Making Green Energy Profitable: The Boom In Distributed Renewable EnergyA Story by hazelcherry015Capital Crown Eco Management Renewable Energy Fraud WatchCapital
Crown Eco Management Renewable Energy Fraud Watch This is a guest post written by Nick Blitterswyk, founder and
CEO of Urban Green Energy (UGE). The distributed renewable energy (DRE) industry has gone
through significant changes in the last five years, as the industry grew from a
cottage industry to one with worldwide revenues of $100 billion and
rising. The market has come back down to
earth from the highs of 2005 to 2009, when investors’ bets on technology
companies and manufacturers went sour as supply outstripped demand. As the latter continued to grow, profitable
business models and clear leaders have emerged, and along have come
opportunities. Successful IPO’s have countered a lackluster clean tech
investment environment, showing that there is success to be had for companies
with a winning formula. SolarCity is one
stellar example: they took a pretty simple piece of technology, rooftop solar
panels, and became the leading solar installer in the U.S. by revolutionizing
the financial vehicles that allow customers to receive a system with no money
down, at less cost than their current electricity rate, and without having to
go through all the paperwork necessary to monetize government incentives. Financing provided by SolarCity is much more
than a revenue growth accelerator, it’s at the core of the business model
itself. By focusing only on states that
offer adequate government incentives, a relatively small market when compared
to the global potential of clean tech, SolarCity has seen its sales, and stock,
succeed. Shares in SolarCity are up more
than 200% since their IPO in late-2012.
Delving beyond their annual revenues, SolarCity has surpassed $1 billion
in solar energy systems deployed last year. At the opposite end of the spectrum we see companies with a
strong technology background that failed to figure out an adequate business
model. Take Southwest Windpower, a
GE-backed distributed wind turbine manufacturer, once tipped to be the next big
thing in renewable energy. While their
technology was second to none, their focus on wind turbine supply, rather than
on solving their customers’ problems, led to disappointing growth. Another example is solar manufacturer SunTech, which recently
defaulted on its debt obligations.
SunTech’s management focused exclusively on their product, pushing to
lower costs and finding itself engaged in a battle with competitors that
ultimately eroded profit margins.
Throughout the renewable energy world, several manufacturers have made
the mistake of waiting for customers, a fatal decision in the face of
commoditization and over-supplied markets. Companies like New York-based UGE merge technology with a
customer-focused business model. In
order to reach scale, UGE focuses on specific market opportunities by looking
for technological challenges and high barriers to entry. A specific example are telecom towers in
developing countries, where users are most in need of cheaper and more secure
energy. We oft hear of the penetration rate of cell phones in
emerging markets, but what we don’t hear about is the enormous challenge
involved in powering the towers that support those phones in countries where
the grid is unreliable and, in many places, unavailable. In many cases, these towers are powered by diesel
at a very high cost. UGE has taken a
leadership position in powering towers with its technology, using off-grid wind
turbines and solar energy storage. Clients include Carlos Slim’s America Movil;
while most of these sites are in developing countries, the company also works
with Verizon in the U.S. for some of its
remote sites. UGE’s technology goes beyond remote telecommunication
sites. The same hybrid technology
platform that delivers cost savings to telecom companies is also being used by
multinationals such as Hilton and BMW to lower costs and become more
sustainable. Similarly, with financial
firms like TD and Citibank vying for the title of “greenest” bank, wind
turbines and solar energy storage systems are being used to protect bank
branches against power outages with the added benefit of assisting their
sustainability efforts. UGE has achieved
this by matching its technology to its business model, designing products like
the Sanya Skypump EV charging station jointly with GE. Altogether, DRE can no longer be looked at as a small industry. Counting with greater energy choices is sure
to create ripples that will alter the way utilities like Consolidated Edison
and Duke Energy operate. With onsite
energy, companies are now able to choose where their energy comes from, and by
incorporating onsite storage those same companies can choose when to draw that
energy as well. Certainly some
forward-looking energy companies, such as Total
and NRG Energy, have jumped at the chance to expand their business and
have invested in or purchased companies operating in the space. Though the dust has started to settle and the
winners of the clean tech boom that ended the last decade are becoming visible,
the effects of increased usage of renewable energy on a distributed scale will
play out with more significant results in the years to come. Original article: Related article: © 2013 hazelcherry015 |
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Added on June 12, 2013 Last Updated on June 12, 2013 Tags: Capital Crown Eco Management Ren |