Bob Moon: The growing pain of rising energy prices around the world has got some companies reexamining the way they do business: Just maybe making their own power would be more cost-effective. Some big names in business are weaning themselves off of public utilities, and using new technology to generate electricity on-site. There’s even a green lining: Turns out it’s cleaner than the old sources.
From the Marketplace Sustainability Desk, Eve Troeh reports.
Eve Troeh: To kick off last July 4th weekend, TJ Rodgers held a celebration at his Silicon Valley company, Cypress Semiconductors.
TJ Rodgers: I felt like a teenage girl. I actually rummaged through my closet and found three different red, white and blue outfits. And I picked this one.
He wanted to look good for cameras when he made his declaration of energy independence.
Rodgers: Sometimes it becomes necessary for a company to rethink the bonds that have connected it to other organizations.
Rodgers wants to sever his company’s bond to the electrical grid. He started by spending $1.5 million to plaster the company’s rooftops with solar panels. They generate about $70,000 a year in energy.
Rodgers: Our power bill every month is less by a factor of four.
A lot of companies that have invested in solar, wind or other cleaner forms of power have done so for public relations, says energy analyst Sam Jaffe.
Sam Jaffe: They’re much more willing to invest in low-carbon renewable technologies that have a larger social goal.
But he says in the past year, what started as a way to save the planet is becoming a way to, well, save money. A big part of that is banks. As public utility prices go up and technologies like solar panels get cheaper, banks are more willing to make loans for clean energy projects.
Jaffe: Innovation in financing and new financing models can have as much impact as any technological breakthrough. It becomes very attractive to business investors.
Plus, companies no longer have to commit to buying the equipment. Instead, they sign something called a power purchase agreement with the company that makes the panels, turbines or other technology.
Kim Saylors-Laster: Where we don’t have to own or operate the systems, but really can purchase the energy that’s produced from them.
That’s Kim Saylors-Laster. She’s vice president of Energy for Walmart.
Saylors-Laster: Renewable projects that we do don’t need necessarily have to save money, but they need to be on par with traditional power sources.
Walmart started several pilot programs. It put wind turbines in parking lots, skylights and solar panels on rooftops. And a 200,000 square foot Walmart in Lancaster, Calif., gets power from fuel cells that convert heat and natural gas into electricity. It’s not completely clean energy, but it is much cleaner. The cells are made by a company called Bloom Energy. They hum so quietly out back, a manager had to help me find them. He pointed to some gray metal blocks…
Dennis: There are four units. And they’re as big as a Ford 150.
Troeh: You would never know what they were. They don’t even look interesting.
Dennis: No, they look like a part of a Walmart building. You’d never know that they’re an actual power source.
The Walmart staff couldn’t tell me how the fuel cells save energy. But they don’t have to. Because Bloom Energy hooked up the boxes and maintains them. Bloom also has contracts with eBay, Staples, and Coca-Cola.
Bloom CEO KR Sridhar used to sell the boxes for $700,000 each. He says the option to just buy the power instead of the box, is now the selling point for companies.
KR Sridhar: It’s economic security, predictability of price, and by the way? It happens to be a green product that’s sustainable.
By locking in a price for power, Walmart VP for energy, Kim Saylors-Laster, says renewable projects can now do much more than break even.
Saylors-Laster: As the price of traditional power increases, our prices generally stay flat.
And because of that, it’s economic reasons — rather than social ones — driving companies toward greener energy.
I’m Eve Troeh for Marketplace.
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