Today, investing in productive assets is the preserve of the wealthy, companies and governments. Tomorrow, with Cloud Consumer Capital (CCC), all consumers (rich and poor) can become investors.
The challenges of climate change and building a resilient energy system requires everyone to invest. Society cannot solely depend on governments, the rich and companies. Many consumers are willing and want to invest, but investment systems today are expensive, clumsy, and unreliable. We need simple, stable, secure ways to invest and give investors a steady stream of reliable returns.
Consumer Capital changes the investment landscape. It removes barriers to investing and makes it easy for anyone to become an investor. Paying an electricity invoice becomes an investment. Allocating some household savings and superannuation payments to renewable energy investments will provide all the funds Canberra needs to address climate change.
Description
White Label Personal Cloud Consumer Capital (CCC) project will scale, commercialise and extend the existing Prepower One Co-op financing of solar panels. The grant will make the capital raising technique available to any business formed by any trading entity.
CCC will provide any consumer who wishes to join a group of other consumers with ways to invest in reducing the cost of electricity to their homes or businesses. It will provide all consumers and investors in the ACT with a means of investing in emerging technologies based in the ACT.
There are no fees to buy or sell Consumer Capital. Investment values stay the same, and investment returns are a steady income stream like a regular salary. Consumer Capital saves the consumer money, and the operating fees come from savings. If there are no savings, there are no fees.
Consumer Capital fits the psychology of most human risk behaviour. Most people hate losing money more than they value gaining money. Traditional investing is available for the gamblers and entrepreneurs of the world, but everyday citizens will prefer the regularity and certainty of Consumer Capital. It will prove popular and attract those who value living well over making more money.
Consumer Capital operates as a continuous stream of money. Steady money flows require less money to make the same investment as investing in lumps. There will be more investment for a given amount of money because the money moves faster. Hence Consumer Capital increases the funds available in a community for investment. Consumer Capital also allows monetisation of some productive assets and means existing assets can fund new investments without selling the assets. It removes the need for governments to sell public assets to realise their investment potential.
Consumer Capital is not a one time project. It builds an investment infrastructure to provide an ongoing continuous stream of investment. The savings come back to investment accounts ready for new investment. CCC can finance most ACT renewable electricity assets and businesses required to address climate change.
Consumers collectively own the businesses they finance and set the prices the business charges. For example, CCC will spend 50% of its income on law, social behaviour, and economics research in taxation, social security, income transfers, pensions, civil society, and democratic institutions.
Most importantly, Consumer Capital treats all citizens the same. Every consumer gets the same return on money invested. All consumers receive investments when they buy from businesses financed with Consumer Capital and gain wealth through consumption. Collectively consumers have a say in spending profits, ensuring no one is left behind or left out.
Project Outcomes
CCC provides local investors with a low-cost, reliable income stream from investments in renewable energy infrastructure. It is an innovation in funding. The investment outcomes of this project are all the projects these investments fund. Over a few years, it will result in billions of dollars of previously unavailable investment. It will provide most of the capital for innovation, research, and deployment of renewable energy infrastructure within the ACT.
As consumers pay their renewable energy invoices, they acquire capital in the energy assets. They can also buy capital in the business by prepaying their future invoices. They receive a return on investment with cheaper energy.
The return on investment is a fixed inflation-adjusted discount on the payment of invoices. The investment pays invoices issued by the entity accepting investments. Because the investment has a fixed value and links to the sale of electricity, it is not a financial investment and comes under the sale and payment of goods and services regulations. Consumer capital is a fixed value asset and can be traded like any non-financial asset. All can invest, and all investments fall under existing taxation rules on buying and selling.
Consumer Capital does not replace existing capital but is a cheaper alternative open to all. A unique feature is the automatic transfer of capital for no cost when a consumer purchases goods and services whose production requires capital investment. A consumer investor passes the capital to the next consumer, who gives it to the following consumer. This feature speeds up capital transfer and means more is available for ongoing investments. Ownership changes of the capital occur without any change to the ownership of the business.
Another outcome of Consumer Capital is that the returns on investment are discounts or savings on the cost of goods and services. The investments are for consumers that wish to save money rather than make money. The investments are fixed in value and backed by tangible assets.
Consumer Capital investor accounts appear to investors like high-interest savings accounts. Investors have real-time information on their investments showing sales, redemptions of investments, earnings, and assets backing the investments. There are no fees to buy or sell investments, and investments retain their value as they are adjusted for CPI inflation every three months.
The government could distribute funds as Consumer Capital for incentive schemes like the ACT Government sustainable household scheme. Doing so would save the ACT government the cost of interest, and the funds would be available to all energy consumers in the ACT and not just those who own houses and can get personal loans.
Consumer Capital will accelerate research into mitigating the social effects of climate change because CCC will provide a substantial percentage of its income to research.
Project Implementation Plan
A prototype system for Consumer Capital exists at Prepower One Co-op. The prototype is available for development and modifications. It will be deployed first within White Label Personal Cloud to obtain ongoing funds for Consumer Capital development. In parallel, Prepower One Co-op will deploy it. The prototype was developed with WordPress for the user interface and Google sheets for the database and computations. Interaction with external systems is handled manually through google forms.
Implementation will commercialise the prototype. The prototype will keep operating, and parts will change to be scalable, extensible, and robust. The project administration is lean, continuous, and low-risk.
Prototype commercialisation tasks with duration months
- Review of the prototype and confirmation of the Overall Plan — one month
- Arranging processes to spend future income on research projects — nine months
- API Connections to Invoicing Systems and Bank Accounts — two months
- Legal Agreements to convert shareholder capital to Consumer Capital — two months
- Legal Agreements for Consumer Capital — four months
- Legal Agreements for different forms of groups to use Consumer Capital — nine months
- API Connections to Cooperative Systems — four months
- Integration with Cooperative websites — four months
- Integration with Corporate websites — two months
- Marketing Plan — two months
- Website Construction — four months
- Replacement of Excel Spreadsheet system with distributed database system with individual privacy and security — nine months
Milestones
- Consumer Capital Accepting Investments 1st July 2022
- Prepower One Accepting Investments 1st September 2022
- Five Community Organisations Accepting Investments 31st December 2022
REIF Contribution
Democratising renewable investment will assist other renewable energy investments as it provides a large local source of funds. The REIF funding will make more ACT innovations and projects aware of Consumer Capital as a potential source of funds. Ten million dollars of investment through CCC will generate fees to cover the CCC operating costs. The marginal cost to administer each new investment dollar is a small fraction of a percentage of the amount invested.
In the ACT alone, the potential extra funds available for renewable energy investment and research are thousands of times greater than the requested grant amount.
Other grant applications that do not receive funds from REIF can go to their consumers for funding through CCC.
The money from the Wind Farms to the REIF comes from ACT consumer payments. The recent substantial increase in consumer payments for electricity went to the Wind Farms. As consumers have paid the money, it is equitable that Consumers should have a say in spending the money. Consumer Capital provides consumers with that right, and there is a solid case for distributing all the REIF funds to projects funded with Consumer Capital.
Risk Assessment
There are minimal technical risks with the project as there is a prototype operating, and the implementation is modular and distributed. The technology needed to implement is straightforward and well known.
There appear to be no current regulatory risks, although legislators could introduce barriers.
The risks are social and the disruption of the social order. Removing the advantage of rich people over investment opportunities makes it harder for rich people to retain their economic advantage even though with CCC, they will keep and increase their wealth. It is why the project includes a way of funding social research. The project will succeed technically and increase investment, but it will disturb the social order.
The opposition will come from people who may lose some of their income, and their businesses become less profitable. Examples are financial advisors, banks, and others in the financial industry and some individuals in financial positions in government and industry.
Consumer Capital removes the need for interest and its derivatives to give investors a return on investment. It removes profiting from capital gains. Techniques such as discounted cash flow analysis to calculate Cost/Benefit calculations do not apply when profits come from reduced costs.
People with expertise and fortunes built around the prevailing economic ideas of self-interest will oppose the approach.
Finally, there is a political risk as political parties tend to think in competitive terms, and Consumer Capital is about collaboration and consensus rather than economic competition.
However, it is far more likely to succeed than fail because it increases the money available for investment and lowers the cost of electricity.
