Posting in Energy
A California start-up betting that many more homes will install microgrids (and solar power) if they don't have to make difficult choices to buy and finance the conversion. It handles the logistics and bills customers per kilowatt hour.
Pay the electric bill, and your lights stay on. An energy start-up believes that the surest way to gain customers (and convert them to renewable energy) is simply to replace the power company.
Gen110 serves as an energy concierge for Californians. The company handles the provisioning of equipment and financing for home microgrids, and then bills the customer for their electric use. Electricity is generated at home and rates are guaranteed lower than the local utility, because it pre-qualifies its customers, said CEO Jason Brown.
"Our main goal is protecting customers from transmission and distribution rate hikes. Heavy [electricity] users get hit more," Brown said. Californians are bearing the cost of maintaining the power grid, and a transmission "tax" is raising household energy expenses more so than the cost of generating power, he added.
Microgrids function in much the same as a traditional power grid, and are normally connected to it. The major difference is that a microgrid can function autonomously if the regional grid goes down. A Gen110 customer can always go fully back onto the grid when necessary. Gen110's current microgrid configurations leverage solar power, but it is also examining natural gas fuel cells.
Its partners include Petersen-Dean Roofing, and Sunrun. There are currently over 2,000 customers buying over 10 megawatts of power, and the average customer will save US$50,000 over 20 years, Brown noted. Gen110 is financed by angel investors, but will announce another round soon.
The financing will help pay for its sales force, which engaging in personal selling with prospects. "The consumer is a barrier to [microgrid] adoption. There's a ‘just pay it syndrome'; people don't know what they pay for kilowatt-hour of electricity," Brown said.
"People know cheapest gas in neighborhood, but are oblivious to rate hikes. You can't underestimate consumer behavior as a key barrier to adoption. New technology is scary, and there's confusing financing options. It's obvious why only 150,000 homes with distributed generation systems despite being economically attractive for 1 million homes or more."
Related on SmartPlanet:
- Autonomous microgrid power trend accelerates
- Chevron turns a mega jail into a microgrid
- More campuses invest in off the grid power options
May 14, 2012
Awesome! Immense information there. http://www.wisconsinhouseinsurance.com
If you compare the hard numbers, many homeowners will spend exactly what they would to purchase a system by enrolling in a program like this. That is because companies like Gen110 will keep consumer costs down because they get the rebate for purchasing the system. Second, all maintenance and monitoring is included for 15 to 20 years. The reason why these companies can provide this service at the same cost to the homeowner is the classic bulk-buying principle. Distributed energy companies are able to purchase many PV system at a bulk cost price, unlike a homeowner. The result is providing a service that is the same cost as purchasing a system, without the added responsibility of monitoring your system's output, hiring maintenance crews, or replacing inverters over time. Additionally, a distributed electricity company would have no incentive to keep a PV system after the term of a homeowner's agreement. Many of them anticipate handing over ownership to the homeowner, which is an extra advantage because many of the systems will last way longer than 20 years. This is simply the logical progression of this technology. 20 years ago, people would purchase their own satellite dishes for $10,000. Now, nobody does that. Instead, Dish Network provides the service at a way lower price.
It's not clear to me how this is better than financing a loan to install your own solar cells which you own. If you own the solar cells you get all the tax credits, and there are many local, state, and national programs to subsidize the actual loan by doing such things as providing a lower interest rate. You also get the same lower costs for transmission and distribution that Gen110 claims. If you allow Gen110 to put their solar cells on your roof, do you get to charge Gen110 rent? And if Gen110 has to make a profit, how is that cheaper in the long run than doing it all yourself and essentially pocketing what would be profit to Gen110? Also, if the average customer saves $50,000 over 20 years, that's $2500 per year. In the example bill shown for November/December 2011 the total was $239. This is a winter bill, so summer will be much higher, but even so the solar cells would have to provide 100% of winter power and a big chunk of summer power to save the $2500. Here in Colorado, the average annual electric bill is around $800. From the provided bills, it looks like California's baseline rates are about the same. The difference is in the tiered rates, which reach up to 33 cents per KWH. Colorado just put in tiered rates, but these are only in effect during the three summer months. The California rates are obviously punitive and several times the actual cost of production. Apparently the only way solar cells make a lot of sense is in environments such as California's where the rates are way above the actual cost. In effect these artificially high rates are an indirect subsidy to companies such as Gen110, and once again you might as well take advantage of that subsidy yourself if you can by installing your own solar cells.