A microgrid business model - made simple.

Our Business

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.

utility-business-models_traditional-emerging_comparison

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.

Our Business Pillars

  • Access to the Grid
    Providing access to the grid is critical to animate energy markets. Our commercial success revolves around three differentiators:

        1. Low-cost differentiation of our product, GridLink, compared to the existing alternatives of synchronous interconnection and traditional utility infrastructure upgrades;
        2. Focus on a new, untapped market of existing DG, primarily CHP plants greater than 2 MW;
        3. A multi-sided platform business model that subsidizes interconnection costs for DG owners while providing a least-cost solution and new access to resources and revenues for distribution and transmission network operators (“DNO”/“TNOs”).
  • Win-Win Business Models
    In most current environments, distributed generators are not optimally connected to the grid. In some cases, there is no connection at all, missing a great opportunity to improve reliability and unlock new sources of revenue for power and grid services.
  • Legal Personality
    Over a decade ago, Pareto realized that microgrids needed a legal personality to ensure an equitable distribution of their benefits while allowing energy to be managed as a commons. We have shaped the implementation of that legal personality, termed an Energy Improvement District (EID). In 2007, the first EID laws were passed and utilized in the state of Connecticut.
  • Demonstration Projects
    Disruptive technologies commonly entail demonstration projects. We are currently working with General Electric and many utilities and universities across the Northeast and Mid-Atlantic to demonstrate the effectiveness of GridLink and our non-synchronous technology. Already four major utilities have approved GridLink for use.