The two reasons driving Anbaric’s desire to enter the microgrid space are cost and resiliency, Clarke Bruno, senior vice president and general counsel of Anbaric, said during the Renewable Energy Finance Forum in New York City June 25.
In typical U.S. markets, he said, a properly designed microgrid can beat utility prices, making microgrids competitive with the utilities.
“That’s a very, very important development,” Bruno said. “What that means is, in contrast to the development of solar and wind, you have a nascent industry that does not depend on a subsidy; it depends simply on market mechanisms being allowed to work.”
Furthermore, resiliency is something that people are willing to pay for, especially after seeing the effectiveness of microgrids keeping New York University and Princeton University in power during Hurricane Sandy.
“Developers like us, independent owners of hard assets or real estate, can configure microgrids so that they can beat utilities on one of the core things that they deliver on, and that is reliability,” Bruno said. “That, I submit, is also an extraordinary opportunity. It rests on technology, it does not rest on subsidies.”
Bruno characterized entering the microspace as a risky move, but said that over the next decade or two, a lot of microgrids will be built.
“We like to be first movers,” he said. “We’re aggressive, we take development risk.”
Microgrids also may offer benefits to the macrogrid that are not able to be monetized now, but may be able to be monetized in the future, he said.
The historic link between electricity demand and economic growth is beginning to diminish and may all but disappear, due to increases in energy efficiency and distributed generation, he said. Such a dynamic behooves the utility industry to seek out revenue streams elsewhere.
“[T]his is the perfect place to get revenues [for utilities], and also perfect place for people like us to get revenues,” he said.
He noted three key barriers currently in place to wide deployment of microgrids: the difficulty for a non-utility to enter electricity markets, the misperception of the level of risk and the perceived threat to incumbent businesses and the regulators with whom they have close relationships.
The first two barriers, however, lay the groundwork for a company like Anbaric to enter the space, Bruno said.
“Those two problems are exactly what allows developers like us to come in, to create a new financial model, to own and operate for the long-term,” he said.
Because it can take up to four years to develop a microgrid, some would ask whether the up-front capital required is commensurate with the payoff.
“We think it is. We think this space is going to grow,” he said.
With that growth is the opportunity for what he described as a “regulatory entrepreneur” to shift regulation, one of the biggest hurdles for participants outside of the utility industry, “to create a level playing field with utilities, to give that incentive to develop these kinds of projects.”