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  • Posted October 26th, 2023
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    How to build an energy commons

    How to build an energy commons

    We’re working with Mutual Credit Services (MCS), who are developing a library of models / ‘recipes’ for building the commons in all sectors of the economy (from housing, energy and land to water, leisure and broadband), based on Chris Cook‘s energy ledger design and use-credit obligations idea – how we can get investment into commons organisations without going into debt or giving away equity. We’ll:

    • make the models accessible for a wide audience, and post on the blog.
    • collect questions from commons members and supporters, then interview a specialist from MCS to try to get those questions answered. We’ll record the interview for Youtube and post the video and transcript on the blog.
    • host a discussion group with commons specialists and people working in the sector (community energy, housing co-ops, land co-ops, credit unions, water engineers etc.), again to record and post on Youtube and the blog.
    • try to get any further questions answered in the comments section, and via an upcoming AI chatbot.
    • try to get these ideas implemented via Stroud Commons and elsewhere.

    This is a draft outline of a design for an energy commons in any town – an energy sector owned by communities, providing affordable, locally-generated, renewable energy. Next, we’ll interview Dil to flesh out this basic design and pull out more details. Over to Dil:


    An energy commons model: energy commons with endogenous finance

    Details will vary depending on circumstances, but the core is this:

    Select a community on the basis of how they could be aggregated in regard of energy supply: bulk deal, downstream from specific substations, derogation – that kind of thing. Diverse is good.

    Gather information. Get the community to let you know/discover:

    • their energy bills from last year: units consumed, cost.
    • usage profile (can be quite rough: mostly matters if they use electricity/gas for heating, and any heavy use like 3 phase, lots of freezers, car charging).
    • building / installation characterisation in efficiency terms (this may need survey finance but can be very rough at the start).

    Analyse data for:

    • energy efficiency savings.
    • renewable installations (and/or modification to existing installations).

    Rank the options in terms of speed/cost/effectiveness.

    Develop a proposition for/with the community (co-design):

    • Detail the roadmap toward energy savings – cost, time, outcomes.
    • Develop and agree the financial model.

    Set up a mutual organisation of which all will be members. This is a multi-stakeholder org, with member classes:

    • Energy Users.
    • Operators (energy producers, managers).
    • Investors.
    • Governance (Elinor Ostrom’s Commons principles).

    The purpose of the org is to achieve a win/win/win/win:

    • Energy efficiencies and savings for users.
    • Decent returns to investors.
    • Good livelihoods for operators/workers.
    • Reduce CO2 emissions.

    These are achieved through cost and efficiency savings made possible through financial collaboration.

    1. Income and investment:

    • Predictable future income – users sign up to get their energy through the org.
    • Up-front income and investment – users and investors pre-purchase kWh vouchers at a discount.

    2. Surplus over costs from:

    • cost savings through aggregate purchasing power.
    • cost and CO2 reduction from energy efficiency improvements using carefully targeted investment.
    • cost and CO2 reduction through renewable generation  (where possible through direct use).

    Raise money through ‘pre-purchase energy credits’ – i.e. cash paid up front for kWh vouchers (users and Investors inside the org, not open market).

    There’s a ‘design space’ here, as to how returns are delivered. Generally:

    • investor returns paid in kWh vouchers, on the basis of achieving surplus targets. The faster these are achieved, the greater the return.
    • users encouraged to buy enough for their usage (in expectation of needing fewer kWh.
    • all members get some share of any surplus as energy credits.

    Value proposition (on top of meeting eco targets) – getting the same ‘exergy’ (useful results) with reduced energy usage. Achieved through:

    • getting the best deal for grid supply as a group buyer.
    • implementing efficiency measures, highest cost/benefit first.
    • introducing local production.

    Members can pay for kWh used with cash or vouchers. Vouchers denominated in kWh hold their value – hedge against inflation. Investors will find a ready market for credits at even small discounts from cash price. Thus a market for further issuance of credits.

    Savings from reduced supply costs will come from:

    • reduced kWh usage – efficiency.
    • reduced kWh cost (group buying power).
    • reduced kWh cost – local generation capacity (ideally through entire consumption within the org, avoid wholesale/retail grid price scam).

    Use of savings will be agreed by commoners; Some mix of:

    • further investment.
    • surplus distribution (as kWh vouchers, not cash).

    Build confidence on basis of success, so that investors are prepared to hold longer dated vouchers, until..

    Diminishing returns arrived at – in other words, all energy use has been made efficient and the bulk of it is generated as locally as appropriate, at which point, begin to issue fewer credits, towards a level of issuance that covers running/maintenance costs only.

    Next we’ll be interviewing Dil to put some flesh on the bones of the idea. Let us know if you have questions you’d like us to put to Dil, or comment below. We’ll be posting similar articles / interviews about other sectors of the economy, and we’ll be trying to implement them in Stroud and other towns. Here’s more information.


    The views expressed in our blog are those of the author and not necessarily lowimpact.org's


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