Green Energy for New Yorkers – the Case of Verdant Power

Dear readers,

My 4th day entry focuses on the business case of Verdant Power, a marine renewable energy company located on Roosevelt Island, on the eastern side of Manhattan. On this sunny Thursday afternoon, we were offered the opportunity to visit Verdant and get an insight into the business potential as well as challenges that this kinetic hydropower technology developer faces. In short, their business model is to generate electricity for small communities through underwater turbines. Hydropower in rivers is great, as it is constant and reliable unlike solar and wind power. The plant planned for Roosevelt Island has the capacity of 1 MW. A bigger capacity is not currently allowed, to prevent potential damage to the natural ecosystem. The model can be applied anywhere, but the objective of the company is to tackle the problem of lack of electricity in local communities in developing countries. By offering affordable technology suitable for small communities, Verdant Power aims at bringing electricity to areas and regions where lack of energy hinders all essential activities of society, such as running businesses and schools.

 

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As we learnt from the case study prepared by our Prof Bala Mulloth as well as during the excellent site visit, the biggest problem for Verdant is to generate cash flow and make the business profitable. The firm faces challenges with accessing external financing, as investors are not keen to finance a project that seems more like a “social project” than a for-profit business. Some investors got involved in the project party due to its media value, but soon withdrew as it did not generate fast returns. However, there are some investors who believe that there is business potential in the long run. On the other hand, despite environment being the hot topic, US government is not providing support for renewable energy businesses: operational since 1999, Verdant acquired the federal energy license for the commercialization of the power production as late as in 2012.

Verdant Power is a very interesting renewable energy company that could generate clean energy to thousands of households in New York, and has the potential to sell its technology to many other regions in the US, and beyond. However, the company has to come up with a profitable business model, given the relatively high operational costs and initial investment as well as the rather modest capacity of the hydroturbines to produce electricity.

On the way back, we took the cable car back to Manhattan – short but such a sweet journey, offering another new angle to gaze the Global City.

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