Making my brain dance to a slightly different tune

 

I have those many different things running in parallel. I believe it is called ‘living’. I am trying to handle that complexity without inventing special metaphysics for that occasion, like ‘It is pointless to do X, I should entirely focus on Y and Z’. Over that half of a century that I have been in this world, I have come to appreciate the fact that my individual existence is truly a complex singularity. What is pointless is the denial of that fact.

Anyway, I keep nailing down two things: my business plan for the EneFin project, and my teaching programmes. As for the business plan, I made a big step forward in putting all its pieces together in my last update in French, namely « Deux cerveaux, légèrement différents l’un de l’autre ». Now, I am going to do something I like doing, i.e. reading backwards. A few years ago, I found out that reading backwards any text is really informative. You probably know that postulate of transformative grammar that each statement in language has at least two layers of meaning: the deep structure, which contains a lot of information, and which we almost never use in current communication, and the superficial structure, which we use in the verbal expression properly spoken, and which is a contracted and generalised version of the corresponding deep structure.

I found out that when I read a text backwards word by word, which goes like ‘like goes which word by word backwards text a read I when that out found I’, and the text is really complex, that inverted reading sort of peels off layers of meaning and allows to get more information out of that piece. I am going to do the same, just idea by idea, and not really word by word, with that summary of business plan that I introduced in « Deux cerveaux, légèrement différents l’un de l’autre ».

So, the last idea, put in the first place, is that in the market of FinTech utilities, supposed to facilitate the development of new businesses, three pricing strategies are available. Strategy #1 is that of relatively high commission levied on each transaction done at the corresponding FinTech platform, and that relatively high price would be around 5% of the value being transacted. Strategy #2 goes the completely opposite way and sets the transactional fee at a level comparable to that applied by typical brokerage houses in the stock market, like 0,4% ÷ 0,7%. Strategy #3 tries to go sort of the middle way and sets the transactional fee at a rate similar to that charged on a typical bank loan for SME (Small and Medium-Sized Enterprises), which is currently around 1,6% if you know the right bank for you.

There is a catch in this strategic choice. There is a general assumption regarding the connection between financial markets and real business: the latter has a definite need for capital, based on the value of the current output, and on the parameters of the Cobb-Douglas production function. In this specific case, it is the aggregate need for capital from the part of small, local investment projects in the field of renewable energies, in Europe. Those guys need a definite amount of capital, let’s call it K, conformingly to the tradition of economic sciences. That stream of capital generates a stream of financial fees on giving that capital a lift on its journey, and that stream of financial fees is the market, where FinTechs dwell.

Strategy #1 defines a market worth 5%*K, Strategy #2 drives it down to (0,4% ÷ 0,7%)*K, and Strategy #3 settles for 1,6%*K. You understand? For each strategy, I assume that my EneFin project would be one among many to use it and thus each strategy would define a financial market. If the majority of players goes for Strategy #2, the really aggressive, low-price one, any FinTech business with higher fees, like in Strategy #1 or #3, would almost automatically face a glass ceiling. On the other hand, if the first FinTech settlers in that market go for Strategy #1, at 5%, it leaves to the others a whole range of possibilities. The choice between those three strategies is not only numerical. It is a choice between various levels of aggressive competition, too.

Whatever the final choice, the reverted reading of my own ideas has proven fruitful. I found a hole, to stuff up with information. How much capital do new projects in renewable energies really need, in Europe, at the aggregate level? I start that estimation with the data I have, and then I will do some rummaging online. I will use the theoretical construct known as LCOE, or ‘Levellized Cost Of Energy’. With It being the capital invested in period t, and Mt standing for the cost of maintenance in period t, accompanied by the cost of fuel Ft in period t, the real output of energy Et allows calculating LCOE with the formula below:

LCOE

With renewables, fuel is for free, hence Ft = 0. The capital that suppliers of energy need for investing in the new capacity of new projects, and for maintaining them in good condition is equal to K = ∆Et*LCOE. Quarterly reports published by the European Commission allow estimating the typical LCOE, in the market of renewables, at some €0,06/kWh, with a descending trend. In like 5 years from now, we can expect LCOE being closer to €0,04/kWh. As for the ∆Et, my own estimates allow ranging it between 82 TWh and 107 TWh a year. As I convert the terawatt hours into kilowatt hours, and do the ∆Et*LCOE, it gives €4,94 billion ≤ K ≤ €6,42 billion a year.

This is my own educated guessing. Now, I go and ask IRENA, i.e. the International Renewable Energy Agency. It proves to be a good idea. I find something interesting. According to my own estimations, the output of renewables in Europe, in 2017, was around 3 670,45 TWh, which, in turn, allows guessing an underlying capacity of 3 670,45 TWh/ 8760 hours = 419 TW. In means that what I computed as capacity actually used makes like 82% of the capacity installed. As I run the same kind of check for 2015, I have the output of renewables at 3 423,5 TWh, which corresponds to a capacity of 390,8 TW, and IRENA provides 465,4 TW of capacity installed, for the same year 2015. Capacity used divided by capacity installed, in this case, gives like 84%.

It generally holds in the presence of two-sided, anti-bullshit test. Capacity installed is usually greater that the one actually used. The opposite is impossible, whilst equality between these two is hardly conceivable, and risky for the energy system as a whole. If I base my calculations of capital needed on the delta of capacity installed, I need to add that overhang of capacity left in reserve, yet financed. I target this one as a surplus of 20%. Consequently, my calculation of capital required morphs into €5,93 billion ≤ K ≤ €7,71 billion a year.

I apply my three alternative strategies to that fork of aggregates, and I get the numbers shown in Table 1 below. It is clearly more than what I computed in « Deux cerveaux, légèrement différents l’un de l’autre ». Given the logic underlying these two alternative calculations, I would rather go for the second one, i.e. that in Table 1. There are more empirical anchors in this second calculation. Still, this is the estimated need for capital in the whole European market of renewable energies. The financing scheme proposed in the EneFin concept suits most of all those relatively small, strongly local projects. Probably, they make just a fraction of those aggregates in Table 1.

Table 1

Estimated value of the market in financial services for the suppliers of renewable energies in Europe, € billions
From To
Strategy #1  296,31  385,46
Strategy #2  29,63  38,55
Strategy #3  94,82

 123,35

As I see and feel it, that business plan for the EneFin project still needs some ripening. I am letting it crystallize in my brain. Take your time, business plan. Take your time. Anyway, what really counts as my personal creation is what will remain in this world after I am dead. I am changing my topic. I turn towards teaching and the preparation of syllabuses for the next academic year. I am using this same occasion to write some educational takeaways for my website.

As it comes to teaching, I feel like shaking it off a bit. Each year, I have more and more teaching hours, at the university. In the academic year which has just ended, it was over 500. In the one to come, it is likely to go over 700. I want to reassess my goals and my values in that process. This is an interesting thing I discovered quite recently, as a matter of fact: casual tasks can be done acceptably well without putting much of myself in the doing of them, but a big, solid workload requires real emotional involvement, at least if I want to do it really well and not to burn myself out in the process.

So, here is the list of the main subjects I have in my schedule for the next academic year:

  • Management: I teach it in two different, Undegraduate majors, and in two languages. I teach that curriculum for the major of International Relations, in English, and for the major of Film & Media Management, in English as well. Besides, I teach in Polish the same subject for the same major of Film & Media, Polish track.
  • Business Planning/Innovation planning – teach it in Polish, in the 3rd year of Management major for undergraduates. This is supposed to be an integrative, advanced course, with little theory and a lot of practical work.
  • Microeconomics – in the English track, I teach it in the first year of International Relations’ major, Undergraduate, basically to the same students whom I work with in the course of management; I am going to teach similar curriculum in the Graduate major of Management, English track as well; in the Polish track, this is a complementary course for the 1st year of Information Technology undergraduates.
  • Economic Policy – I teach this curriculum in the English track, 3rd year undergraduate in the major of International Relations.
  • International Trade/ International Economic Relations – the slash I put in the name of this subject means that it consists, in fact, in two similar subjects I teach at two different levels, i.e. Undergraduate (International Trade) and Graduate (International Economic Relations), of the English track in the major of International Relations
  • Political Systems – English track, Graduate level, major Management

Good, so this is the inventory of what I do, and now my big question is: what do I really want to do in what I do? What do I want to achieve in terms of teaching outcome? What do I want my students to learn?

The first part of my answer is pretty simple: I want them to learn science as such, i.e. the scientific method, and I want them to become basically proficient in using that method for building their own social roles in an intelligent way. I want to train them at the sequence made of observation followed by hypothesising, which is further followed by empirical verification and communication of results. One of the big lessons you can learn, when practicing this sequence, is that it takes time and smart coordination of your own actions. Science, understood as a method of dealing smartly with that bloody mess we call reality, requires both creativity and rigour, and these two traits are the second major takeaway I want my students to have, in my classes.

This basic education goal comes from two plain observations. Firstly, there are things you can learn in a classroom, and those which you just can’t. Secondly, we are coexisting with an emergent form of intelligence, the digital one, and we need to adapt. Can you learn management in a classroom? Certainly not. Management is a craft and an art, in the first place, and only secondarily this is a science. As craft and art, management is, most of all, fierce inter-personal competition inside a complex social structure. Yes, there is ethical management. Yes, there is management for higher a purpose. Yes, you can imagine ethereal beings like that. Still, if you want to do any management at all, you have to stay in the game inside an organization, and in order to achieve that simple goal, you need to be efficiently competitive.

Can you learn international relations in a classroom? Once again, the answer is: hell no. If, one day, you try to put together a policy, a social action, or a business at the international scale, you can really learn what international relations are. If you can’t learn management in a classroom, and can’t learn international relations, what is the point of teaching them at a university? If you ask this question, you are bloody touching the essence of the thing, as I feel it. I named some of the things you can’t learn in a classroom, so what are the things you can?

In order to understand the learning you can have out of any situation, the essential thing is to understand what is happening in that situation. In a classroom, we are basically having a conversation in a semi-organized group. Semi-organized means there is a basic division of roles – I teach, students learn and take exams – but we have a lot of flexibility when it comes to ritualizing the whole situation. I can play the distant, cold, exigent bastard, or I can play the nice guy. Students can play the smart ones, the diligent ones, or can play fools.

If you have a semi-defined social role, both you and your social environment will push towards defining it completely. This is what we, humans, do: we shape our social structures so as to make social relations acceptably predictable. Thus, in a classroom, the most fundamental process of learning that takes place is the transition from semi-defined social roles to the fully defined ones. Students essentially learn how to make themselves into the social role they think their social environment expects them to endorse.

I remember one student, from the last Winter semester. He had that special style, combining Gothic elements, such as demon-looking, all black contact lenses, with a vaguely androgynous clothing and haircut. Apparently, a rebel. Still, it was nothing short of amazing to watch this alleged rebel in his virtually desperate efforts to find a role in the group, i.e. in relations with other students and with me. That guy was literally experimenting with himself, and tried to play a slightly different role at each of the 30 classes scheduled in the semester.

Thus, in a classroom, what we have in terms of the most fundamental teaching, is a partly controlled environment for training students in the definition of their own social roles. It is like: ‘Look, you can read this book, and you can use that reading to endorse various stances. You can play the dumb one, who doesn’t understand anything. You can play the diligent one, who wants to get extra points by writing an optional essay. You can play the smart guy, and challenge me in class on the grounds of that book. In short, you can learn how to use large parcels of theoretical knowledge in order to experiment with your own social identity’.

OK, enough writing in that update. I feel like switching, as it is my ritual, to French, once again, to make my brain dance to a slightly different linguistic tune.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?

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