The Blog - Das Model

"In the factory we make chemicals, in the shop we sell dreams".  That quote came from the CEO of a cosmetics company, I've long forgotten the origin, but the words have stayed with me.  The logic holds good for many businesses.  We don't buy energy, we use it to run our life, petrol gets us to and from work, electricity lets us see in the dark and gas cooks our food.  My grandparents memories went back to the late nineteenth century, there were some fond memories of horses but small regret for the passing of steam trains, as one former fireman said, there is no romance in raking out a firebox at 4 am on a winter's morning.  Both my mother and grandmother remember cleaning oil lamps, they hated "lamp black" and the mess it could make of your clothes if you were not careful.  Most of them had moved on to gas lighting by the time the Great War broke out.  This was an improvement, but the lamps still needed cleaning, albeit less frequently and someone had to light them.  By 1930, electricity had arrived and lights worked at the flick of a switch and the only maintainence required was changing a bulb every few weeks.  The cost of this convenience was a quarterly bill, but now you could leave the house and get a job to earn the money to pay it.  The women were the best sales people the power comanies ever had.

The typical inter-war home had few appliances, a vacuum cleaner, a radio, maybe an electric fire for occasional use, but it was lighting that most people associated with electricity.  This is reflected in the names of the companies such as "The Peacehaven Electric Light and Power Company" and "Hawes Electric Light Company".  These companies started small, initially they achieved growth by extending their distribution networks and adding more customers, then when most homes had light, growth came from an ever increasing number uses for electricity.  This is the global standard business model, businesses grow and make profits by increasing the amount of product sold.  The economy wants healthy, responsible companies which provide good jobs, pensions, tax revenue etc.. It is also concerned about security and the environmental impact of increasing energy consumption.  What is needed is a business model which provides employment, profits etc. which is based on selling less product.  It hard to imagine a CEO proposing to cut sales by 10% and the ones which achieve this objective usually get fired.

Let's not spoil a simple idea with detail.  I want to light my home at the lowest cost, I currently do this by buying electricity to make the light bulbs work.  My electricity company could say "we will light your home to an acceptable standard  for what you currently pay for electricity".  Now their profits are now based on using less energy.  I'm still getting my head around the economics of LED lighting, but the general idea seems to be that the capital costs are high, but the energy and operating are costs are low. My energy/lighting company now has the incentive to choose the most energy efficient technology, say, LED lamps.

The idea can be extended to the bizarre.  Maybe, commercial laundries are more efficient than domestic washing machines and tumble dryers.  Getting washing dry, can use more energy than evicting the dirt, thus a clothes line in the back garden is an investment in solar technology.  The man who used to come and read the meter could call to collect the dirty washing.  The eletricity company's glossy annual report which used have images of giant pylons striding across the hills delivering the energy from wind farms, now has pictures of underwear drying in the Sun.  It's amazing how well cheap red wine and a business school education go so well toegether.