UGE Capstone Presentation FINAL
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This document summarizes a capstone presentation about scaling a microgrid business. It analyzes microgrid opportunities in four locations - the Philippines, South Africa, New Jersey, and New York. For each location, it discusses key value drivers like value of lost load, levelized cost of energy, identity, and financeability. Based on the analysis, it recommends the company consider microgrid projects in the Philippines, New Jersey, and New York due to factors like high value of lost load and energy costs. It says projects in South Africa may also be feasible. The presentation concludes that no single solution fits all and microgrid projects must be tailored to individual client needs with stakeholder engagement.
UGE Capstone Presentation FINAL
- 1. Capstone Presentation Heather Bain, Pat Eaton, Kim Heismann, Tim Woodcock Josh Rogol / David Droz: Team Advisors July 1, 2015
- 2. Capstone Objective UGE: How do we scale our Microgrid business? Target Market: Commercial & Industrial Small-Medium Size Enterprises
- 3. UGE’s Microgrid Solution Microgrids: • Ability to “island” (operate off-grid)
- 4. Problem “How do customers value Microgrids and what are they willing to pay for them?” Chris Cavanagh, National Grid at New York Energy Week 2015
- 5. Methodology 1. • Explored Microgrid opportunities within geographies: • Philippines, South Africa, New Jersey, New York 2. • Designed system of four value drivers for analysis 3. • Conducted primary and secondary research to reach conclusions and recommendations VoLL Identity Finance ability LCoE
- 6. Value Driver #1: Value of Lost Load (VoLL) Elements: • Wages (Direct) • Lost Product • Lost Revenues • Lost Operating Capital • Customer Frustration • Management Frustration • Liability Issues Lower and Upper Bound VoLLs in Texas by Electric Reliability Council of Texas (ERCOT) Definition: the perceived value of uninterruptible power Loss ($/kW) = ƒ (duration, season, time of day, notice)
- 7. Elements: • TOU/Curtailment: DR • Gov't Program : Grants • Value of Upgrade: Real Estate Value, Building Performance • Grid Revenue • kWh comparison to diesel/grid Definition: (CAPEX + OPEX) / Energy Value Driver #2: Levelized Cost of Energy (LCoE)
- 8. Value Driver #3: Identity Elements: • Green • Cultural Acceptance • Energy Independence • Smart / Tech • Resilient / Reliable • No Noise, Comfort Factor, Health Definition: the value of reputation and brand identity resulting from Microgrid adoption Hilton Ft. Lauderdale Beach Resort distinguished itself as the destination for green lodging and events
- 9. Value Driver #4: Financeability Nation / Region • National Credit • National PPP • Political Risk • Utility Regulations • Grants / Subsidies Customer • Cash • Credit • Underwriter • Government Program • Cost Savings Asset Characteristics • Warranty • Performance Guarantee • Insurance • Standardized Contract • Secondary Market Definition: access to financing Elements:
- 10. Philippines Factors to Consider • High Cost of Electricity • Risk of Power Outages • Government Incentives for Renewables • Plentiful Solar and Wind Resources Promising Industries • Hospitals • Universities • Resorts (Many others: data centers, call centers, supermarkets, OEMs, manufacturing, etc.) VoLL Identity Finance ability LCoE Hospitals Universities Resorts
- 11. South Africa: • VoLL: High VoLL with “Load-Shedding”. • IEA: 200k mini-grids by 2040 • LCoE: Modest kWh and kW rates, 12%+/yr. • Government Commitments: 6.4GW by 2020 • Identity: A handful of target regions (Cape Town, REP) • Wineries, Commercial, Light Manufacturing, Restaurants, Hospitals, Retail, etc. • Financebility: Poor Sovereign Credit, Variable Client Risk • International Customers or Fund Support, i.e. • Competition: • Partners?: VoLL Identity Finance ability LCoE
- 12. United States • Aging US Power Grid Blacks Out More Than Any Other Developed Nation (DoE/NERC) • Loses power 285% more often than in 1984 • Costs American businesses $150 billion per year • US Microgrid Capacity Will More Than Double by 2020— and Include a lot More Renewables (Greentech Media) • Commercial & Industrial will lead growth, with 40% in 2020 • Renewables from 6% today to 23% in 2020
- 13. New Jersey VoLL • Hurricane Sandy cost businesses in NJ $30B LCoE • Average cost of electricity: Medium/High • Demand charge: High Identity • Market acceptance, but other factors more important than “green” Financeability • Highly developed standards • BPU energy storage program, ERB • NJ PACE coming online for 2016 VoLL Identity Finance ability LCoE
- 14. New York Progressive Energy Vision • REV, RPS, Emphasis on Resilience LCoE • Extremely High kWh Rates and kW Charges VoLL • Sandy, Irene, 2003 blackout. Identity • New Yorkers Prefer Green Financeability • Federal Funding – HUD, RISE: NYC, DoE • State Level – Green Bank; NYSERDA, NY Prize • Utilities - ConEd DMP and BQDM Promising Industries • Critical Infrastructure • Universities/Colleges, Libraries, Business Parks, Factories, Big-Chain Supermarkets VoLL Identity Finance ability LCoE NYC Mid-Hudson Long Island
- 15. Recommendations Should UGE consider Microgrid projects in these locations? • Philippines: Yes – Very high VoLL and LCoE. Focus on well-funded private employers in industries most vulnerable to unreliable grid and high cost of electricity • South Africa: Maybe – Rates increasing, but still low. Extremely high VoLL. Launch now in Cape Town if feasible, future rate climate is promising • New Jersey: Yes – High VoLL and LCoE. Leverage demand charge management, frequency regulation and SRECs • New York: Yes – High VoLL and LCoE. Abundant financing mechanisms. Leverage Public/Private Partnerships to deploy at scale. No “one-size-fits-all solution” - Microgrid projects must be tailored to individual clients’ needs Stakeholder engagement and relationships are essential
- 16. “Energy is Local” Josh Rogol - Thought Leader