How EFA Works

How EFA Works

We're crowdfunding in 2022!

An Asset Class for the Anthropocene

An EFA project is operated so that it can service a capital repayment and an annual return.

The terms of a subscription are matched with a bond; this is a fixed income asset that is issued to raise money, a little like a loan.  Creditors who purchase the bond are rewarded through an annual ‘coupon rate’, or annual percentage yield.  Because they are assets that guarantee an annual return they are more popular amongst low-risk investors (e.g. people who look after pensions).

Because the bond is fixed income people get cheap energy, and because of all the social and environmental good that’s done, the bonds become very green and desirable to ethical investors (and especially those who want people to save for the future).

How EFA Technology Works

EFA’s local energy as-a-service creates a community power station (or renewable microgrid) using existing homes and buildings.

Cheap energy is then provided to households through monthly subscriptions, so there are no upfront costs.

The generated energy is pooled and distributed through the microgrid network, and each household receives a share of green energy to use every month.

The EFA renewable microgrid works like a series of connected household systems.  Each home stays connected to the grid so switches back to their regular energy supplier when needed.

As EFA launches new products we’ll offer further improvements.  We’ll provide for more of people’s energy needs with insulation, increasing microgrid energy (with heat pumps and microwind) and greener technology (like electric boilers).

How EFA Finance Works

Financing a project is very simple (at least we think so).  It’s based on a comparison of the cost of energy from a microgrid (hardware, finance and running costs) with the cost of the same amount of energy from the grid.

Obviously there is a hard physical limit to the amount of electricity that can come out of a microgrid.

But, even with finance costs of 5.5% per year we’ve been able to identify ways that local energy as-a-service will make savings for households.

EFA vs. Business as Usual

What goes into the average UK Energy Bill?

After disaggregating electricity from gas and assuming the same break-down of costs, what goes into the cost of an electricity bill is shown in the chart and list below.

Wholesale costs – £440
Network costs – £152
Operating costs – £83
Environmental and social obligation costs – £62
VAT – £38
Other direct costs – £30
Total – £805

  • Wholesale costs
  • Network costs
  • Operating costs
  • Environmental and social obligation costs
  • VAT
  • Other Direct Costs
  • Total Avg. UK Energy Bill

What goes into the average UK Energy Bill?

After disaggregating electricity from gas and assuming the same break-down of costs, what goes into the cost of an electricity bill is shown in the chart and list below.

Wholesale costs – £440
Network costs – £152
Operating costs – £83
Environmental and social obligation costs – £62
VAT – £38
Other direct costs – £30
Total – £805

Scenario 1
Servicing 5% interest over 20 years

Annual Usage of 4135 kWh per household, per year. 1,000 household project.

4Kw Solar System with 50% of generation dedicated to battery capacity.

51.15% savings on electricity costs, and reduces monthly electricity costs from £96.48 to £45.91

probably the most suitable scenario presented for investors looking for a financial return

more than doubles the initial investment over a 20 year period

Of course, by working with Local Government and tapping into green asset markets, we’re aiming to ensure that the cost of finance is as low as possible.

Scenario 2
Servicing 2.5% interest over 12 years

This scenario would be the most suitable for a local government organisation or other “AAA” credit status public institution that is able to issue large Municipal Bonds of £250M, and provides savings of around 47.5%.

Annual Usage of 4135 kWh per household, per year. 1,000 household project.

4Kw Solar System with 50% of generation dedicated to battery capacity.

reduces monthly electricity costs from £96.48 to £49.67

What if ... ?

If – just if – we were able to, here are two scenarios where the finance cost is just 1% (which may potentially be achievable if voluntary carbon credits or government support were used to supplement finance costs).

Scenario 3
Servicing 1% over 5 years

This scenario is designed to illustrate a model where the costs of the project are paid off as soon as possible (with no savings over 5-6 years), while providing free energy for the remaining useful life of hardware.

Annual Usage of 4135 kWh per household, per year. 1,000 household project.

4Kw Solar System with 50% of generation dedicated to battery capacity.

no savings on electricity costs

Scenario 4
Servicing 1% over 24 years

This model uses lower installation costs due to assumed economies of scale (£500,000 rather than £1,000,000), and represents an upper limit to the savings (~70%) that are currently achievable with EFA.

By exploiting the gap between the market price of energy and the cost of energy using renewable technologies, EFA’s economically sensible offer can incentivise projects ranging from a small crowdfunding scenario to a central government backed infrastructure project.

How EFA Engagement Works

Because we’re taking a local approach to the global issue of climate change, we’re aiming to empower local people, government and businesses to claim a stake in the future, while ensuring everyone can benefit from the green transition.

The key ingredient for EFA to make any impact is our ability to work with people.  Considering the busy lives people lead, to get things done conveniently, we’ll be providing an app.

Because of the pressures of modern life, we know that it’s important to make it as easy as possible for you to bring the benefits of EFA to your community.

We’ve done all the complicated regulatory stuff, the financial-energy modelling and created a value chain that rewards everyone involved.

Now, we’re working towards making local energy as easy as a few clicks.

This webpage is for information purposes only and intends to illustrate (1) the results of calculations using Environmentally Friendly Alternatives Ltd.’s proprietary local energy subscription algorithms, and (2) the future direction of the EFA Cloud software platform and related services.  It is not a commitment to provide an investment product, deliver consumer savings, code, functionality or any features.

Calculations rendered using hardware pricing assumptions obtained by Environmentally Friendly Alternatives Ltd. through research conducted in March and April 2021.

All energy prices obtained from the following sources:

https://www.ofgem.gov.uk/publications/breakdown-dual-fuel-bill

https://www.ofgem.gov.uk/energy-data-and-research/data-portal/all-available-charts, chart data from ‘Breakdown of the default tariff price cap (GBP £, direct debit)’

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