When Your Excess Is Valuable—Just Not to You

Post 7: When Your Excess Is Valuable—Just Not to You

Not too long ago, I purchased a home that was equipped with Solar panels. It was a Tesla 12.8kW system that had an annual production of around 20,000 kWh at the time it was inspected at purchase.

When I consumed electricity, I paid normal rates. When the house produced excess electricity and exported it to the grid, the compensation could be tiny by comparison. The exact economics vary by utility, location and rate structure, but the observation was what interested me.

The excess was not idle. Someone was using it.

Yet the excess credited was much different than the excess produced. In both cases, there was excess capacity and excess demand simultaneously. Unfortunately, the power companies have found a way to exploit this. They simple charge more for excess demand than they credit for excess capacity. This is a highly regulated industry and shows the market driven solution to obvious excess on either side.

That is different from an unused screwdriver or empty warehouse. I call it value-stranded excess.

Used inefficiently may be more interesting than unused

Many excess opportunities require creating demand.

Value-stranded excess is different because demand may already exist. Supply exists. Infrastructure exists. The transaction exists.

The interesting question is why the value is allocated the way it is.

An originator may lack scale, storage, distribution, aggregation, information, timing flexibility, contractual rights, standardization, predictability or negotiating power.

Map the value, not just the waste

This suggests value leakage mapping.

Follow a resource through the economy. Who creates it? Who handles it? Who transforms it? Who ultimately consumes it? Where does its economic value increase dramatically? Who captures that increase?

A manufacturer may pay to dispose of a byproduct another company purchases as an input. A truck returns empty while another shipper pays for transportation. A business generates data incidentally while someone downstream aggregates similar data and sells expensive intelligence. A facility pays to remove heat while another process pays to create heat.

The opportunity may not be physically buying and reselling the resource.

It may be discovering where enormous amounts of value are already being created but captured somewhere other than where the underlying capability originates.