Smarter Energy: Zero-Down Financing For Intelligent Power Storage

For commercial, industrial and municipal power consumers, intelligent energy storage, coupled with demand response, is emerging as an economically viable means of realizing gains in energy efficiency and paring down electric utility bills. That, in turn, may have much broader social and environmental ramifications and positive outcomes, spurring smart grid development and more widespread adoption of distributed solar, other forms of renewable energy generation and electric vehicles (EVs). And that could well lead to realizing big reductions in carbon and greenhouse gas emissions, as well as other pollutants that result from generating electricity by burning fossil fuels.

An initial group of intelligent energy storage-demand response startups is beginning to make some waves in the U.S. power industry. Nurtured by federal funds and private-sector venture capital, they are now being given a boost by state government initiatives such as California's AB 2514, “Procurement Targets for Viable and Cost-Effective Energy Storage Systems.”

Intelligent energy storage startups, such as Green Charge Networks (GCN), are also taking a page out of the residential solar playbook. Last week, independent equipment finance and asset management company TIP Capital and GCN announced the creation of the first fund of its kind: a $10 million TIE fund that will enable GCN to offer its commercial, industrial and municipal customers zero-money down financing to deploy its GreenStation smart energy storage-demand response and reduction platform.

Creative financing for power efficiency projects

Founded in 2009 with $12 million in grant funding from the Department of Energy (DOE) via the American Recovery & Reinvestment Act (ARRA), Santa Clara, Calif.-based GCN has been moving quickly from bleeding to leading edge.

With more than three years of real-world data and field testing under its belt, the Santa Clara-based power, as opposed to energy, efficiency specialist is ready to scale up commercially, GCN founder and CEO Vic Shao recently told Triple Pundit in an interview. Having signed 1.5 megawatts (MW) worth of Power Efficiency Agreements (PEAs) with customers, Shao and his team have their sights set on raising that to 5 MW by year-end.

An energy efficiency financing pioneer, Bloomfield Hills, Mich.-based TIP Capital has been providing creative, cash flow-positive financing for a variety of energy efficiency projects – EV fleets, building lighting and others – across a growing range of commercial, industrial and municipal customers. Company management sees enough in GCN's early track record to commit $10 million to establish a fund dedicated to providing a zero-dollars-down smart energy storage financing option for new commercial, industrial and municipal GCN customers.

As TIP Capital's VP of National Accounts Ross Reida was quoted:

“With Green Charge Networks’ savings track record for their customers and pipeline of deals, TIP Capital is excited to be partnered with GCN. Our flexible programs will allow GCN’s customers to pay $0 down, provide energy savings above what they pay, and protect against rising demand charges.”

Added GCN CFO Brian Asparro:

“For buildings to be more power efficient and to optimize the potential for environment benefits, intelligent energy storage must be financially affordable and accessible for business owners. Commercial buildings account for 18% of US CO2 emissions. Through GCN’s GreenStation, building owners can save 15% or more on their electric bills.”

Distributed energy: Cleaner, greener and more affordable

GCN is one of a pioneering set of aspiring U.S. power industry players focused on intelligent energy storage and demand response as a means of forging a cleaner, greener U.S. energy infrastructure for this and generations to come.

GE Ventures and Spain's Iberdrola were among those investing $15 million in a Series B round of venture capital financing for a smart energy storage solutions provider, Millbrae, Calif.-based Stem, last December.

Enacting groundbreaking state mandates and incentives for renewable energy, smart grid and now energy efficiency, California and New York have been the focal points for GCN, Stem and other smart energy storage-demand response system startups up to this point. Intelligent Generation (IG), on the other hand, sees loads of promise (pardon the pun) in the U.S. heartland.

Applying its energy storage and demand management algorithms across a fleet of assets dispersed commercial customer sites making use of solar PV systems in the western end of the PJM Interconnection power market, IG is able to optimize savings and returns. With 10 MW of projects in its pipeline, management sees an abundance of opportunities just in the Chicago metropolitan area alone, much less PJM's entire service territory.

While its GreenStation platform can be an integral, value-added facet of a distributed energy platform that includes solar photovoltaic (PV) arrays and EVs, the economics of smart energy storage have improved rapidly enough to justify investing in such systems on a stand-alone basis, particularly in power markets where commercial, industrial and municipal customers are subject to high demand charges.

While TIP Capital and GCN generally project 15 percent returns on investment for customers installing the GCN GreenStation, they could be substantially higher. As GCN's Shao explained:

“The returns are absolutely incredible when you factor in all these rebates and tax credits and so forth. Some really super attractive situations have ROIs in the 1.5 to 2.5 year range, about 25 percent of our deal flow.

“The electricity bill savings realized by customers in Con Ed territory in New York can pay back their investment in GCN’s GreenStation in as little as 1.5 to 2.5 years. The story is similar in California.”

Images courtesy of Green Charge Networks