Renewable energy becomes a utility lifeline

There are a number of ways to make money on solar and wind energy, as some of the nation's electric utilities are discovering.

By TheStreet Staff Apr 29, 2013 3:03PM

thestreet logoWindmills and electric power lines Getty ImagesBy Dana Blankenhorn, TheStreet


When North Carolina Republicans brought forth a bill pushed by the conservative lobbying group ALEC, the American Legislative Exchange Council, to gut the state's renewable energy standards, they figured they had a model piece of pro-business legislation that would sail through the legislature this year.


But, as North American Windpower gleefully reported, it died in committee. Key to the story is the committee where it died -- public utilities and energy.

It died there because the state's electrical utilities, chiefly Duke Energy (DUK), which bought out rival Progress Energy last year, didn't support the legislation, despite the fact that the bill's prime sponsor formerly worked there.


What happened?


Duke has found out how to make money with renewable energy sources. 

Its non-regulated Duke Energy Renewables unit plans to double production from wind, solar and biomass projects this decade. Big customers, including Google (GOOG) and Apple (AAPL), both of which have large data centers in North Carolina, are supporting a new green energy rate, reports the Charlotte Business Journal.


Where to find opportunity

Solar and wind projects offer big advantages to electric utility companies. The utilities get a premium rate for solar power, the supply of which peaks in the afternoon alongside the higher demand for air conditioning. The utilities also can make a big profit from homes and businesses that install panels, buying the excess energy at off-peak prices and selling it later for a higher price. 


Even the additional storage capacity needed to tap renewable energy can become a profit center. A Department of Energy rule called FERC 890 effectively doubles the value of storage projects.


Imre Gyuk, program manager for energy storage research at the Department of Energy, said in a recent Atlanta talk that there were 686 megawatts of storage capacity worldwide as of March. He estimated that for every five watts of power available, one watt of storage is necessary to assure the stability needed by modern cloud data centers. But there are more than 300 gigawatts (1,000 megawatts) of continuous load throughout the U.S. grid alone. In short, the opportunity in energy storage has barely been touched.


The cash, and profit from these operations doesn't fall within the regulations of state governments. AES Energy Storage, with the same corporate parent, AES (AES), as Indiana's IPALCO utility, has a 32-megawatt battery in West Virginia controlling the output of a wind farm. It makes money.

Not all utilities on board 

Not every utility company is on board with this. Municipally owned CPS Energy in San Antonio, Texas, is trying to cut what it pays homeowners for solar power, citing increased costs. Most of Texas' grid is isolated from that of the rest of the country, as seen in this Google Sites map.

While utilities' profits from renewable energy sources can be high, so can be the risk in fighting them. Pacific Gas & Electric (PCG) is trying to fight off a challenge to its monopoly status in San Francisco from the municipally owned CleanPowerSF. As the cost of solar power plunges below that of other grid energy, the number of customers producing their own power rises, and the city wants to harness this to compete against the utility monopoly.


The San Francisco Bay Guardian calls the result a "dirty war," and it is the ultimate nightmare for utilities. Failure to buy renewable power, and to plan for it, risks a utility's long-term survival as a monopoly provider. And there are lots of ways to gain unregulated -- free -- cash flow from making, selling and managing renewable power.


Against that reality, ideology is powerless.


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Apr 30, 2013 8:29AM
AES has done so well that its stock price has only broken even since 1996 and it has paid next to no dividends.  It bought out and and ruined the stock price of IPALCO.  All Duke Energy wants is the investment tax credits for its non-regulated operating segment.  Investment tax credits are like a sugar high, quick earnings impact but not sustainable.  Shame on MSN Money for still another pro-Obama article that distorts facts.  In the end the consumer pays for government give aways and errors.
May 1, 2013 7:40AM
Apparently, some posters think we can waste our way to continued prosperity. Recall Rome. Recall all other power houses that forgot about how NOT taking care of the middle-class first would either signal a major revolution and or their collective ends.

Shame is on poster after poster being brainwashed by the likes of fox, rush, and the kochs. Those folks care nothing about the future and only about profiting from today. That type of thinking always ends badly. Being short sighted will not just hurt them and their future families but you and yours. Eventually folks will all get that. However, By then, it will be far far too late.

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