Re: GP: renewable energy comany?

[Cornelius Suchy <c.suchy@consultants.mvv.de>]

I am afraid the first part of Ron's response, that
a renewable energy company has to make profits independently of grants,
is true in the long run. Of course many conventional fuels do receive
'grants' as well by way of externalities that are not accounted for, but
the average consumer does not feel that directly. A consequence would be
that the product you are trying to sell must somehow be competitive to
conventional fuels, not only to other suppliers of this product. For
solar water heaters that means the price would have to come down by
something between 10% to 50%, depending on fuel prices and the scale of
the project. This is only manageable with a radical different marketing
approach and some new manufacturing ideas. I have my own ideas on this
(in the field of solar water heaters) that I am willing to share upon
request.
For the second part of Ron's answer I disagree. I have worked and lived
in the so-called developing world and have not seen any renewable energy
technology that hasn't already been disseminated in the west to some
extend. (Solar dryers for agricultural products is an exception to this).
Usually, the situation for renewables is worse in developing countries
than in the west. Even if a technology  pays off, it will often not
be implemented because there is no money to cover the up-front
investments. Prohibitively high interest rates for credits make projects
financially unviable that might have worked with rates common in the
west. Renewables always replace operation cost by up-front costs so the
availability of finance is crucial.
Rural electrification is often seen as an example for successful RE
implementation. In some cases grid extension might be more expensive than
stand-alone renewable technologies. But often there is a lack of
infrastructure simply because people cannot pay for it. If they cannot
pay for grid extension they usually also cannot pay for stand-alone
systems, unless some international donor finances it. Then again you are
depending on government imposed policies. If these are local governments,
from my experience, matters get more difficult.
I don't want to be negative about the idea of implementing renewables in
the developing world. As a matter of fact that is why I moved there. But,
I am afraid, matters are more difficult there. On top of this any
realistic business plan for a country in transition would require living
in this country for a certain period beforehand.
The bottom line is, that I would suggest you, Matt, to come up with some
new ideas that could work in the U.S. If they go in the industrialized
world they might eventually be transferred to some better-off developing
countries, such as China or Mexico. 
Good luck!
Cornelius Suchy, Kazakhstan


At 14:19 07.03.2002 -0800, Ron Byrd wrote:
> I personally (this is my opinion
> not corporate propaganda!)  think that a renewable energy
> business large enough to support a MBA graduate in today's economy is not
> going to be profitable and sustainable. Unless it is well diversified in
> all types of energy markets. A lot of renewable energy business rely on
> government imposed policies and subsidies. A good renewable business plan
> needs to be profitable on its own without the aid of government grant
> programs. A basis for reoccurring revenues needs to be established from
> the beginning or the business will fail a soon as the grants are no
> longer available. 
>
> The easiest way to establish a renewable energy business would be to
> focus on developing countries where there is no existing infrastructure.
> It seems like a lot of people feel there is going to be a sustainable
> market there someday. That is if they can afford it. The hardest, yet
> most rewarding route would be to compete with the USA energy industry and
> try to manage a grid power business that has a reoccurring revenue plan.
> Establish the company in such a way that it becomes attractive to a
> larger firm and sell it when the time is right. Have you ever read the
> book "How owns the Sun"? 
>
> Take your profits from energy and invested it in water. How does this
> sound? "Got Air"? 
>
> I am not trying to be funny. I am only making a point that everything we
> do has to have some kind of economics associated with it. Someone has to
> make money or it will not happen. It seems to me that nothing in life is
> free anymore. 
>
> This is a resent article placed in the Houston Chronicle. 
> http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=28328935&ID=cnniw&scategory=Energy%3AAlternative&
>
> I don't know why the author wrote it. Maybe they wish to put down
> renewables because they have an interest in a gas company or something
> like that. It does drive home the message that renewables are more
> expensive than traditional sources of energy. And if we want them then we
> will have to pay for them. The highlight of this article is at the end
> when the author says "Of course, things could change. There could be
> a breakthrough in renewable energy technology. Or the price of natural
> gas could soar well above its current rate and stay there forever".
>
> We had a severe gas shortage in the USA in 2000 that drove gas prices way
> up. Since this is a finite resource it is possible it will happen again,
> regardless of what Rush Limbaugh thinks. I am betting we will run out of
> fossil fuel first.  
>
> This site has lots of pessimistic views about our future. Are their
> predictions true?  
> http://www.dieoff.org/ 
>
> Maybe you could share some of your thoughts with us entrepreneurs. 
> -- 
> Ron Byrd 
> Vice President 
> Sunstar Precision Energy Corporation 
> http://www.specbyrd.com 
> " We turn sunlight into SPEC energy " 
>