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Clean Power Startups Aim to Break Monopoly of U.S. Utility Giants

A small band of upstarts is quietly trying to innovate their way into a 100-year-old energy market dominated by utilities and fossil fuels. Can it work?

Dec 12, 2012
(Page 2 of 3 )
Solar installation

Green claims Georgia Power wouldn't lose out, because the grid access fees Georgia Solar would pay would make up for the loss of ratepayers. He anticipates Georgia Power will take legal action if the State Legislature amends the law and PSC okays its bid to become a utility.

The Georgia Power spokesperson wouldn't speculate on what action it might take.

If Georgia Solar can proceed, the new utility would target 2,000 megawatts of solar power by 2016, nearly 10 times the amount of solar electricity Georgia Power plans to purchase over the next few years.

Green believes he and other solar entrepreneurs will eventually get their day in the sun. Solar is the fastest-growing power generation source in the United States, and in sunny Georgia it's still only less than one-tenth of one percent of the energy mix.

"How do you beat down a technology when it's being used all over the world except in your little fiefdom?" Green said.

Colo., Calif. Firms Blaze New Paths

In Colorado, a similar push is already making progress.

This summer, one-year-old PanTerra Energy became the first company in Colorado—and one of just a few nationwide—to be registered as a geothermal utility.

Now it's working to present the state's public utilities commission with a plan to sell geothermal heating and cooling directly to commercial and public building owners.

Geothermal heat pump systems take advantage of Earth's stable ground temperatures, which range from 45 to 75 degrees Fahrenheit. The pumps use long metal pipes filled with a water-based liquid. In the winter, the fluid absorbs underground heat and transfers it through pipes to a pump in the basement, which circulates warm air throughout the building. In the summer, it works in reverse: The liquid absorbs heat in the building and pipes it underground so the Earth can cool it. The cooled liquid is then circulated back into the structure.

The pumps use up to 70 percent less electricity than conventional boilers and air conditioners. Customers typically cover the upfront costs of the system within five to 10 years from savings on utility bills. Still, many potential customers like school districts, municipalities and prison systems don't have the cash to buy and install the equipment.

For such customers, PanTerra is proposing to own, install and operate the pumps and charge them for the heating and cooling and to lease the equipment. To do so it had to become a utility.

The big utilities have shown little interest in small-scale geothermal, according to John Kelly, operations manager for the Geothermal Exchange Organization, the industry's main trade association.

"That gives PanTerra an advantage" and "a very large market" to target.

California-based Gen110 is also trying to break the traditional utility business model, but by convincing more homeowners and businesses to generate their own solar electricity using distributed generation, or DG.

DG is any small-scale system that generates electricity on-site usually via rooftop solar panels. Unlike a centralized power plant model—which emits electricity in one direction from power plants through transmission lines to local distribution lines—solar panels work in two directions. When the sun shines the panels send power to the grid; at night or on cloudy days they take in electricity. If connected to battery back-ups, the systems can store excess power and keep the lights on when the grid goes down.

Last year, the United States installed more than 60,000 residential and commercial solar systems, almost all on rooftops.

California-based Gen110 wants to increase that amount by trying to appeal to people's pocketbooks, according to Jason Brown, the 34-year-old CEO and co-founder of Gen110. He said homes and businesses can save up to thousands of dollars each year by generating electricity locally, because it eliminates most of the transmission and distribution fees utilities charge to deliver power from power plants.

Gen110 mines voluminous amounts of data on energy usage so it can spot the people who could gain the most financially from putting solar panels on their roofs—typically those who consume lots of energy or pay exceptionally high utility rates. Brown declined to say what type of data the Gen110 team uses or where they get it.

So far, the startup has partnered primarily with SunRun, a leading San Francisco solar leaser and installer. Armed with data, Gen110's 70-person team meets face-to-face with potential customers to explain how SunRun's financing plan works. People who sign up pay two bills: one to their utility and one to SunRun. Brown says the sum of the two bills is always less than their previous utility bill.

Gen110 so far has helped distribute solar electricity to 2,400 households across California.

Its goal? "One day, every home in America will have onsite power," Brown said.

Can Small Players Ever Compete?

All these efforts are still small potatoes compared to what U.S. utilities handle—more than 1 million megawatts in electrical capacity, mostly from about 1,400 coal plants and 5,500 natural gas plants.

Will smaller renewable companies ever be able to compete?

Experts told InsideClimate News the answer is yes because of falling costs of clean energy and growing interest in renewables from investors, businesses and homeowners.

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