Historically, utilities have monetized a centralized power system that generates electricity upstream almost entirely with charges to passive consumers downstream. For utilities, the emerging microgrid paradigm represents a fundamental shift from the historical one-sided, unidirectional model to a two-sided platform business model with bidirectional power and services.
Increasingly, utility customers want to supplement the electric power that they import from the macrogrid with fuel efficient and reliable DG. The idealized version, often found at the center of new regulatory frameworks in many states, has microgrids serving local-area distribution networks. Customers and regulators hope that these microgrids can buy supplementary power and services from the macrogrid when needed; and at other times, they hope that the microgrid can sell power, demand response, and frequency and voltage services to the macro grid.
Synchronizing the electric grid in multiple directions poses significant technical challenges and results in negative network effects. However, following the example of telecoms, we believe that a non-synchronous approach allows a two-sided business model to generate a positive cost-benefit ratio for both DNO/TNOs and DG owners.
In response to these challenges, Pareto Energy has developed a multi-sided business model to help electric utilities and their customers monetize DG without compromising reliability, economics, or environmental aspects. Our business model is 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 upfront capital incentives paid by distribution network or transmission network operators (“DNO/TNO”); and 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 core philosophy traces back to Vilfredo Pareto, an Italian economist and the namesake of our company, known for his concept of efficiency. An opportunity is said to be “Pareto Efficient” if it improves at least one individual without making any other individual worse off in a given set. With our platform, we generate improved results for utility shareholders and ratepayers, transmission network operators, DG owners, and the environment. We believe that GridLink and our associated microgrids are Pareto Efficient solutions to a complex set of energy challenges.
We believe that utility companies can and should take the lead in developing microgrid projects in their service areas. Local utilities know best the intricacies and demands of their grids. They hold the key to unlocking true win-win microgrid opportunities.
We bring together policymakers, utilities, and engineers. We employ a holistic approach to microgrids with consideration not only for technology, but also the environment, economics, policy, and strategic partnerships needed to be successful.
GridLink is truly groundbreaking. It allows for vast diversity in power supply and loads. Size and behaviors can be tailored for each project, while the overall architecture remains standard and repeatable. With GridLink, we have cut the time for a utility's interconnection approval from years down to months.
Why build new generation when existing assets can be better utilized? Retrofitting existing sites allows utilities and regulators to incorporate DG assets in their short-term system planning without the time delays and additional emissions that would be otherwise incurred with new combustion generation.