Author Archives: Liston Jackson

Lesson 11 – Deregulation – Jackson

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The goal of deregulating energy markets is to create competition in a market that was previously controlled by monopolies. According to standard economic reasoning, this increase in competition should lead to lower prices. Unfortunately, this has not always been the case. In reality, deregulated power plants can sell power at higher prices because they are not held in check by governments. Although there is slightly more competition, most regions are still dominated by one large utility, eliminating any real retail choice. The average price of power in deregulated states is 48% higher than in regulated states. The lack of continuity also means that power grids are less reliable because several different companies need to work together to keep the electrical balance.

The business opportunity that can take advantage of deregulated energy markets is in microgrids. A report by Robert Liam Dohn defines mircogrid as,”a discrete energy system consisting of distributed energy sources (e.g. renewables, conventional, storage) and loads capable of operating in parallel with, or independently from, the main grid. The primary purpose is to ensure reliable, affordable energy security for commercial, industrial and federal government consumers.” Microgrids can provide backup to unreliable grids. They were used in New Jersey after Hurricane Sandy Hook to immediately provide electricity to damaged areas. They also have potential in underdeveloped regions of the world, with no grid access. A microgrid tied to a renewable energy source has the potential to supply critical electricity to areas of the world which are lacking. As energy markets deregulate, a market for microgrid technology should develop rapidly.

“The Business Case for Microgrids” – Siemens

Click to access The%20business%20case%20for%20microgrids_Siemens%20white%20paper.pdf

“How Solar-Based Microgrids Could Bring Power to Millions” – MIT Technology Review

http://www.technologyreview.com/featuredstory/429529/how-solar-based-microgrids-could-bring-power-to-millions/

“Microgrids Keep Power Flowing Through Sandy Outages” – MIT Technology Review

http://www.technologyreview.com/view/507106/microgrids-keep-power-flowing-through-sandy-outages/

Lesson 8 – Cost of Capital – Jackson

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It is important to remember that to be successful, sustainability must be an integrative concept. Social equity, environmental protection, and economic development must all be considered. As someone who is attempting to promote sustainability and renewable energy projects, it is important to be able to explain all three pillars and how your project will allow an investor to be successful in all. In the real world, business decisions are most often based on the bottom line. An investor or company may have the best intentions of pursing a sustainability project, but if the costs are not advantageous, the project will not be approved.

There are several key financing terms and concepts that need to be understood and explainable to prove the worth of a project. Return on equity (ROE) is the amount of net income returned as a percentage of shareholder equity. It is used to measure profitability by revealing how much profit a company generates with the money shareholders invest. It also can be used for comparing a company’s profitability to other firms in the same industry. Weighted average cost of capital (WACC) is the rate a firm must earn to satisfy its shareholders and is used to determine whether an investment is worthwhile. Finally, net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. This is another tool to determine the profitability of a proposed investment or project.

Although there are many other financial and accounting tools, the three listed are useful for determining the value of a company and of an investment or project. When looking for investment for a renewable energy project, it may be useful to focus on NPV. This is used to compare the initial cost of a project to the total value of future revenue generated by that project.  Calculating and getting a positive NPV shows that you understand the costs and revenues associated with the project and can explain exactly how the project will be profitable over a longer time period. Demonstrating a knowledge of finance will make it more likely to find investors for a project.

http://www.investopedia.com/terms/n/npv.asphttp://www.investopedia.com/terms/w/wacc.asp

03- What Have We Learned? – Jackson

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On May 9th, 2014 the White House announced new Executive Actions addressing energy efficiency. Many state and local governments have also announced intentions to promote energy efficiency as a way to cut carbon pollution, protect the environment, save money, and preserve resources. The President’s plan gives $2 billion in federal energy efficiency upgrades to Federal buildings, in addition to the $2 billion already allotted in 2011. The release also announced new DOE energy efficiency standards for electric motors and walk-in coolers and freezers. The Federal government also regulates energy efficiency standards for appliances, vehicles, and buildings. The city of Chicago’s sustainability initiative calls for strengthening commercial building codes and retrofitting residential apartment buildings. 

Boston Consulting Group shared an example of how an energy efficiency business can create opportunity by providing companies with “end-to-end” services. Beginning with an energy audit, the efficiency business then can provide a company with necessary services such as upgraded lighting, new HVAC units, energy recovery ventilators, occupancy sensors in offices and restrooms, and smart thermostats. All of these upgrades will dramatically reduce the company’s energy consumption, saving a lot of money. The initial investment is covered by the energy efficiency business and paid back over a certain period, say 10 years, with interest. Thereby, the efficiency business gains a solid return on investment, while the company gains the immediate energy savings without having to front the huge initial investment. The energy savings in effect more than pay for the total cost of the project. I think this type of plan could work very well for large companies, that have a willingness and scale to afford large projects. 

Sources:

http://www.whitehouse.gov/the-press-office/2014/05/09/fact-sheet-president-obama-announces-commitments-and-executive-actions-a

http://www.cityofchicago.org/city/en/progs/env/retrofit_chicago.html

https://www.bcgperspectives.com/content/articles/energy_environment_energy_efficiency_opportunity_winning_strategies_high_growth_market/?chapter=3#chapter3

Lesson 2 – Liston Jackson

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Nuclear power has more financial and government support because it is a known entity. Nuclear power plants have been operating in the U.S. since 1974. The costs, benefits, and dangers are all well known. This makes it more attractive to investors and policymakers because it offers less risk than renewable energy sources, which remain a fairly new technology. It also provides a more stable base load than renewables. The intermittent nature of wind and solar power makes them highly unreliable. The base load on the grid needs to be maintained even when the wind is not blowing and the sun is not shining. Renewables also tend to be expensive and yield far less power than nuclear. Large scale increases in power from renewable sources would also require very expensive upgrades to the grid. For large countries that want to lower greenhouse gas emissions but also need to generate a lot of electricity, like the U.S. and China, nuclear looks very attractive.

Energy storage can be an important component to counteracting the intermittent nature of renewable energy sources and balancing the grid. There are many forms of energy storage, including flywheels, compressed air energy storage, thermal, pumped hydropower, and the most common, batteries. Entrepreneurs are investing in developing new battery technology that can be more cost effective for use as grid storage. Bill Gates has said he is investing in five different battery startups. Developing more efficient ways to store energy will be essential is solar and wind energy is to continue growing rapidly. 

Getting to Know Liston Jackson

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Hello class,

My name is Liston and like many of you, I’m an ESP student. This will be my sixth semester at World Campus, and while I still have about a year to go, I’ve been steadily making progress. I am originally from northern Virginia (the D.C. suburbs) and I’m currently serving active duty U.S. Coast Guard and stationed in Chicago. I am still in the process of figuring out what career I will pursue. As I’ve taken courses in the ESP program I know I want to work in the renewable energy field. I am just not sure exactly what form that will take. Will it be working on energy policy, energy finance, sales, consulting, etc? I hope this course will help me better understand sustainability entrepreneurship and the types of careers available.

I have never started a business. In fact, aside from a few summer jobs in high school, most of my adult working life has been spent in the military and not in private business. I have been trying to learn more about solar energy and ways to make it more practical and profitable to increase solar energy use. Companies like SolarCity, which pays all upfront installation costs, are coming up with unique ways to increase their business and I’d like to learn more about how they are accomplishing it.

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