Here's a business opportunity for a government or private company with an eye to the future of energy in New Zealand.
Implement a buy-now, pay later approach to home and business installations of passive solar water heating systems. This could be done by any of lines companies, generators, government or local councils or all combined. It would also represent a new revenue stream via providing contractually required on-going maintenance contracts.
Advantages
Security of supply would be greatly enhanced. The country starts saving power (coal, diesel, hydro lake water) from the first install. The hydro lakes begin the Winter less depleted and the risk of power problems ovr winter would be reduced or eliminated.
Power consumers will see lower power bills over time.
Civil defence capability is enhanced as water in homes can be heated to some extent daily during daytime power outages or if natural disasters cut off mains power.
Large scale power generation projects could be deferred. They wouldn't be necessary.
People currently on gas water heating are provided with a migration path away from that declining resource.
There would be a new and permanent monthly revenue stream from servicing and maintaining the large number of installations. Hundreds of thousands of homes and businesses paying some amount every month.
A new industry employing thousands of people would be created and would have a long term, local future.
Reduces the incentive (and the ability) to keep power in short supply in order to maximise profit.
Disadvantages
Power conservation means lower revenues for generators. They have no financial incentive to reduce power consumption or to make power cheaper. The ONLY financial incentive for generators is to produce slightly less power than is actually required in order to maintain price and maximise profits.
Obvious Problems
Companies focused on maximising profit won't find this attractive. It may fall to government to somehow enable this in the national interest. No one is going to lose money. The problem is they stand to earn less.
In order to avoid people shirking their obligation to pay, over time, for the installation of the systems, the cost of the installation could be attached to the dwelling or structure itself instead of being the personal property of the persons or company currently occupying the structure. Ideally, this would involve local councils as they already operate to this model. Lines companies could do it to, as they can track power features by address as well as by person.
Either way, if you buy or sell a building, the liability for any remaining passive solar install debt and ongoing maintenance charges goes with it. You buy the house on the understanding that you may be paying $20 or whatever / month to pay off the install cost over whatever number of years and some additional amount for the service contract. The amount being paid could be capped at an amount equivalent to the power being saved.
Bottom Line
Had such a program been started in 1992, after the first major power scare, every home and business in the country could have already been upgraded this way. These installations would/could have saved a huge amount of power already. Far more power than several Project Aquas would have generated after the decade it would have taken to build it.
From a commercial perspective, they would now have all been paid off and generating ongoing service contract revenue for the providers/maintainers of the systems. Every new home would be required to have one installed - funded on the same model in order to lower the cost impact on new homes.
The benefits are many and obvious. The downsides are few....and none, if you aren't worried about generators earning less profit in a relative sense, while still earning huge profits in nominal dollar terms.
Rotten to the core
28 minutes ago
Hi,
ReplyDeleteYour proposal is very similar to a scheme for a new business model that I'm developing at the moment.
My employer has contacts with influential entreprenuers here (Nick Lewis and Nick Gerritsen).
I just have to build a good enough business case for the scheme and he'll arrange for me to give a presentation before those guys.
Great! I have done more detailed work in the past....so if you want someone to bounce ideas off, let me know.
ReplyDeleteI've toyed with the idea of gathering the capital myself and starting a kind of reverse pyramid scheme where the revenue coming in fro the initial installs (I funded) would enable further installs and rising ride of revenue...with ongoing maintenance charges underpinning it. It would start slowly at first, then begin to compound. The variables would be length of term for repayment and the size and freuency. I worked out that 3 years, plus 20% margin, would be the minimum.....for my own expectations.
But it would make it possible to just install the stuff in 50 homes (50 * $4000) almost immediately, and then gather in $150 / month from each (50*150=$7500). That should be balanced by power savings and exctation of future benefit. It gets over the initial capital hurdle.
For each two additional installs, that another $300 / month...and the more you install, the sooner you can install still more.
The idea was to enable and invest and not "return" was invisioned until roughly 1000 installs ($150,000 / month in revenue). At that point, you could begin to extract the 20% on the initial installs....in a ration you defined. Obviously, the longer you invest, the sooner you reach significant scale.
From this small start, you'd have to focus on a trial area with a service delivery capability in place. Estimations of system failure and maintenance costs would be built into costs.
The key issue would be to avoid banks sucking the life out of your money through administration costs. A cheap, but effective and legally compliant contractual regime would have to be defined and used.
Bad debts would have to be avoided as with any business. The terms of the contract would require removal of equipment for non-payment.
...and so on.....
Of course, this was all on a small scale. A big operator with several million to invest would kick ass from day one.
Rentals would be an issue. Landlords hate investing in anything that only saves a tenant money. This is where the law eventually needs to catch up with the where the market fails.