Green Business Product And Service Innovations Are The Key To The Future

A good dose of innovation. That’s what the U.S. needs to get moving again. New ideas. New Industry. New products. That’s what will make the country competitive in the world.



That’s pretty much what President Obama said in his State of the Union address. And he’s right. I hope. The trouble is no one knows exactly what to innovate. A breakthrough, clean and green replacement for oil and coal would be nice.



We like to think of business innovation as the creation of a new product, something tangible, or a new process for doing something, such as in manufacturing, or new software such as an "app" for an iPad. Yet there’s another kind of innovation that’s often ignored: innovative green business models or practices. Simply put, innovative green business models are just, new, different and often clever ways to offer already established, mainstream services or products.



There’s a certain beauty in innovative green business models. They don’t require massive research and development, expensive manufacturing and the creation of distribution channels. Innovative business models are mostly just good marketing and salesmanship combined with a good product or service.



In solar energy there’s an innovative business model that’s been around for a number of years now and has become an increasingly popular way to build solar generation capacity: Let’s call it no upfront cost solar power. The model is fairly simple:



Solar Developer "A" installs a solar electric system on the property of Customer "B" at not cost to "B." Not a penny given to Solar Developer "A". In return for having this solar system on its property Customer "B" pays Developer "A" a predetermined fixed rate for the solar generated electricity it uses. Developer "A" becomes, in effect, a utility. That predetermined rate paid by "B" is locked in for a contract period which can be 20 years or more. "B" worries less about volatile energy prices. "B" can plan its business operations around this fixed energy cost. "B" can also prove to customers that it is environmentally friendly. "See," the company can say, "We’ve got solar."



Solar Developer "A" gets something out of this too. Why shouldn’t that it? This is business after all.



By building the solar project for "B," Solar Developer "A" has established a tidy business with a steady stream of revenue. As soon as the solar electric system is turned on, and "B" pays its bills, "A" begins a 20-year flow a cash for which it can choose how to use. Cash can be used to repay the construction cost of "B’s" solar system. Cash can be put back in the "kitty" to fund no upfront cost solar electric systems for other companies. Cash can be used for regular operating expenses, pay dividends to company investors or pay interest on money, perhaps borrowed, to build solar systems. Accountants and managers within ‘A" can determine the best way to use this river of cash.



If "A" happens to be an established utility company adding new generation capacity bit-by-bit as needed "A" can also avoid building new large scale power plants, yet still earn money selling power, which is, of course, "A’s" business. Build a solar plant here, a solar plant there, and soon you get the same capacity as a larger central facility without all the fuss of building the big powerplant.



No upfront works particularly well with photovoltaic solar energy. Much of cost of building and operating a system is paid when the project is built. Since there is no fuel to buy – the Sun is free – the cost of the plant is mostly the cost of construction. There is some maintenance and management, of course, but for the most part a solar electric plant should need little care, and no feeding, for its lifetime. What other energy source can say that?



But solar power has its limitations: It only works in the daylight.





Are there other clean power technologies that might apply the same no upfront cost business model? Wind energy for one. Now there’s another.



Bloom Energy, a maker of solid oxide fuel cell technology, has launched its Bloom Electrons service where the company will install its Bloom Box fuel cell generators with no upfront cost to customers.



The company puts it this way in a press release:



"The Bloom Electrons service allows customers to lock in their electricity rates for 10 years, delivering fixed predictable costs and significant savings versus the grid. Bloom manages and maintains the systems on the customers’ sites and the customers pay only for the electricity consumed. This allows immediate cost savings with no initial investment, making onsite clean, reliable, affordable energy more accessible."



The California Institute of Technology, one of the world’s most highly regarded scientific and technology universities, is one of the first to benefit from the Bloom Electrons with a 2 MW installation. Other notable customers for the service are Kaiser Permanente, Walmart, The Coca-Cola Company and Staples Inc.



Customers can still purchase a Bloom Box, or two or three or more, since the units are modular and can work together. Bloom Electrons is a financial option for those that would rather avoid the capital investment.



If there’s a potential problem for Bloom its the possible rise in the cost of natural gas over the 10-year fixed-rate period. However for now, and into the foreseeable future, the price of natural gas seems stable or perhaps could go even lower with new discoveries. Further, the Bloom Box will run on biogas, such as methane-heavy gas from landfill operations. Biogas can be blended with traditional natural gas to increase supply.



Bloom Energy created this program in collaboration with Credit Suisse and Silicon Valley Bank. The upfront cash has to come from somewhere.



Is there a next step in no upfront green energy? Yes, more than likely in mass energy storage: No upfront cost batteries that store intermittent renewable energy from sources like solar and wind.