The TH Interview: Brian Reidy of MicroPlanet

Here is an interview with Brian Reidy, CEO of MicroPlanet. I could try to explain in some detail what his company does, but Brian does that much better than I could during the interview. All I will say is that it has to do with electric voltage regulators that apparently could optimize significantly our electricity consumption by reducing inefficiency in the current delivery system, thus saving energy and reducing greenhouse gas emissions. The first part of the interview is more personal because I was curious to find out where he came from, the second part has more to do with his company and its technology, and the end has more general questions. I want to thank Brian for taking the time to give such detailed answers.TreeHugger: Hi! Thank you for agreeing to this interview. Since when you have been interested in the environment?

Brian Reidy: I first became "conscious" of the environment during business school. I completed my MBA at the University of Colorado in Boulder, CO in 1986. It's hard to live in a place like Boulder and not be conscious of the environment.

Perhaps coincidentally, during my graduate work I also became interested in advanced electronic technologies. Our company, MicroPlanet, allows me to combine both interests.

TH: Can you remember anything in particular that first made you aware of the necessity of lessening our impact on nature?

BR: The January — February 1997 issue of the Harvard Business Review had an article called "Beyond Greening: Strategies for a Sustainable World" written by Stuart L. Hart.

There were some remarkably troubling statistics in this article. For instance: " if the entire world lived like North Americans, it would take three planet Earths to support the present world population".

As a businessman, nirvana is finding a way to improve troubling societal problems while creating shareholder wealth. Mr. Hart suggested that "The achievement of sustainability will mean billions of dollars in products, services and technologies that barely exist today". The opportunity he laid out in this article really spoke to me.

For me, MicroPlanet and its electronic voltage regulators are the manifestation of this idea.

TH: Any environmental heroes or mentors?

BR: S. David Freeman.

Dave has been at the game of energy efficiency in the electric utility industry for almost 40 years. Dave has been instrumental in shaping national, regional and local policy and regulations. Unlike many policymakers, Dave has actually run several of the largest public utilities in North America. In most if not all of these utilities, Dave aggressively employed energy efficiency programs to bring these organizations back to financial solvency — proving the avoided capital economics of energy efficiency.

I am very fortunate to have Dave as member of MicroPlanet's board of directors.

TH: Any "epiphany" anecdote?

BR: Generally when the we talk about issues such as global warming, greenhouse gases emissions, climate change we talk in terms that are way too big for people to get their arms around. For instance, have you ever actually seen a "ton" of greenhouse gases? Most people are just trying to get their kids to school, get to work on time and stay healthy. Many of these people would truly like to help but don't know how.

Therefore, my favorite anecdotes reduce the scope of very large problems to bite sized pieces and/or help inform the soccer mom or little league dad how to help without adding stress to their already hectic lives.

Here is a self-serving story that perhaps you'll appreciate:

If the MicroPlanet High Voltage Regulatorâ„¢ (HVRâ„¢) was deployed across North America on individual residences, each home would successfully reduce its greenhouse gas emissions by about one ton per year.

This is based on the following assumptions: a typical home in the U.S. uses 10,000 kWhs per year, emitting about 2.5 pounds of greenhouse gases per kWh totaling 25,000 pounds per year, per home. Assuming an average energy savings of 10 percent, on the homes fitted with the HVRâ„¢ an average residence would successfully reduce kWh usage by 1,000 and emissions of greenhouse gases by about one ton per year, per home. With approximately 150 million meters in the U.S., this means we (i.e., U.S. residential consumer) could collectively reduce our impact on the environment by 150 million tons of greenhouse gas emissions per year.

This sounds like a number that would fit nicely in many news stories. (One note of caution: I'd like to point out that because of some regulatory requirements the HVR is only sold to electric utilities today. Therefore if your readers are interested in installing an HVR they will need to work through their electric utility).

TH: What are your environmental goals, what are you doing to achieve them and what are the obstacles that you are facing?

BR: The Company's mission is not targeted specifically on the environment — it is a bit more general: MicroPlanet is in the business of improving the human condition by intelligently using technology to reduce inefficiency.

To achieve our objectives as a company, we are working closely with the electric utility industry in North America, South America and Europe to advance our objectives. Progress is being made at a deliberate pace.

The primary obstacle we are facing is the lack of economic incentive for utilities to aggressively tackle the challenge of system inefficiency. Regulatory rate structures in North America still presume the U.S. is experiencing a period of rapid growth — similar to say what is happening in China or India today. Growth based rate incentives increase the cash flow of electric utilities that choose to deploy more assets versus fewer. This is inefficient in terms of capital and electricity and does not match reality.

TH: How do you stay motivated despite all the "doom & gloom"?

BR: I'm a glass half full person and therefore don't accept "doom and gloom" as the natural state.

I've also found that if you read editorial's from periodicals published at any point in the distant past (e.g., 50 or 100 years ago) and extrapolated the worst of the news stories — the probability of us having this discussion in 2005 was miniscule as the world should have ended by now for one reason or another.

In addition, I am very hopeful about the future. The generation of kids following us is quite "conscious" and will provide the leadership needed to deal with a vastly different world then I knew growing up.

This assertion is based on interaction with my two teenage daughters their friends and peers.

TH: Could you tells us more about what MicroPlanet is doing and how that will help the environment?

BR: MicroPlanet makes "point-of-consumption" electronic voltage regulators.

For the non-engineer, the products are essentially computers that are installed in conjunction with your electric meter on the side of your home or small business to help you reduce the number of kWhs consumed.

MicroPlanet's products utilize a patented combination of advanced power electronics (i.e., the computer) and transformer technology that raises or lowers voltage delivered from the electric utility to a constant output voltage.

The products provide utilities or small businesses the ability to deploy energy efficiency through a concept called conservation voltage reduction (CVR). CVR decreases the voltage at which electrical power is consumed, and for most electrical devices, the lower the consumption voltage, the lower the overall kWhs consumed. By regulating delivered voltage at the point-of-consumption to 114 - 115 volts, MicroPlanet's products allow utilities and their customers to capture the full potential of CVR. (CVR is considered a form of demand side management (DSM)).

It's the Company's view that MicroPlanet's products are unique, solution-oriented, focused on a key issue (waste in the electric utility system), and that these products will significantly modernize the electric grid so that it operates more efficiently and intelligently.


Energy efficiency products

• MicroPlanet's EVRâ„¢ and HVRâ„¢ products regulate a consumer's voltage received from its electric utility to the lower end of the allowable delivery range, thereby reducing energy consumption and associated costs, improving the lifespan of electrical appliances, and reducing greenhouse gas emissions.

• The Company is currently completing the design of a new threephase product (the EVR 3Pâ„¢) targeted for sale to mid-size commercial businesses such as restaurants and convenience stores. The EVR 3P serves the same role as an EVR only for 3-phase services. MicroPlanet expects prototypes of the EVR 3P to be available during the 2nd half of 2005 and is targeting initial commercial demonstration projects by the end of 2005.

Voltage compliance products

• MicroPlanet's LVRâ„¢ product boosts the operating voltage for consumers suffering from chronically low voltage service from electric utilities, assisting the utilities in maintaining the minimum level of voltage service to these consumers.

One of the unique aspects of our approach is that most energy efficiency programs promoted by electric utilities have taken place "behind the meter", meaning in the homes or businesses of their customers (e.g., compact fluorescent lightbulbs). MicroPlanet believes there is opportunity to improve efficiency on the utility side of the meter as well. Why? According to the DOE's National Renewable Energy Laboratory, up to 70% of energy is wasted from the point where the original fuel source enters the system to the point where a consumer uses the energy in the form of a kWh. This means collectively there is a lot of work to be done to improve the efficiency of the grid from top to bottom.

For instance, most electrical equipment and appliances in businesses and homes operate efficiently at 114 to 115 volts. Due to technological limitations of the existing electricity grid, the majority of U.S. states allow electric utilities to deliver higher voltage to ensure that customers furthest away from the substation receive the minimum 114 volts. The normal operating range of line voltage service is between 114 volts and 126 volts. As a result, the vast majority of electric utility customers receive more voltage than necessary. This translates into wasted electricity, higher operating and capital costs for electric utilities and customers, larger electricity bills, shorter lives for electrical apparatus and increased greenhouse gas emissions resulting from the production of surplus electricity. Many consumers, and commercial enterprises in particular, have turned to various smallscale conservation methods in an effort to curb rising electricity rates, with varying levels of success.

By regulating delivered voltage at the point-of-consumption to 114 - 115 volts, MicroPlanet's products reduce power consumption for most locations. Meaning:

• Electric utility customers can use MicroPlanet's products to reduce operating costs for electricity, reduce capital expenditures by prolonging the life of electrical equipment and help reduce each customer's contribution to greenhouse gas emissions.

• Electric utilities can use MicroPlanet's products to lower electricity demand of their customers, while conforming to minimum service requirements at costs that are lower than the traditional infrastructure upgrades used to increase electricity grid capacity.

TH: What would it take for your company to completely succeed in its goals?

BR: A MicroPlanet product is the standard solution for point of consumption voltage regulation in the electric utility industry.

TH: How would the world be different if you had your way?

BR: This is a big question. I'd like to pare it down to a few bite sized pieces.

There are two changes we'd like to see electric utility regulators and utilities adopt immediately:

• Reduce the maximum allowable voltage in the U.S. defined in ANSI C84.1 by at least 10 volts (i.e., from 126v to 116v) which would translate into millions of recovered kWh's per year, driving a reduction of millions of tons of greenhouse gases per year, a reduction in stress on overtaxed distribution and transmission systems, and a reduction in operating and capital costs for utilities and their customers;

• Implement a financial incentive program to motivate end use customers to install HVRs, EVRs and EVR 3Ps in droves. How? Most utilities we speak to suggest that if public utility commissions would resurrect the 1980's style financial incentive programs designed to proliferate adoption of demand side management programs that they would install the MicroPlanet products en masse.

Under DSM type programs in the 1980's utilities paid for customers to install weather stripping, wrap hot water heaters, put in extra insulation and add double pained windows to their home. Why? Because way back in the 1980's everyone understood that the economics of reducing a kWh versus building a kw of capacity were dramatically in favor of kWh reduction. Those economics have not and will not change until the utility infrastructure reduces its total waste factor, which to a large extent is driven by the physics of the traditional grid design.

A well designed program to motivate customers to install an HVR, EVR or EVR 3P would not only help recover millions of kWh's per year, reduce millions of tons of greenhouse gases but it would help improve the reliability of the U.S. distribution grid.

TH: Could you please describe what you do, in an average week, in the course of your work at MicroPlanet?

BR: I believe shareholder value is created through people. As such most of my time is spent on "people" related tasks.

These people include our customers, shareholders, management team or board.

TH: How many people are working with you?

BR: The MicroPlanet business model calls for a small, high performing team of executives which operates as the core. The core group then outsources the heavy labor portion of each function to best in class partners. This approach reduces the corporate G&A; and fixed expenses, which we believe meets the dual goals of shareholder value and efficiency.

Therefore as of today we have 7 members of the management team. These 7 probably control 100+ people through the outsourced relationships and other partnerships we operate within.

TH: Where do you see the company in 5-10 years?

BR: It is our intention to be the standard solution for point of consumption voltage regulation in the global electric utility industry.

TH: What thoughts or images are conjured up at the mention of the word 'Nuclear'?

BR: A technically viable fuel source that comes with risks that I believe are unacceptable to society.

Before society expands the role of nuclear power, I'd prefer we utilize every other resource at our disposal. However, in order for this to happen we will need to see a lot more leadership and a lot less politicking from policymakers and regulators to get there.

TH: How do you unwind from the responsibility of your position?

BR: I exercise or spend time with my wife & kids.

TH: None of us are angels. We all 'sin'. Share with us your personal environmental vice(s).

BR: We live in an older home that was remodeled before we bought it. The home has quite a bit of recessed lighting which requires more electricity then we really need to adequately light a room. It's stylish but wasteful.

On the positive side, I will point out that everyone on the executive team at MicroPlanet uses some form of public transportation to get to work. For instance I walk to and from work which is about 6 miles round trip.

TH: Is there a book our readers should rush down to their local library to borrow?

BR: One of the best reference sources I use is Power Loss by Richard Hirsh.

TH: Can you describe the last environmental success you had (large or small) that triggered the thought: "You know, if we could do more of that, we might just pull this off."?

BR: The recent announcement MicroPlanet recently made about the relationship with AES indicates how Kyoto will help drive significant change throughout the global electric utility industry. Here are two paragraphs from that release:

"SEATTLE, Wa. — MicroPlanet (TSXV: MP) today announced an agreement with AES Corporation (NYSE: AES) to pursue a pilot program introducing MicroPlanet's point-of-consumption voltage regulators on the electric system of AES's subsidiary, Eletropaulo, in Sao Paulo, Brazil. The voltage regulators improve energy efficiency and distribution system reliability.

This innovative program is intended to demonstrate the capabilities of MicroPlanet's High Voltage Regulatorâ„¢ (HVRâ„¢) to reduce electric energy consumption by regulating voltage used by customers to a level that optimizes energy utilized by electrical equipment. In addition, the MicroPlanet regulator is capable of either lowering or raising voltage to a pre-programmed set point, which will enable Eletropaulo to improve voltage- related reliability."
TH: Any final words you wish to share with our readers?

BR: Capitalism and treehugging are not mutually exclusive. We need to use our economic power to reinforce what is important to us — invest in stocks like MicroPlanet(TSXV: MP), buy products that promote sustainability, work with your local electric utilities and state regulators to change the way they view capital, make rational choices about the people who run your country, most of all get engaged in your life!

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