The natural conditions of Amplepuis favour water and sun. The local waterways have very high mass flow rate in the cold season of the year, i.e. from November to April, which falls dramatically in the middle of the summer. On the other hand, summers are really sunny and hot. Thus, I am thinking about a system of watermills installed on the local waterways. By the way, there is a historically valuable (and valued) watermill, a picturesque little thing, located some 2 miles northeast from the town centre.
Let’s start with demand. In France, the average use of energy per capita is 3 641,11 kg of oil equivalent per year, which encompasses basically everything: household consumption of electricity and heat, industrial use, transportation, and services. Following the data about energy use provided by the International Energy Agency (IEA 2008), we have the following structure: households’ consumption 29%, manufacturing 33%, transportation 26%, and services 3%. Transportation essentially happens between places, and even with electric cars everywhere, a local community can produce renewable energy for just a fraction of the overall transportation it is connected to. Thus, I am sketching the vision of that small town producing locally, out of renewable sources of energy (mostly water and sun), 80% of the total energy use, possible to calculate out of the raw demographic data. That would make the total local demand for energy, in the population of 4948 people, amounting to 167 622 863,22 kWh per year. This demand for energy represents 19 135,03 kW of electrical capacity, and, on the other hand, a market of some $18 million ($18 002 695,51 to be exact). With the natural conditions available, I am thinking about a mix of power generation made in 80% of hydropower, with the remaining 20% coming from photovoltaic modules. That would mean a total capacity of water turbines amounting to about 15,3 megawatts, and a capacity of some 3,9 megawatts embodied in sun farms, spread over the picturesque hills around that little town. As for hydropower, the Initial Capital Cost (ICC) of the corresponding capacity can be estimated at some $65,2 million, mostly devoted to civil works (55,8%, $36,4 million), with the strictly spoken power-generating equipment worth some $17,4 million (26,9% of the total), engineering and construction costs taking 14,6% of the ICC ($9,5 million), and the necessary electrical infrastructure costing about $1,7 million. The sun farm(s), with a capacity of 3,9 megawatt mean an investment of $9,6 million. Thus, it makes a total capital investment of $74,7 million, in order to build the necessary electrical capacity.
Now, we turn the population of Amplepuis into a community of bankers. They issue their own currency in order to finance the development of that local power system. This currency would have the name of ‘wasun’, coming from the concatenation of words ‘water’ and ‘sun’. There are three basic challenges, when issuing the Amplepuis-Wasun, or AWS. Firstly, it should have a predictable exchange rate against other major currencies. As I have made my calculations in US$, it would be convenient to assure a parity to the US dollar, in our Amplepuis-Wasun. The most classical way of having that angle covered is to hold currency reserves denominated in US$, thus either dollars themselves or, for example, US federal bonds. I think that, at the end of the day, federal bonds would be better: they bring an interest. This is very much a puzzle, what exact amount of monetary reserves denominated in US$ would be necessary to maintain a predictable exchange rate of the Amplepuis-Wasun. An educated guess leads me to betting on some 50% proportion, i.e. for every $1 million worth of Amplepuis-Wasuns, the issuing entity should hold $500 000 in US federal bonds. Secondly, the AWS should serve to grease the local market of energy, and the total nominal value of AWS issued should correspond somehow to the local demand for energy: $18 million. Thirdly, if the AWS has to be of any interest to bankers, financial investors, and to the plain local folks, there must be a substantial discount, from the nominal value, at the primary issuance. For the moment, I spell ‘substantial’ as 20%.
Connecting the thirdly with the secondly and the firstly, we have the following equation:
AWS 18 million = $18 million = AWS 14,4 million of proceeds from issuance + AWS 3,6 million of total discount offered to the prime buyers = $9 million in US federal bonds + $9 million worth in other assets.
At this point, I am a little bit more conservative than the most fervent partisans of new virtual currencies, i.e. I am placing the issuance of AWS in the context of a balance sheet. The total value of any currency issued represents a liability in the balance sheet of the issuing entity, and has to be mirrored on the active side of the balance sheet. It means that contrarily to Bitcoin, the Amplepuis-Wasun (AWS), is supposed to be backed by some kind of valuable assets, not just by trust. Those assets can be, roughly speaking, of a threefold nature. In probably the most basic version, the total value of Amplepuis-Wasuns issued into circulation could be backed by the value of fixed assets present in the balance sheet of power-generating entities. We take the capital value of sun farms, and that of the power-generating equipment in watermills, which makes a total of $27,1 million.
All in all, I can make a first sketch of the balance sheet for the corporate or cooperative entity, which could organize and finance the shifting of the local community of Amplepuis into an energy-based local economy with local currency.
Total assets = $27 million in property, plant and equipment + $9 million in US federal bonds = $36 million
Liabilities = AWS 18 million = $18 million
Equity = $36 millions of total assets - $18 millions of liabilities = $18 million
Initial cash flow = - Investment in power installations – Investment in monetary reserves + proceeds from the issuance of AWS = - $74 million - $9 million + $14,4 million = - $69 million
As we can see, there is a whole in the perfect plan. The calculation of the initial cash flow leads to looking for $69 million in investment capital. The provisional balance sheet displays $36 million in assets, covered in 50% by equity. We have a hole of $33 million, to cover either with a public subsidy, or by pumping up the balance sheet.