MUSKEGON — A pair of West Michigan entrepreneurs want to create a market for onsite electrical power generation by undercutting large utilities with cheaper electricity costs.
While electrical generation has typically been reserved for utilities, Michael Lee and Gary Kerns plan to cater their technology to organizations with large physical locations such as retail stores, hospitals and data centers. The reason: The partners say the system can create reliable power for less cost than buying electricity from commercial power plants.
The pair, who co-founded Muskegon-based Sol Electrica Renewable Energy Inc. in 2014, say their EnvironGEN 800 power system has myriad benefits for large power consumers.
The system would plug directly into a building’s power distribution system and provide a base load of 800 kilowatts of electricity while being fired by natural gas from a local supplier. Customers would still be hooked into the main electrical grid in case they use more than 800 kilowatts during peak times.
Primarily, the technology has the potential to reduce annual electrical costs up to 25 percent, Lee said. Moreover, Sol Electrica plans to own and maintain the units as an independent power producer, negating any capital investment on the part of its customers.
“All we do is sell electric for 35 percent below commercial rates,” Lee said. “The customer doesn’t have any capital risk. … All they have to do is put one extra line item on their accounting income statement to pay two electric bills. They don’t have to do any site work, they don’t have to pay any capital equipment costs, they’re not leasing the unit. This provides customers about zero risk.”
The technology also produces approximately 40 percent less greenhouse gas emissions than coal-fired power plants, Lee said.
Since the EnvironGEN is onsite and uses its own electrical meter, Sol Electrica was able to skirt Michigan’s 10-percent electric choice law, which limits businesses’ ability to purchase energy from independent suppliers.
Experts predict the market for on-site electrical power generation will grow as large power users look for ways to reduce their energy costs.
“Right now, the marketplace for onsite power generation is very attractive … and the technology keeps improving,” said Greg Northrup, principal at Grand Rapids-based Sustainable Partners LLC, a developer of alternative and renewable energy projects in West Michigan. “The time is right as people are looking for ways to reduce their cost and increase reliability, especially for people who run 24/7.”
According to initial research, approximately 9,500 potential customers in the U.S. could benefit from Sol Electrica’s technology, Lee said.
So far, Sol Electrica has approached companies such as mega-retailers Wal-mart and Meijer Inc., which have expressed “tepid interest,” Lee said. However, Lee notes he was prospecting with those companies at a time when Sol Electrica planned to sell the units directly to customers. The company has since pivoted its model and plans to own the systems while simply selling customers the electricity.
Those potential customers will now “be much more receptive because they have no risk,” Lee said.
Lee and Kerns have funded 90 percent of the company with roughly $130,000 of their own money. The company also received $11,000 of business accelerator funds through the state.
Sol Electrica plans to enter an additional round of fundraising for an undisclosed sum to pay for more testing for its products. Once that’s complete, the partners plan to seek about $2 million from angel investors and venture capital firms in Michigan. That funding would then allow the company to enter the commercialization phase for its technology, which the partners hope to begin in six months.
Lee estimates the company will have installed more than 1,000 units in five years after commercializing the product. Sol Electrica also plans to keep its manufacturing operations in Michigan and create up to 300 jobs in five years, he added.
Sol Electrica currently operates from Grand Valley State University’s Muskegon Innovation Hub, which recently changed its name from the Michigan Alternative and Renewable Energy Center in May of this year, as MiBiz first reported.
The secret to the EnvironGEN’s efficiency comes from the design of its natural gas-powered turbine.
While conventional turbines use fan-like blades that rotate as high-pressure steam runs over them, Sol Electrica’s design — dubbed a thermal molecular adhesion turbine — incorporates a series of extremely thin discs. The discs are coated with a specialized material that attracts steam particles and holds them long enough for another steam particle to hit them, creating additional velocity in the system, according to Lee.
The combination of specialized discs and nozzles allows the turbine to use highly-saturated steam to operate at a much lower temperature and pressure than conventional steam turbines.
“All the power companies run off superheated steam at extreme high temperatures and pressures and with almost no water content so they’re at a deficit already,” Lee said. “It takes a heck of a lot of energy to make superheated steam at those temperatures and pressures and their turbine can never see water. As soon as they see any water at all, they pit and they have to replace them.”
Sol Electrica’s turbine requires nearly three times less heat and ten times less pressure to operate compared to commercial turbines used by power companies, Lee said. The system’s disks also reduce the physical footprint of the turbine to roughly a quarter of the size of a conventional bladed turbine and it can be produced for one-fifth of the cost, Lee said.
Sol Electrica’s onsite power generation technology spun off as part of a larger energy project the company is pursuing. It hopes the turbine business will help fund production of a closed-loop solar desalination system that would convert seawater into potable water more efficiently than current technology, Lee said.
“It’s just a lot of practical useful technology and our understanding of looking at things and figuring out how to make them more efficient,” Lee said. “Most of the stuff we’ve come up with is not actually new by any means, but we’ve made it much more efficient, and efficient enough that we can get patents on those improvements.”
Made In Michigan: Muskegon-based Sol Electrica Renewable Energy Inc., wants to capitalize on the market for onsite power generation with its new EnvironGEN 800 unit. At the core of the technology is an ultra-efficient turbine developed by company co-founders Michael Lee and Gary Kerns. The product helps cut annual electricity costs by 25 percent for large energy users. The company hopes to begin commercializing its product in six months in conjunction with a $2 million raise from investors.
Editor's Note: A previous version of this story stated that the EnvironGEN 800 unit produced a base load of 800 megawatts. The correct unit is 800 kilowatts.