Brightergy is looking to become a distributed generation utility, combining microturbines and solar with the help of Black & Veatch and an exclusive microturbine license from Capstone Turbines.
“The multifaceted B&V alliance is for developing $100 million in commercial solar over the next three years,” explained Brightergy CEO Adam Blake. “But it is not limited to solar. It is for distributed generation and can include the Capstone microturbines [for which] we were awarded the exclusive Kansas and Missouri license."
B&V will act as EPC in the initial $3.2 million solar build in Kansas City, home to B&V’s global headquarters. That will consist of 70 commercial-industrial projects totaling about 2 megawatts. Blake expects B&V to also act as EPC for Capstone microturbine installations.
Brightergy is adding the natural gas- or biogas-powered microturbines because, Blake said, “We are an energy company, not a solar company. Like solar, microturbines are a source of distributed generation.”
Specifics of the $100 million B&V alliance are not public but, according to Blake, it will mean a big expansion in the third-party ownership (TPO) financing model that, through leases and power purchase agreements, build DG without upfront or ownership costs to the consumer. In addition, he said, “Our intention is to create a financial product around the microturbine technology similar to the solar product.”
“What attracted Black & Veatch was our sales platform,” Blake explained. “We intend to leverage their reputation and engineering expertise. And their client base with C&I customers represents a huge lead-generation resource.”
The alliance validates solar’s increasing reach. Through it, Black & Veatch will “further expand its portfolio of distributed generation services,” explained President/CEO Dean Oskvig.
Solar’s popularity also attracted Capstone. “Their extensive customer base and experience in the distributed energy market,” said Capstone Marketing and Sales VP Jim Crouse, “will kick-start the deployment of microturbines in Kansas and Missouri.”
A microturbine is “the size of a refrigerator,” Blake explained. Unlike solar, it requires the added expense of fuel from low-pressure natural gas, which is available in most homes and buildings for space or hot water heating. Microturbines generate electricity and in the process create waste heat that can be captured to further offset energy consumption.
The B&V alliance will add to the Brightergy capital resources. To date, it has done some $50 million in TPO solar deals with capital from a bank which Blake declined to name, as well as the Brightergy balance sheet and cash leveraged from 1603 Treasury Grants.
The microturbine TPO contracts may be “the first scalable commercial offering” for the company, according to Blake. They will differ from solar agreements, with the the biggest difference being the variable price of natural gas. Brightergy will offer a five-year price guarantee in place of solar’s twenty-year fixed price. “Local gas companies already offer five-year contracts,” Blake said.
Eventually, Blake intends to offer seven-, ten-, and fifteen-year options. “The Capstone microturbine has a nine-year warranty. But to go beyond a five-year contract, we will have to hedge gas prices. That will increase the guaranteed electricity price, though the forward price curve for natural gas is not very steep.” Initially, Blake said, Brightergy will outsource its hedging to traders, but may bring that in-house as its volume and experience grows.
“The payback for microturbines depends on two factors,” Blake said. “Like solar, the price of electricity is a major factor. There is no price per watt for microturbines because of variables. Two important ones are the facility’s natural gas consumption and how the waste heat is used.”
A building using electricity 24/7, like a hotel, hospital, or data center, will get a bigger, faster return than will a commercial business that closes up shop on nights and weekends.
“The small, 30-kilowatt Capstone product costs in the $50,000 range,” Blake said. “A multi-megawatt turbine can be $3 million and up.”
Three Capstone microturbines at the Philadelphia Four Seasons Hotel cost $1.1 million (installed) in 2009, according to the company. They generate 200 kilowatts, satisfying 30 percent of the hotel’s demand for electricity. The captured waste heat meets all of the hotel’s hot water needs and 15 percent of its heating needs.
Though Brightergy has yet to do a combined solar-microturbine installation, Blake intends to eventually provide a combination TPO financing product.
Storage is still too expensive for the combo installation to allow customers to go off-grid, Blake acknowledged, “but we are becoming a distributed utility.”
Missouri’s two IOUs have reacted differently to DG. Ameren, in St. Louis, has caused no problems, Blake said. Solar installers in the Kansas City Power & Light territory have, however, reported delays with interconnections and rebates. “Utilities are going to hate this as much as they hate distributed solar,” Blake said.
TPO financing through PPAs and leases is not widely established in the Midwest, but Blake is confident Missouri case law does not interfere with such contracts. He is aware utilities may challenge them. “But," he asked, “do utilities want to be aggressive in attacking distributed generation?”