We are a microgrid company with a least-cost response to a $9.2B energy market in New York, where the NYS-PSC is asking the regional utility (Con Edison) to reduce peak use on the transmission and distribution network (“macrogrid”) by 370 MWs per year from 2017-2022. Similarly, we have identified potential projects at existing CHP sites across nine other states in the US worth over $8B in revenue. We also see direct applicability for our platform overseas, in the UK and beyond.
Currently, we see the opportunity to make the market and to that end, are pursuing a round of Series B investment for our demonstration project, scaling up, and market expansion activities. Our series B offering has been designed to yield investors a 22% internal rate of return from an 8% dividend and a share of distributable cash from the Kings Plaza CHP (KP-CHP) Plant project now estimated at $12 million.
In 10 US states, there are currently over 370 customer sites representing a potential revenue of $11B+ to retrofit existing CHP.
We have a multi-sided platform business model built around a patented configuration of off-the-shelf power electronics, branded as GridLink, that removes the friction between microgrids and the macrogrid. Our platform develops improved cash flows for large (> 2MW) existing CHP and renewable energy installations by better interconnecting with the utility distribution network. Improved cash flows come from two sources: 1) upfront capital incentives paid by distribution network or transmission network operators (“DNO/TNO”); and 2) operating income paid annually by emerging behind-the-meter (BTM) markets for buying power and ancillary services. We see electric utilities (DNOs) as the customer for our platform, with the owners of distributed generation as the second side to our platform business model.
Our proof of concept project is the 8 MW KP-CHP where the revenue model is to sell GridLink at a price of $1.50 per watt. The project will generate a shared savings pool from DNO capital incentives, payments for ancillary services markets, and fuel use efficiency gains at the CHP site. As a result, Pareto Energy will add to its profit by sharing in $1.01 per watt of savings to the owner of the CHP plant. Approval of the Con Edison capital incentive by the NYS-PSC and the operating income by the NYISO is expected before the end of 2015.
GridLink costs less than half of alternatives while providing unparalleled capability.
Named after Italian economist Vilfredo Pareto, our company’s European roots extend to our technology as well. GE Power Conversion builds the power electronics for our GridLink product in Germany. By using these power electronics instead of mechanical switches to integrate microgrids with the macrogrid, GridLink offers numerous benefits: additional flexibility to conventional power plants; a lower carbon footprint with a 15-20% increase in fuel use efficiency; and support for the decoupling of the grid (much like US telecoms in the past). GridLink’s communication capabilities, embedded in its design and through partnerships with DERMs, allows it to integrate seamlessly with the broader grid.
The worldwide microgrid market is forecasted to reach $40 billion in annual revenues by 2020 according to Navigant Research, with the US microgrid market expected to top over $20 billion.
Our business model allows utilities to monetize DG without any additional burden on ratepayers. Utility shareholders earn as much on our microgrid projects as investing in traditional transmission and distribution infrastructure.
By using modern power electronics, our projects generate a positive net cash flow by qualifying for nearly 3x the payment amounts in ISO behind-the-meter markets compared to traditional mechanical switches.
Microgrids: Technology + Policy + Economics
Pareto has a unique whole-product approach to microgrids that integrates innovative technology with deep expertise in policy and economics.
Pareto Energy’s brain trust of financial planners, engineers and attorneys has created a microgrid platform called GridLink. GridLink consists of (1) a legal framework for consumer self-organization and self-management of microgrids, (2) power electronics for affordable, safe and reliable interconnection with the utility grid, and (3) decision support software to optimize microgrid investments and operations. Unlike other microgrid business models that invite utility opposition, GridLink ensures an equitable sharing of microgrid benefits between microgrid users and utility rate payers and shareholders.