Contributors

Sunday, April 7, 2013

Solar PV growth of 496%/year since 2009-it feels GREAT.

I am humbled to announce that since 2009, my small family and employee-owned company, Pristine Sun, has achieved energized solar systems (construction fully completed with systems operational) growth of 496% CAGR (Compound Annual Growth Rate, measured in growth year over year) since 2009.

The kilowatts energized by 12/31/2012 (nearly all on commercial and industrial rooftops and carport shade structures) are enough to power the equivalent of 510 average homes (assuming 5 kWp per home of capacity, which generates about 750 kWh per month on average).  We currently own and operate 55 solar PV systems in the state of New York, one in Arizona, and 10 in California.  These are all "behind the meter" systems, where the energy is delivered to the building owner or tenant and lowers their electric bill by an average of 15% or more in the first year.

Each of our customers signs a 20-year solar service agreement containing a fixed price per kWh in the first year with a very low to modest annual price escalator (usually around 2-3%).  This means that their bill will remain lower than the local utility rates, and the savings will increase over time, often significantly (depending on how fast utility bills continue to increase).  Assuming average electricity prices increase by 5%+ per year (historical averages are actually closer to 6-7% even with lower natural gas prices, since only 1/3 of an electric bill is generation and 2/3 is transmission & distribution), our customers will see savings of up to 50% compared to their neighbors after a number of years.  Some of our customers are already re-investing their electricity bill savings into energy efficiency upgrades and EV chargers for their cars & trucks (yes, there are 100% electric and plug-in-electric trucks as well) to save even more and accelerate their energy independence.

Remember that solar modules have 25-year performance output guarantees and have consistently out-performed their warranties for over five decades now, and the expected life of the modules is 35-50 years.  Plus, because we're lowering the cost of operating the building, studies show that our solar systems increase the building and property value by about $15 to $25 for every $1 in annual energy savings.  Since the fuel cost to operate a solar system is free, we are very excited to be helping to stimulate our economy by making our customers more financially stable and productive for decades to come.  Not to mention the vast savings of avoiding the healthcare and climate change costs by not burning as many fossil fuels.

In 2013, I'm pleased to announce that my company has begun construction (finally) on our fleet of utility scale small solar power plants (or solar farms or solar parks, if you will).  Nearly all of these projects are located in rural California on land that is not suitable for farming, such as grazing land or fallow land.  Despite that, we've also gone above and beyond to make them as sustainable as possible: we are planting native wildflowers to support local bee apiaries and in some cases allowing sheep ranchers to graze their sheep between the rows of solar modules.  This maximizes the use of the land and provides in some cases additional revenue to the landowner (usually a small family farmstead).

It appears likely that we will construct over 25 MW (megawatts), or 25 million watts, of such projects this year, in addition to continued growth of our rooftop commercial projects.  This is of course conditional upon closing continued construction financing and post-construction take-out loans for these projects.  25 MW, on top of the 2.5 MW we've already installed through 2012, is equivalent to powering a whopping 5,000 American homes!

Assuming we energize (Star Trek, anyone?) 25 MW this year, our CAGR will continue to equal about 500% from 2009 through 2013.  However, beginning in 2014 it will be quite difficult to increase by five times the growth (that's 125 MW next year) due to our increasing size & scale.  We'll do our best to raise the sufficient construction and post-construction financing necessary, however, because project finance is the only factor that constrains our growth.  We have a nearly unlimited supply of small utility scale solar projects and small rooftop commercial projects we could build, thanks to our amazing network of installers and sales consultants.

Here is a photo of one of our small (325 kW) utility scale solar PV systems going online on 3 acres in Tehama County California (north of Sacramento):

Check back for more updates later, and thanks for reading!
Cheers,
Troy


Saturday, April 6, 2013

Career history - battles I've won & lost in the Clean Power Revolution, including regulatory scrutiny




Career History and Battles I've Won and Lost
Prior regulatory scrutiny – my name has been cleared

While I could write a book about the mistakes I've made in the past, this blog entry is intended to focus on the events surrounding the securities matters in Missouri and Kansas in the first half of the last decade.  For those who have found online material regarding these events and care enough to want to hear the other side of the story from my perspective (and that of my lawyers at the time), then keep reading.  For those who are looking for reasons to discredit my work or reputation in renewable energy, I am human and you will therefore find that I've made mistakes that you can capitalize on.  However, I have realized recently that I can do more good for the planet and the US economy if I provide 100% transparency and not try to hide from my mistakes.

In 1998, I founded the 1st utility-scale wind power company in Kansas: Tradewind Energy LLC (formerly Kansas Wind Power LLC).  Early on, we struggled to learn the energy business, the utility-scale wind development business, and to raise capital, while fighting intense (and sometimes extreme) resistance from fossil fuel interests and surprisingly even from some environmentalists.  There were a few times that my staff and I received death threats while trying to develop wind projects, particularly a project to the northeast of Wichita.  At that site, there were hunting clubs with very wealthy members who claimed the wind turbines would scare off their birds and deer.  We later learned that fossil fuel “dig up stuff and burn it” die-hards were affiliated with and/or members of that hunting club.  Who knows if that played a part in that being the first project where we were denied a conditional use permit by the county?  Nevertheless, we plowed on and developed about a dozen sites in the state for wind farms.  During this time early in the company's history, one of my staff members made the mistake of sending emails out to an Opt-In list asking for interested parties that may want to participate in a non-profit cooperative for ownership of wind turbines, similar to a farming coop.  We did so based on pending legislation in the state of Kansas (House Bill 2018).  But because that bill was not enacted yet into law (it was a year later) we got our hand slapped by the overzealous Kansas securities office for “general solicitation” (which is now legal nationwide as part of the crowd-funding legislation passed by Congress) even though no funds were ever raised from any party.

By the time I sold my interest in the company in 2004, the company had raised several million dollars from angel investors and had developed a few sites to a mature status, including the Smoky Hills Wind Farm and Caney River Wind Farm sites.  Both of those sites went on to be operating wind farms of 250 MW ($500 Million) and 200 MW ($350 Million) respectively, and the former site was the largest wind farm in Kansas for a number of years.  And in 2012, Tradewind received the distinction of winning the Outstanding Commercial Achievement Award from the American Wind Energy Association for helping to bring cost-effective wind power to the Southeast.


I get sentimental when I reflect back and admit to myself that I chose to “give up my baby” by selling my interests in the company.  But I do get a great deal of satisfaction knowing that my former company has done well and the investors have earned a nice return (based on what I’ve been told).

At Krystal Energy, we did grow quickly: from a handful of energy sales consultants in 2004 to over 2,500 energy consultants in 2005 and over 5,000 customers.  But the margins were way too thin to make a profit, and we were forced to raise outside capital to keep paying staff salaries and serve our customers.  My personal investment in the company (from proceeds earned from selling my share of Tradewind) was insufficient to keep the company operating at a loss for very long.  By that time, there were about 10 employees and a full complement of Board Directors.  We cut costs as much as we could, but after a few months we came to a crossroads: either raise money or go out of business.  We elected to raise money.  

About that time, I was approached by the Sierra Club and asked to be an Expert Witness in their fight against Great Plains Energy (the parent company of Kansas City Power & Light) and their plans to build three new coal plants.  I accepted the pro bono engagement and prepared thoughtful and well-documented remarks for the hearing that demonstrated the financial attractiveness of wind energy as compared to new coal plants.  The Sierra Club law firm (based in St. Louis, MO) and our team felt like my presentation made a compelling case for wind energy, and that doing no coal and more wind energy would provide substantial economic benefits to both the shareholders and ratepayers of Great Plains Energy.  The lawyers warned me that the commissioners of the Missouri Public Service Commission were being supported politically by the region's coal-based utilities, but I was cocky and fearless and attacked their business model unapologetically.  Another mistake.  A big, dumb mistake.

Within weeks of my testimony at the Missouri PSC, our company was approached by seemingly every regulator in the state of Missouri, including the Securities Division of the Secretary of State (Robin Carnahan), the consumer protection office, the attorney general, and several others.  Initially, many of them tried to say that they had the jurisdiction to regulate green tags and wanted us to stop selling our products & services.  Obviously we resisted that and provided comprehensive documentation to each regulatory agency to refute their attempts to regulate us or claim we were not in compliance with regulations.  As a result, fortunately, this regulatory scrutiny quickly evaporated from all agencies except one: the securities division of the secretary of state.  Although the investment offering was posted on the U.S. SEC website, prepared by a large Chicago-based law firm, and filed properly with the federal and state agencies, and the state of Missouri even cashed our check to register the offering, the secretary of state's office issued a damning and outrageous press release, accusing our company of everything they could possibly think of.  This shocking, unsubstantiated and damning announcement crushed our sales growth and caused us to lose thousands of customers and hundreds of sales energy consultants, even though nearly all of the allegations were false and unfounded. 

Our Board authorized us to immediately engage a law firm and fight for our survival.  After about 18 months and hundreds of thousands of dollars in legal fees, the state could not find a single act of wrongdoing or misconduct.  And their star witnesses were two former Krystal Energy disgruntled employees who had made false claims that were quickly proven to be unfounded. We had reached a point where the state proposed a settlement where we would offer to buy back the stock from the two Missouri shareholders who purchased stock, and from the former employees (who were Missouri residents) that we had fired months before the investigation and had received gifted (free) stock and/or stock options.  I immediately agreed to assume all liability in order to shield my five independent Board Directors and my six dedicated fellow management team members from any liability.  Although my salary and all other forms of compensation at the time were less than $65,000 per year (barely enough to support my family), I invested as much as I could during this time to keep the company afloat and often went without reimbursement of my company expenses and went without pay on numerous occasions.

In the settlement, there were no fines or penalties, no admission of wrongdoing by any of our officers or Board directors, and no "victory" that could be announced by Krystal Energy.  We considered going to trial to claim a true victory, but that would have cost another $150,000 to $300,000 in legal fees and taken another 12-18 months (or more) with the outcome not guaranteed despite our very strong case.  Although our lawyers told us we had a 95-99% chance of prevailing in trial, by that time we had exhausted all of our available financial resources for legal bills, had laid off nearly all of our employees, and our sales had declined by more than 90%.  This regulatory action had effectively put us out of business, so we were forced to accept the settlement.  So Missouri vacated the C&D Order (which means it's as if it never happened at all) but the elected politicians got their press releases the prior year and we got no coverage of being vindicated.  If you would like a copy of the settlement signed by the Missouri officials or a copy of a letter from our lawyers describing the matter and its outcome, please don't hesitate to email me and I will send it to you will full transparency.

Read the summary letter from the law firm that represented Krystal Energy (including all of its officers & directors, myself included) here.

What's interesting is that Robin Carnahan, the secretary of state at that time, was the sister of Tom Carnahan, the founder and CEO (at the time, although he subsequently stepped down) of our biggest competitor, Missouri-based Wind  Capital Group.  That firm was competing with us for power purchase agreements from the few utilities in the region that were either willing or compelled to buy wind energy.  Coincidence?  Maybe.  And there were several people who confirmed that some of the Missouri commissioners were "in the pocket" of the utilities, so, in my opinion, this was a concerted effort to discredit my company - and me, as the most vocal spokesperson and poster child for wind energy in the region.   

In retrospect, I often think I should not have taken on the coal-based, ultra-conservative Midwestern utility executives because it put my company out of business and it caused tremendous stress on my marriage, my family, and my health.  But every time, I come back to the issue of integrity and conviction: if I'm unwilling to stand up for what I believe in, regardless of the consequences, then who am I really?  I've never been one to hide from conflict if a wrong can be "righted" by my actions.  So, despite the life-changing disaster that befell me - and that I will never be able to escape due to the power of the Internet - I have said that even now, almost a decade later, it's hard for me to regret testifying against the coal plants.  Was it worth it?

Well, a few years after my testimony the Sierra Club and Great Plains Energy (GPE) signed a landmark settlement.  You can read about the settlement at the link below, which has been widely used now as a template by the Sierra Club in their battles against new coal plants.  

Missouri: Sierra Club and Utility Agree to Landmark Global Warming Plan
March 20, 2007
In a groundbreaking agreement that can serve as a model for environmental groups and utilities working together, the Sierra Club, Kansas City Power and Light (KCPL), and the Concerned Citizens of Platte County (CCPC) have agreed on a set of initiatives to offset carbon dioxide (CO2) and reduce other emissions for the Kansas City-based utility. Under the agreement announced, KCPL agreed to pursue offsets for all of the global warming emissions associated with its new plant through significant investments in energy efficiency and renewable energy, and cut pollution from its existing plants in order to improve air quality in the Greater Kansas City metro area.

The agreement proposes other investments in clean energy, significant decreases in emissions and resolves four appeals pending between the Sierra Club, CCPC, and KCPL. The most significant element of the agreement is the unprecedented commitment by KCPL to pursue the offset of carbon emissions from its proposed Iatan 2 generating station, located near Weston, Missouri. The estimated 6,000,000 tons of annual carbon dioxide emissions are targeted to be offset by adding 400 megawatts (MW) of wind power; 300 MW of energy efficiency; and a yet to be determined combination of wind, efficiency, or the closing, altering, re-powering or efficiency improvements at any of its generating units. These proposed offsets will be partially implemented by 2010 and fully implemented by 2012. The parties are also agreeing to work together on a series of regulatory and legislative initiatives to achieve an overall reduction in KCPL's carbon dioxide emissions of 20 percent by 2020.


Many people worked very hard for a long time to reach this settlement.  I played a small part in this famous battle within the Clean Power Revolution.  So yeah, it was worth it.