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56 MICROPOWER: THE NEXT ELECTRICAL ERA FINDING FINANCING 57 ized interconnection rules, streamlined permitting stan- dards, net metering requirements, new tax code provisions, and reduced stranded-asset charges for users. Unlike Insull and his contemporaries, who pushed for consolidation and monopoly, these networks advocate decentralization and fair competition in the power business.124 Finding Financing Although utility stocks have long been considered stable and unexciting, suitable for “widows and orphans,” those belonging to a handful of power industry newcomers behaved out of character in the first months of the new mil- lennium. Stock in Plug Power, which had opened at $15 per share the previous November, leapt from the low $20s to a high of $156 before dropping close to $50 by mid-May. Shares in Ballard jumped from the $20s to nearly $145 before dipping into the $70s. Astropower, Spire, and Energy Conversion Devices also experienced stock gyrations, with most staying well above pre-surge levels. Ballard raised large amounts of capital through a secondary offering, while those that had not yet gone public found themselves the friendly focus of investment bankers.125 The recent investor interest in micropower companies indicates a deeper trend, paralleling that described in Networks of Power, Thomas Hughes’s survey of the develop- ment of electric power systems in Western society between 1880 and 1930. Initially, “inventor-entrepreneurs” like Edison were the key actors, presiding over the creation and early application of their innovations. Later on, other entre- preneurs—“manager-entrepreneurs” and “financier-entre- preneurs”—such as J. P. Morgan began to take center stage as the problems blocking the growth of the new system became more managerial and financial. Inventors and engineers still played an important role in the evolution of the system, but were complemented by players experienced in the complex- ities of organization and financing.126 The new electric power system appears to be evolving in the same way. Echoing Hughes, equity analyst Hugh Holman explains that “one reason we take a more optimistic view toward the future of energy technology is that we see a new breed of entrepreneur appearing in the power indus- try—the financial, versus the techie, entrepreneur....Thus, from day one, the financial entrepreneur brings rigor to the management of a technology startup and has an eye on the financial end game, the exit strategy.” Holman lists a grow- ing number of investment funds, both venture capital and those funding companies at a later stage, that specifically tar- get business opportunities created by energy deregulation, as well as venture funds that include energy-related invest- ments in their diversified portfolios. (See Appendix B.)127 For small, less-established high-technology firms that often lack initial access to capital markets, venture capital funds can provide essential seed finance, experienced advice, and access to managers with business skills to balance those of the more technically inclined entrepreneurs. The United States has the most highly developed venture capital market, with hundreds of funds reviewing thousands of financing proposals each year. Although the first fund was started in Boston in 1946, the model was copied and improved upon on the West Coast, where it has driven the Silicon Valley information technology revolution and the biotechnology revolution that originated in San Francisco. As restructuring picks up in the United States, with 24 states now starting to open their power generation to competition, energy-focused venture firms are appearing.128 One prominent firm, San Francisco-based Nth Power Technologies, has invested its first $65 million and is raising another $75–$100 million. Current investments include micropower technology suppliers as well as firms that focus on providing power quality. Nth Power’s investors are utili- ties—among them Pacificorp, Sierra Pacific, and Electricité de France—that see these technologies as a marketing tool for attracting customers in a competitive market. Founding part-PDF Image | Micropower: The Next Electrical Era
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