IT is poised to revolutionize the energy industry by ceding control of consumption and generation to consumers and lead to an “age of empowerment”, an influential figure in the wholesale power sector said yesterday.
David Crane, the outspoken CEO of NRG Energy, told the Cleantech Forum in San Francisco: “We’ve come a long way from the days of the legendary Henry Ford and his comment that the American consumer can have any color of model T as long as it’s black.
“Today, personal energy consumption is a one-way street – cash flows out of the pocket of the American consumer and into the accounts of big energy companies. But we’re on the brink of an age where the average american can be a seller of smart clean energy as well as a customer.
“Leaders of the [conventional] power industry believe that the rate-based, state-regulated, vertically integrated stifling utility business model that was first established during the Henry Ford era is going to persist as the dominant delivery paradigm of the 21st century.
“It’s a business model that’s based on converting fossil fuels into electricity that were first commercialized in the 18th century. If we think of the 18th century as the age of enlightenment my view is that the 21st century will become known as the age of empowerment.”
NRG Energy, based in Princeton, New Jersey, has a diverse portfolio of 26,000MW generation capacity, but has invested $1 billion worth of equity into utility scale solar projects.
Putting Money Where Its Mouth Is
“That private equity translates into a $6.5 billion investment in solar projects under construction or various stages of production,” he said.
In October 2010, NRG Solar invested up to $300 million to become the lead investor in BrightSource’s Ivanpah project.
The project was also awarded $1.6 billion in loans guaranteed by the US Department of Energy’s Loan Programs Office.
BrightSource is slated to go public the second week of April. Crane declined to comment on the forthcoming BrightSource IPO after his keynote speech.
But Sheeraz Haji, the chief executive of the Cleantech Group, said its mid-point valuation of $1.04 billion would be a welcome bright spot for the solar industry.
Several Public Offerings On The Horizon
Last year was a tough year for IPOs, but there were early signs of a recovery, he said.
Two companies backed by Silicon Valley venture fund Kleiner Perkins Caulfield Byers are set to go public in the next week. Coal-bed methane specialist Luca Technologies, aims to raise $102 million, and micro-inverter company, Enphase Energy aims to raise up to $87 million.
Solar thermal specialists BrightSource aims to raise $1.04 billion at IPO, and municipal waste to biofuels company Enerkem hopes to raise $137.8 million in the second week of April.
Venture Capital firm VantagePoint, which owns 19% equity in BrightSource, is in the middle of raising another fund, Haji said.
“$1 billion is a big enough number that I think it would be very positive if it gets done at the mid-point or better. The venture world is hungry for exits and this will be something with bragging rights.”
Figures for 2012 so far hinted at relative improvements for VC investments in cleantech, he added. January and February this year saw a total of $1.52 billion invested compared with $1.4 billion invested in the same period last year.
Crane said that NRG had entered into a venture fund with ConocoPhillips and GE, with a focus on the solar industry.
“We saw so much more coming down the innovation pipeline in solar relative to wind, we said solar is going to progress a lot further. It’s influenced our strategy a lot.”
Disruptive Technologies Set to Transform Lives
But he said that despite NRG Energy’s large investments in utility-scale solar, distributed generation would transform the lives of ordinary Americans. In combination, solar, plug in electric vehicles and smart meters will “individually and collectively transform people’s perception and cause disruptive change.”
“When a smart meter is installed with a solar array on your roof and electric car charger in your garage then the economics of smart meter technology and the capabilities will become compelling to the consumer.
“The ultimate potency of smart meters and disruptive technologies is in the deployment and association with other disruptive technologies.”
He said that the clean energy industry needed to do a better job of marketing itself to consumers so that the average American could understand the “extraordinary opportunity” offered by new energy technologies.
“If one EV car goes bad and it’s suddenly it’s a failed engineering project,” he said. “We’re being out-marketed and that’s crazy.
“EV is the single greatest hope our industry has in terms of increased demand for our product. The Edison Institute should be leading the marketing of the electric car.”
Last week, NRG Energy agreed to a $125 million settlement with the Californian administration to fund a statewide network of electric car charging stations. NRG’s partner Dynergy was accused of overcharging for power during the state’s 2001 energy crisis.
NRG’s eVgo service has been met with good success so far in Houston, Texas, where 80% of the purchasers of electric vehicles had signed up to use the charging stations, he said.
“The one disappointment which I lay at the door of the financiers is what you see [with] solar companies working with financiers to come up with ways to securitize solar panels. I would have thought that by now we would have seen rolled out in the EV space ways of separating the acquisition of the battery from the car.
“That’s the biggest disappointment in the EV world is that we’re not seeing innovative financing that brings the sticker price down.”
