DCHT in the Jan 10th Business Week article on Utilities...
Don't look now, but utilities could be one of the hot new investment opportunities. With yesterday's regulated-monopoly approach being supplanted by marketplace competition, savvy entrepreneurs have wasted no time jumping in to develop new technologies that promise to transform the business of generating,
distributing, and marketing electricity.
Already, there's a venture-capital firm devoted to funding startups working on power-related technologies. Since 1997, San Francisco-based Nth Power Technologies Inc. has plowed $65 million into more than a dozen ventures, and the company is now raising an even bigger kitty for its next round of investments. Co-founder Nancy C. Floyd reckons the utility industry
is as ripe for innovation today as telecommunications was in the early 1980s, after the breakup of AT&T (T). 'It was the flow of venture funds to little firms that
helped create today's wired world,' she says.
NO PLUG. The U.S. is taking its own sweet time in deregulating electricity, leaving the decision to restructure or not up to the individual states. In contrast, Germany pulled the plug on all aspects of power monopolies last February. But the U.S. Federal Energy
Regulatory Commission in December did announce
guidelines designed to entice utilities to surrender control of their high-voltage lines. FERC hopes to improve distribution efficiencies through consolidations in the operation of the national power grid. A few independent system operators would take over the lines now managed by 100-odd utilities. Five ISOs have been formed, but power grid integration remains elusive. 'Until some people are operating parts of the grid as a going business, at a profit, I don't see it taking off,' says
Henry J. Cialone, general manager of energy services at Battelle Memorial Institute.
Still, what's happening is awesome. National and state borders are becoming obsolete, and a global power grid could be in the offing. Rainer Bitsch, head of the distributed energy supply division at Siemens (SMAWY), envisions electricity being piped across continents using a new high-voltage, direct-current technology that virtually eliminates transmission losses.
As part of this scenario, customers could visit an Internet brokerage and bid on cheap power from hydroelectric plants in Siberia, Scotland, or Canada. The first Internet power trading floors already exist. Enermetrix.com in Maynard, Mass., serves corporate buyers. And power companies can swap watts at
www.houstonstreet.-com, run by Houston Street
Exchange in Portsmouth, N.H.
Ultimately, the power lines themselves could be
humming with deals. Tomorrow's electronic systems will have enough smarts to find the best price for the power they need automatically, and the computers controlling
the grid will harness this information to optimize distribution and coordinate production by generating plants.
Getting the whole power system to work together will be no mean feat, because there will be small generating plants all over the map--including in individual buildings.
Microturbine generators suitable for stores and
apartment houses are being marketed by AlliedSignal (ALD), Capstone Turbine, Ingersoll Rand (IR), and SatCon Technology--and models for individual homes should show up this year or next. Fuel cells are a new option for producing electricity at restaurants, small
factories, and hospitals, with home-size units coming soon from such startups as Avista Labs, DCH Technology, Epyx, NiSource, and Plug Power.
Plug Power Inc. went public last October at $15 a share,and was recently trading in the mid-20s. Hardly a Net IPO. But perhaps it's a sign of better things to come as investors wake to the new potentials of energy companies. |
