NORTHERN COLORADO BUSINESS JOURNAL: Cooling technology makes smart-grid systems smarter
By Kristen Tatti
Northern Colorado Business Journal
In early February, Windsor-based Ice Energy Inc. had a coming-out, of sorts, as the company shifted its focus from cooling one structure at a time to addressing the needs of entire energy transmission systems. The company unveiled itself to a new market at the energy industry's DistribuTECH Conference and Exhibition in San Diego.
Ice Energy was founded in 2003 and initially marketed its Ice Bear units to residential and commercial customers who, with an initial capital investment, could look forward to decades of off-peak energy prices.
The change for Ice Energy is not in the technology, but in the market. The company has come to embrace the idea that the true benefit of the Ice Bear is as a part in a system of energy management for utilities, according to CFO David Schwarzbach. Widespread installation by utilities of Ice Energy's energy storage technology directly on individual commercial buildings has the potential to permanently shift as much as 40 percent of peak energy demand to off-peak hours.
The switch to off-peak hours is important for a variety of reasons. It ensures the reliability of service, can postpone or eliminate the need for additional backup generation systems and allows energy use to occur at times when it is most efficient. During the evening, when temperatures are lower, transmission lines run more efficiently. Additionally, energy from alternative sources, such as wind, is most available during off-peak hours, increasing its contribution to the power mix.
Venture capital infusion
Helping the company make the transition to the utility mass market is a $33 million infusion of capital it landed last fall. The second-round financing was led by Energy Capital Partners, a private equity firm managing a $2.25 billion fund focused on energy infrastructure and power generation, including natural gas, hydroelectric and renewable energy, as well as electrical transmission and distribution assets.
"What's really great about this financial round is the partnership with Energy Capital Partners," Schwarzbach said.
Venture capital firms are increasingly interested in alternative energy technologies. What is unique about the ECP financing is that in addition to the $33 million, the company will provide $150 million in capital for energy-scale deployment of Ice Energy's technology.
"One of the keys of success for green technologies is the ability to bring financing for projects, especially in today's market," Schwarzbach said.
The $150 million will help cover the upfront cost of deployment. About 14,000 Ice Bear 30 units are needed to fulfill a 100-megawatt deployment. Schwarzbach said the $150 million, along with other funding mechanisms, could launch three to four projects.
Also advancing the company into the utility industry was the addition of Chris Hickman as senior vice president of utility solutions late in 2008. Hickman has more than 20 years of experience in the utility industry.
When he first heard of Ice Energy, "I was like, 'Oh no, not another perpetual-motion company,'" Hickman recalled. "But the energy is produced, transmitted and stored by the Ice Bear at the cheapest, most efficient time."
Good news for smart grid
Company executives aren't the only ones singing Ice Bear's praises. Just in time for the DistribuTECH event, the unit received a 90 out of 100 from the Smart Grid News Smart Grid Scorecard - the highest score given since the rating system was launched more than a year ago.
In recent years, the number of companies developing technologies related to the smart grid has exploded. Over the years, the need for key developments such as mobile communication and certain mechanics for integration has become apparent.
"We were seeing (companies in the field) weren't thinking in terms of the system," said Erich Gunther, co-founder of Knoxville-based utility consulting firm EnerNex Corp., who developed the Smart Grid Scorecard.
Gunther uses the scorecard to evaluate how well technologies address the key smart-grid issues in a regular product/technology review column he writes for Smart Grid News, a U.S. Department of Energy sponsored publication. The scorecard, which is available for free download at www.smartgrid.com, looks at a technology's or product's overall impact on the system, its ability to integrate with existing and new technologies, scalability and other factors.
Gunther will research a product for several days and often conduct site visits to the company. With Ice Energy, he was able to visit the Windsor facility and see the IceBear in action at the nonprofit Electric Power Research Institute. So far, he has reviewed more than a dozen products and the IceBear, with a score of 90, is the highest rated.
"I'm a reasonably hard scorer," Gunther admitted. "I don't review products that are not going to score well." The products he reviews are often part of projects he is working on for EnerNex clients.
The Ice Bear scored 10 out of 10 in the areas of manageability, scalability, interactivity and impact.
Elegant peak-demand management
"The peak-demand management issue is one of the biggest problems we have in the U.S. utility industry," Gunther said. "It's very expensive to manage the peak."
Utility companies traditionally have responded to peak-demand needs by adding more generation and transmission capabilities. The IceBear, Gunther pointed out, is a permanent and predictable way to shift the demand load to times when the system is not pushed to the breaking point.
"The Ice Bear is unique because it's applying basic principles of thermodynamics and physics to address the problem of peak management," he said. "It's elegant in its simplicity."
The unit is so simple that it takes no extra training for deployment. Any HVAC technician can easily set up the Ice Bear on the existing system, creating and maintaining many jobs that have been hard hit by the construction bust. Also, under Ice Energy's new model, the end-use customer will receive the unit for free.
"That's the biggest part of the model. While they benefit, the utility benefits even more," Hickman said. "There are few times in life you see - or even have an opportunity to be involved in - a true win-win situation."
The company's success stands to be a win for Northern Colorado, too. Ice Energy now employs about 55 at its Windsor office and is in the process of expanding into additional space at the site. The initial manufacturing is also done in Windsor. The company will look at contract manufacturing possibilities as well as in-house manufacturing as orders ramp up.