Buy units

at market price

€

Prepay

Prepay

Units

€

€

Guarantee Society - Seller accepts Buyer's IOU

Seller Buyer

IOU

Value

IOU is guaranteed by Sellers & Buyers mutually

Seller Buyer

IOU

Value

Pool

GuaranteeGuarantee

Seller & Buyer pay guarantee charge into Pool held by Custodian

Seller Buyer

IOU

Value

Pool GuaranteeGuarantee

Fee Fee

Buyer settles credit in € or '€'s worth' eg energy-based or land-based currency

Seller Buyer

Value

Pool GuaranteeGuarantee

Fee Fee

If Buyer defaults: system pays sellers and collects from buyer if possible

Seller A BuyerDefault

Pool

Collects

Pays

Seller B

Default

Pays

Service provider sets guarantee limits, handles defaults & manages system

Seller Buyer

IOU

Value

Pool GuaranteeGuarantee

Fee Fee

Manager

FeeService

Clearing Union

Guarantee Society is the social contract within which Sellers accept Buyers' credit and settle balances

Sellers and Buyers pay a guarantee charge and share costs of operation and defaults

Manager allocates guarantee limits, manages platform, ensures transparency, handles defaults

Clearing Union

Producer Consumer

Pool GuaranteeGuarantee

Fee Fee

Manager

FeeService

It'll Never Work

For 140 years, Protection & Indemnity (P&I) Clubs have mutually guaranteed risks Lloyds won't cover

For 125 years P& I Clubs have been managed by Thomas Miller

21st Century problems cannot be solved with 20th century solutions.........

…....21st century solutions pre-date modern finance