Reply To: Questions regarding DPF.

[Warwick]

Kyle wrote: Greetings FFS! 🙂 I have been following the dpf approach, and in particular the LPP project, for several months and have appreciated this community and the quality of thought and effort that so many of you have put into advancing and clarifying our understanding of the physics and engineering for this solution. Anyway, it is my pleasure to be here and I look forward to meeting you.

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What finally prompted me to register and comment was the thread in this forum entitled “List of Billionaires and informational packet.” I had some thoughts and two questions.

It seems that the conversation did not consider using the not-for-profit approach to the project fundraising: only the for-profit micro-fundraising and “anchor” investor approaches. Is there a reason that the non-profit approach is not considered?

Part of what I find so very attractive to the DPF project is the relatively small monies required for the proof of concept (not to mention the eventual production environment). I am confident that a non-profit micro-contributor approach could, through several low-to-no cost marketing approaches, raise these monies for the non-profit and the non-profit could, through a grant process, help fund the LPP proof of concept.

Greetings Kyle, you are very welcome.

I’ll be honest and say that I did not fully understand what it is you are suggesting.
My understanding was that LPP didn’t need any more cash to finance proof of concept but now it’s not clear for me? Rezwan?
I’m a bit confused as to whether what you have in mind, Kyle, is literally non-profit (as in, zero profit) or actually altruistic (net donations)??
My immediate reaction is, yes, 6 or 7 figures is the most anyone could probably raise on a “free loan for the good of humanity” basis. But if it’s for proof-of-concept, they might never see the money again, so I think it would run into the same problems as trying to issue for-profit debt.

How much investment (in total) would be needed for manufacture of FF units to replace the world’s current energy consumption (however this would be used)? Well, back of an envelope …. World consumption rate is 1.5 x 10^13 Watts (according to wikipedia).
At 5 x 10^6 W per unit, that means 3 x 10^6 units and at a cost (we’ll ignore any markup that would represent an extra need of credit to the consumer) of $200000 per unit, that makes $6 x 10^11 (unless I made a mistake, I’m not very good at arithmetic). Or, in American trillions, about $0.6 trillion or $600 billion. In context, world GDP is $60+ trillion.
Fortunately it’s possible for people to borrow against future income (if they have any) to buy their shiny FF units sooner … as long as all that credit is available.

So I think 3 things.

1. A lot comes down to a question I have wondered for a while – of the predicted $200k cost per unit, what is marginal cost and what is the overhead of setting up a facility (whoever it is that does it, whether LPP or a third-party)?How can funds for building facilities be raised?
LPP itself going public, in the traditional sense, would be madness for sure. The big boys will snap it up in an instant. I guess it could be good for the developers – they’ll be sailing private yachts for the rest of their lives, as opposed to being found in a field, which is what always might happen if you successfully rock the big boys’ boat. But in 10 years some filmmaker will make a documentary called “Who killed Focus Fusion?” and that will be all that ever happened.
I understand that preference shares are not a great solution in that the financial situation is there the same as with bonds, according to wikipedia. Never knew that before.
Brealey and Myers “Principles of Corporate Finance” book* gives a list (p.934) of defenses against hostile takeover. The most well-known is the “poison pill”. For this it says “Existing shareholders are issued rights which, if there is a significant purchase of shares by a bidder, can be used to purchase additional stock in the company at a bargain price”. It’s not immediately clear whether that might work. Imagine a big utility comes along intent on paying whatever it takes to snuff you out. Will the existing shareholders really be able to beat it even at bargain rates? Probably not. Maybe if a big purchase of shares triggered automatic free distribution of shares to existing shareholders it might work. “Cyanide pill”.

2. Who will the customers be? It seems fairly obvious from the above simple arithmetic that it wouldn’t be that sensible for LPP, or the manufacturer, to own the units themselves and sell electricity. (Am I right? What say?)
So as customers for the units, I think non-profit firms is a likely answer. Sure there will be some industrial consumers that are one big for-profit entity – no problem there. But residentially?
I can certainly imagine a network of cooperatives, each owning and operating one or two units, each independent and owned by the consumer-members. I guess there would be between 1,000 and 2,000 members per co-op and this means a joining fee of $200 – not inconceivable at all that someone would pay that in exchange for no electric bills.
This would be amongst the most democratic forms of power plant ownership.
By contrast, big capital has other avenues. Plant that already exists will not be rendered worthless, not unless and until the price of electricity were to crash. Marginal costs at most large power plants are very small; you could say that due to government subsidies (in the UK anyway), marginal costs at fission plants are in effect negative.