I was having dinner with my brother in law, Ovid, tonight and we got on the topic of alternative energy. One thing led to another and we came upon the idea of creating "Power Backed Securities" to fund the development of solar panel arrays.
The basic premise is that individuals purchase solar panels that are part of a remote solar panel array. (Solar panels that are a part of an array located in a desert generate more power than rooftop panels, and are more efficient as they are installed and managed in bulk.)
The dinner napkin math is as follows:
An 8'x4' solar panel as a part of an array costs approx. $800
It takes about 5 of these panels to power an average house: $4,000
The panels are good for 25 year. Assuming maintenance, upkeep, and land costs are another 50%: $2,000
So $6,000 will power a home for 25 years. That breaks down to $20/mo per house; I know that is much less than I currently pay in utilities!
There are two problems with this scenario:
1. Most people are not in the position to shell out $6k upfront for 25 years of power.
2. Even if they were in that position there is no mechanism to trade the offsite solar panel power for grid power.
The solutions as I see it:
1.Create a "Power Backed Security". Individuals will guarantee the Solar Panel Purchase loans, and in addition to the personal guarantees the power output from the solar panels will act as additional security. So if someone defaults on their "Solar Panel Mortgage" they lose the rights to the power generated. Organizations could group these Power Backed Securities together and sell them on the investment markets. Similarly to Mortgage Backed Securities.
2. Create a system that matches up individuals with the solar panels they own. Have the solar panel power output connect to your SSN or something. Wherever you live, the power credits will follow you. If the solar panel owner has a surplus then they can sell their power credits automatically through the power utility.
Brilliant! ... which country is implementing it?