Standard Renewables Crypto Concept
Financing a green revolution and saving planet by leveraging Crypto Contracts, Marketplaces, and the capitalistic playbook first developed by J.D. Rockefeller.
Year
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2019
Role
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Project Owner
Today’s economies are not built to address the crisis
In the past half-century, the world’s population has doubled, economy quadrupled, and trade increased by 10-fold. The cost of this development: 75% of the planet’s land, 66% of the ocean, and over 85% of wetlands have been altered, affected, or lost.
Beyond the moral and human costs of climate change, the report estimates the damage from 2.7 degrees / 3.6 degrees of warming to be $54 and $69 Trillion respectively.
To prevent 2.7 degrees of warming by 2040, the threshold for which many of climate changes worst implications begin, greenhouse emissions must be reduced by 45% by 2030 and 100% by 2050.
Today’s economies are not built to address the crisis
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Feature...In the past half-century, the world’s population has doubled, economy quadrupled, and trade increased by 10-fold. The cost of this development: 75% of the planet’s land, 66% of the ocean, and over 85% of wetlands have been altered, affected, or lost.
Beyond the moral and human costs of climate change, the report estimates the damage from 2.7 degrees / 3.6 degrees of warming to be $54 and $69 Trillion respectively.
To prevent 2.7 degrees of warming by 2040, the threshold for which many of climate changes worst implications begin, greenhouse emissions must be reduced by 45% by 2030 and 100% by 2050.
How might we
Given the inability of our current financial and political institutions to adequately address the issue of climate change, how might we leverage new financial technologies and the general will to create the proper incentive structures for radical and effective change in the energy industry starting first in the United States.
Staying Under the 2.7 Degree Target in the US
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To meet the benchmarks documented in the IPCC report while also meeting to capacity demands, ~80 Quadrillion BTUs of renewable energy capacity must come online between 2030 and 2050 in the USA.
Newly Favorable Marginal Economics
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Recent technological advancements, supply chain optimizations, and competition have drove down the costs of Utility-Scale Wind & Solar
Renewables on a Cost Basis
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Thanks to the advancements previously outlines, utility renewables currently operate on a much lower marginal cost than their coal and gas counterparts. Cost of capital continues to drop as well which is I forecast to be price parable before the end of the next decade.
Continued Operating Costs of Fossil Fuel Power Generation Make Them Economically Unsustainable
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Currently, operating cost for wind and solar electrical generation are more efficient than traditional fossil fuel generation. With the addition of fixed costs, Total costs on a price per unit (BTU) basis should make renewables have a total advantage in the next decade.
Solution
Spur investment through creating a new marketplace for renewable project funding - enabling incumbents, communities, and individual investors to easily back projects.
Given our financial analysis, the forecasted marginal cost advantages of solar and wind provide a solid investment thesis. However, operationally, these innovations must be realized within a very tight timeline and will only likely occur when construction happens at scale.
Hence, a large investment ($410 billion) towards renewable construction will be needed prior to the projected operational advantages being realized.
Assuming no governmental support—or perhaps headwinds given the power of energy lobbies— we propose creating a marketplace for renewable projects and using Crypto Contracts to raise money from the local communities and align with incumbents and create a powerful company that holds the keys to the energy revolution via equity and intellectual property holdings.
Significant Opportunity for Financing Construction of Renewables at Scale using convertible debt-like vehicle
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We conducted a financial analysis in order to assess the direct opportunity in the market.
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Projected operational efficiencies forward using historical trends with tapering applying both to the cost of capital and variable costs.
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As coal has been largely flat and natural gas has become less efficient, we kept the cost of operations flat.
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We assume a 5-years from planning to operations for power plants
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We use the trailing 5-year cost of capital projections when assessing start up cost (Sensitivity Analysis for 2030 begins with Year Zero full investment in 2024)
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We assume 15% startup investment room and 15% management fee
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We assume a price point for renewables at the current cost of coal
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We assume flat revenues / profit margins through 2040
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Downward cost pressures from likely other entrants are not accounted for
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Inflation is not accounted for
Operations
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Standard Renewables creates a marketplace, led by local markets, to be able to invest in the construction of renewable projects to replace CO2 emitting plants. We manage the selection of markets and local contractors, create subsidiary corporations for each project, fund and share R&D, and oversee primary and secondary market mechanics.
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Given current market pricing and forecasts, targeting areas currently served through coal electrical generation will offer better financial competitive environments and enable us to focus on eliminating biggest CO2 emitters. There were about 8,652 power plants in the United States representing 28% of the generation. Tertiary eligible markets will target natural gas producers.
Creating a Vehicle for Selection of and Funding Solar and Wind Power at Scale through Crypto-Currency
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Our Crypto-Contract Strategy is designed to create lucrative financial incentives for local markets to invest in replacing their CO2 emitting power plants.
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Our first step is to issue crypto currency representing the total investment needed to manage and construct renewable power plants that meet the IPCC’s 2030 goal.
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This is estimated to replace 50 Quadrillion BTU units (a 45% cut from 2010 levels plus necessary new capacity).
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Target investment needed is $410 Billion.
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Total Quantity Created: 50,000,000,000
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Technology choice: We will use a Permissioned Ledger system to ensure security of the transaction and enable us to work with users bank infrastructure.
Selection of Projects Through a Crypto Contracts
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For example, an individual from one of the eligible markets can purchase a contract at the set offer rate of $82. Through their interface, they can input the zip code of their market meaning they are voting their investment to fund the construction of a renewable plant to server their area. When a project becomes fully funded (estimated by the generation capacity of the targeted replacement power plant multiplied by the 2025 construction rate forecast), the zip codes for that corresponding plant are updated as fully funded in the ledger making them no longer eligible for selection. Zip Codes for contracts remain editable until a project is fully funded. Funding percentages are continually updated in the public ledgers.
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If projects do not reach full funding within the first year of offering, the least supported zip codes will become ineligible. Individuals will have 12-weeks to select a zip code for their contract or it will be randomly assigned before full lockout of the 2030 sprint.
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We believe this will create competitive mechanics within the community, ultimately creating incentives for self-promotions and establish viral loops (investors in local markets then have an incentive to convince their communities to purchase contracts or appropriate existing contracts towards their projects)
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If contracts are deemed uncompetitive or fulfillable within 18 months of close, funds may be directed towards previously unfulfilled projects or contracts refunded at the choice of Standard Renewables. Each purchase will have a low commission and fee assessed as an additional initial source of revenue for Standard Renewables.
Overview of Contracts
Financial Mechanics
The financial components crypto contracts operate similar to a convertible note. Each contract sold helps fund the initial construction of a renewable project. The owner of the contract is entitled to a 10-year 85% profit share distribution with credit towards their electric bill when operating in the local area. The contracts guarantee a 5% annual return on their principle or better. Underperforming areas will be subsidized through the 15% management fee. At set dates, the contracts can be converted by the holder (if a qualified investor) into common stock of the operating generation company at a share price ratio chosen by an outside third party. At Year 2, Standard Renewables may call the contracts at a price of $218 per contract representing a 12% annual compound return paid in either cash or equity in the underlying project company.
Subsidiary Ownership
Each project which moves forward into construction and operations will be held under an independent corporation at first fully owned by Standard Renewables. Once the power plant comes into operation, contract owners will have an opportunity to convert into common shareholders at Years 0, 2, 5, and 8 after completion. Preferred shares will be held by Standard Renewables and hold a 10x voting power.
Independence of Subsidiaries and Governance
Each company will operate as its own C-Corp, enabling take subsequent financings through traditional bond and equity markets as needed. Votes and governance will be managed through crypto governance on private ledger, enabling equity holders to easily cast votes for boards and other measures securely and transparently and for Standard Renewables to easily represent our interest across geographies.
Ancillary Service Offerings
Third-Party Vendors who own at least 1% of a projects outstanding contracts, may, for a fee to the organization, upsell contract holders with energy needs within the contracted area served, relevant additional services and which can be paid directly through the contract distributions. This may be a viable source of ancillary revenue and help promote services needed to keep renewables competitive such as energy storage areas.
Establishing Secondary Market
The secondary marketplace offers another source of revenue for Standard Renewables by enabling exchange of the contracts for each individuals project and subsidiary. This will be fully run and operated by Standard Renewables and work similar to coinbase.
Buyer-Held Unlocked Contracts
Contracts for projects that have yet to be selected for construction are non-transferable. This is to ensure that the secondary market does not compete directly with the primary market during the initial offering year.
Locked Contracts
Contracts that have been locked can be bought and sold, but the underlying project zip cannot be changed.
Options contracts and futures
Locked Contracts may be lended, borrowed, or swapped within the market using the ledger. This tracks both the buyers and seller as well as the agreement between the two as well as their margin accounts as necessary.
Standard Renewables-Held Contracts
If contracts go unsold in the initial offering, Standard Renewables may sell these contracts in the secondary market with zip chosen by the company at the time of listing. This should enable an additional source of revenue for Standard Renewables.
Additional Benefits of Using Crypto Contracts
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Overall funding for this scale of an upstart company would never be financed.
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Enables us to be financed through the broader public, not just qualified investors, by using a coin-based system
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The ability for each contract to contain all the information and history through the ledger is vital for the complexity of states of the currency as well as validating ownership and creating secondary markets.
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It enables us to create an interface and information that is easy to use for the average customer to trade with (critical for local support)
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Enable efficient transfer between traditional banking system
2030 Rollout Strategy
Gaining buy-in from the community and local government is important to graining initial traction and superseding potential legal disputes. By offering power companies the opportunity to potentially own the project in the future should also help align our incentives and keep competition at bay.
Initial Private Offering
The initial offering will be offered to the local municipalities and established power companies in the local area for a discounted price of 10%. This is meant to create buy-in within the locality and ease competitiveness. These contracts will be locked to the zip and returned if projects do not move forward.
Initial Community Offering
After the Initial private offering, the community offering will be offered to the residents in the local area for a discounted price of 8%. This is meant to create buy-in within the locality. These contracts will be locked to the zip and returned if projects do not move forward.
Secondary Private Offering
After the local offerings, contracts will be able to be bought by established financial institutions, banks, and funds. For a 5% discounted price. These contracts are nonrefundable.
Public Offering
After the private offerings, contracts will be able to be bought by the broader public. These contracts are nonrefundable.
Marketing & Sales
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To launch the initial offer, we will use local financial development personnel to first meet partners on the ground within energy and power. Secondly, in the localities chose, we will launch a local blitz of advertising and content at the point of sale. By using fear, promising lower energy prices, creating local high-paying jobs, and offering very solid financial reassurances for their investments, this should be an easy sell. Third, We will partner with local real estate companies so that home sellers may ‘pre-buy clean power for the buyer through selling energy contracts with their future home for buyers.
Network Effects
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Ultimately, we will create many network effects, with individuals and companies able to easily buy and sell contracts in start-up renewable energy companies across the country. Further, the companies localities that would benefit from these projects, are then incentivized to bring others into the market in-order to first secure the project and then to be able to increase the value of their holdings. These organization may include the contractors and suppliers most likely to fulfill the project itself or the local infrastructure needs, the third party financiers to those adjacent projects, organizations looking to expand within the geographies looking for cheaper energy rates, the network organizations looking to gain access to through-sell on the network, outside investors looking to diversify their in-network holding or their broader financial portfolio, and environmental and consumer-protection advocacy groups.
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By offering easy financial upside and low-cost to enter for local communities, competitors, and established financial organizations, we should be able to have a significant multiple on our marketing and sales budget.
Partner, Don't Compete
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Fossil Fuel Energy companies cannot compete operationally with a renewable energy company. However, they could seriously delay our ability to become operational in a community through-legislative hold-ups or launching competing marketing campaigns against the sale of the initial contracts.
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To help mitigate these issues, we will first try to seek them as an investor in each local project. At a national scale and delivering out learnings across projects, Standard Renewables will be able to manage this transition much more effectively. Ultimately, because of the convertible nature of the contracts, our goal is for the power companies themselves to be the majority shareholders of the local enterprise and be given the keys to having substantially better margins on their operations.
Prospects and Company Evolution
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In the beginning, we are about creating a revolution and a new type of community-led investment in clean energy transition. We provide the infrastructure, expertise, and scale to meet the 2030 horizons. We will further create value through developing and leveraging internal IP for similar initiatives around the world.
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In the medium term, we are a marketplace for buying and selling contracts for 10k+ individual local power companies. This will also open up opportunities for selling ancillary services and investing in adjacent industries. Fruther, We also operate the organizations through their investment horizons and create a new set of contracts for the 2040 and 2050 horizons.
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In the long-term, we will ultimately own small stakes in thousands of local energy companies. We believe this will offer tremendous power and financial rewards in the broader market. We will be best position to supply the support servers and new technologies for the industry. And just like Rockafellars fortunes soared after the break-up of Standard Oil into separate organizations, we are preceding our strategy with the ability to be global financiers. Our long-term service offerings could entail funds, support services, investing, or even the establishment of an energy index.
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Don’t own the oil wells. Own the infrastructure and IP that runs the market.
