This solar-energy startup is following the sun — and the money

Much gnashing of teeth accompanies just about any discussion of energy prices in Illinois. But Chicagoans ain’t got nothing on residents of the U.S. Virgin Islands. Islanders pay 58 cents per kilowatt hour, roughly four times the average cost of energy in Illinois. And they use a lot more energy, too. According to the Energy Information Administration, the U.S.V.I. consumes five times more energy per capita as the U.S. average.

Veriown, a Chicago solar-energy startup, aims to offer the University of the Virgin Islands a way out of the Island’s crippling energy costs. Last week, the company, a spinoff of solar-farm developer New Generation Power, inked a 20-year agreement with the university to build 10,000 solar panels on two of its campuses.

The distributed solar system will use 4.2 acres on the St. Thomas campus and 3.9 acres on a campus on St. Croix to produce 4.5 million kilowatt hours each year, enough to power 1,000 homes and 50 percent of the university’s power.

The university will finance the project through a power-purchase agreement, in which Veriown builds the installation in exchange for a contract with locked-in rates.

The Virgin Islands contract is a big win for the young company, but there are only so many Caribbean islands with exorbitant energy costs. Like the rest of the solar industry, Veriown’s long-term success hinges on its ability to make the case for solar adoption domestically, where comparative energy costs are much lower.

The company relies on a distributed solar energy model, planning to build individual solar microgrids — essentially small generating plants — at universities, hospitals, military bases, and other large complexes. Veriown then locks each institution into a long-term, fixed-rate contract, as with its Virgin Islands’ contract, or leases the technology to the firms in exchange for a monthly rate.

Joel Gamoran, a solar energy expert at green startup Generaytor, says that distributed energy models that use microgrids save by keeping bleed to a minimum. “It’s most efficient to deliver electricity close to where it was produced,” Gamoran says.

That’s one of the reasons Veriown CEO Steve Johanns believes his firm can scale beyond the Virgin Islands.

“Technology has dramatically influenced the size, capability and accessibility of computing and communicating over the last two decades,” CEO Steve Johanns says. “The next two decades, it will do the same to change the way we consume energy. We believe a day will come when everyone will harness his or her very own energy.”

When it comes to regulation, Veriown has the wind at its back. The Obama Administration has committed to doubling the nation’s solar capacity by 2020. In 2010, Governor Quinn signed into law interim goals intended to get the state’s solar consumption to 6 percent by 2015.

Locally, the market is small but moving fast. In Illinois, the $27 million invested in 2012 to install solar on homes and businesses represented a 259 percent increase from 2011, and the industry is expected to see similar growth this year, according to the Solar Energy Industries Association trade group.

With so much more money to play with, Veriown is partnering with the Galvin Center for Electricity Innovation at the Illinois Institue for Technology to develop the next generation of microgrids. The not-for-profit Galvin Electricity Initiative set up “smart” switches and electrical-service loops on the IIT campus, decreasing power demand by 20 percent and enabling the campus to rely on its own microgrid eventually.

ABOVE: (l to r) Dr. Chirinjeev Kathuria, Chairman of Chicago-based Veriown Energy; Dr. David Hall, President of University of the Virgin Islands; and Dr. Mohammad Shahiehpour, Director of Chicago-based Galvin Center for Electricity Innovation at IIT sign the energy deal.