Wind, biomass, cogeneration and small hydro hybrid for remote and distributed system are to be developed by EnergyWorks, headed by Jeffrey Eckel, 37, former president of Finnish company Wartsila Diesel Development Corporation. Mason Willrich, former chief executive of Pacific Gas & Electric Enterprises, will serve as chairman of the board.
The new venture, also to focus on industrial energy efficiency services, including process improvements, is to be based in Landover, Maryland, near Washington DC. A major reason for the location is that financing is expected to come in part from international lending agencies such as the World Bank and the Interamerican Development Bank.
"The market for human-scale energy systems rather than gigantic projects is enormous," Eckel told the Washington Post. "You've got two billion people in the world who don't have a light bulb, and many of these people cannot be reached by traditional power lines." He adds that the use of new renewable energy technologies is growing at a rate between 10-20% annually in a number of major markets. "Small is appropriate when it comes to individual renewable energy projects," he says. "But EnergyWorks also has capabilities big enough and broad enough to combine multiple projects into larger transactions."
By the end of the year, EnergyWorks is expected to employ 15 to 20 staff, adds Jeff Leichtman of Bechtel Enterprises. Expansion after that will most likely be in Latin America and Asia, says Jan Mitchell of PacifiCorp Holdings. India, Indonesia, Argentina, Mexico and Brazil are already seen as initial targets, as is China, although that country is not easy for doing business, Willrich told the San Francisco Chronicle. In the US, the firm will also develop alternative energy projects, as well as industrial energy efficiency improvements.
The move is clearly part of the trend of "big money" testing the waters in renewables. In July 1994, Westinghouse Electric Corp had announced a long term business alliance with New World Power Corp to develop a similar range of renewable power systems, although little has been heard since the pact was formed and it is not clear if the venture will become successful. It is certain, however, that the fortunes of New World, publicly traded, are rocky (see page 18).
Renewables lobbyists welcomed the venture. "I think any time any major corporate entities get together, the long term prospect is very bright," says Randy Swisher of the American Wind Energy Association. "This is what the solar industry has needed for years," adds Scott Sklar of the Solar Energy Industries Association. "Bechtel can offer across-the-board expertise and credibility and help create economies of scale." Sklar says Bechtel also has the advantage of long experience in dealing with international financial institutions, such as the World Bank, that are beginning to extend more loans to renewable energy projects. However, some say the character of renewables will change for the worse when visionaries are replaced by Fortune 100 companies, although the trend is probably inevitable.
The venture into small scale plants is a radical departure for Bechtel. One of America's largest engineering, construction and management firms, it had revenues of $7.9 billion in 1994. The privately owned firm, based in San Francisco, is also one of the largest internationally and has been key in power and cogeneration development since the 1940s and has participated in building more than 450 power plants worldwide with a generating capacity of over 200,000 MW. And Bechtel Enterprises is a leader in private finance and project development in independent power generation, transportation, ports and water systems.
PacifiCorp, based in Portland, Oregon, also has a strong track record. It is the third largest utility west of the Rocky Mountains, serving 1.4 million customers in seven western states through Pacific Power and Utah Power. PacifiCorp Holdings, a wholly owned subsidiary, oversees the company's non-electric businesses including a large telecommunications firm, an independent power production company and two new subsidiaries to try and leverage its power marketing and plant and fuels management expertise in the national energy market.
John Carter, president of Bechtel Enterprises, sees the venture as an opportunity to participate in a growing movement toward renewables and smaller distributed energy systems. "The World Energy Council projects that approximately 145,000 MW of new electric generating capacity using renewable resources will be added to the global energy supply between 1991 and 2010," he pointed out.
Michael Henderson, chief executive of PacifiCorp Holdings, says: "By uniting the worldwide development, engineering, procurement, construction and financing skills of the Bechtel organisation with the utility, telecommunications, operating system skills, and financial resources of PacifiCorp, our joint venture will serve the market for small power systems with quantity sales and quality service."
One of the keys to EnergyWorks' approach will be to try and develop strategic relationships. "As part of our approach, we will be working with strong local partners in each country, helping to establish local manufacturing, as well as operations and maintenance capabilities," Eckel says. "Our goal is to maximise local employment and economic growth by implementing small energy systems on a large scale." He adds, "There are a thousand things that can go wrong, and most of them will. But the fundamental economics for this business are fairly strong. The mechanics of how to do it, how to finance the projects and how to make them really well maintained, top notch projects are all things we have to figure out."