Russell W. Ray, Contributing Editor, Hydro Review magazine
December 27, 2011 | 4 Comments
Michael P. Maley is the newest member of the executive team at Hydro Green Energy LLC, a developer of low-head hydropower projects. Maley discusses the company's technology, its business strategy and his decision to jump into the hydropower business.
In May 2011, Michael P. Maley, an experienced developer of energy projects, was named president and chief executive officer of Westmont, Ill.-based Hydro Green Energy LLC, an enterprising company with grand plans to develop low-head hydro projects at non-powered dams in the U.S.
In addition to providing vast experience in the development, design and construction of power generation facilities, Maley raised a lot of cash to invest in project development through a deal with Providence Renewables LLC, a renewable energy investment company in Dallas.
The infusion of cash will be used to expedite the development of 28 low-head hydropower projects in 14 states.
Hydro Green Energy was founded in 2002 by Wayne F. Krouse, the company’s executive vice president of technology. Mark R. Stover is the company’s vice president of corporate affairs. Together, this team of executives has a wealth of financial, regulatory and technology experience to move the company forward in several markets throughout the U.S.
In September 2011, the company was selected by the U.S. Department of Energy to receive $1.8 million for research, development and deployment of its low-head hydropower system.
Hydro Review sat down recently with Maley to discuss the company’s technology, its business strategy and his decision to enter the hydropower business.
Q. Why did you decide to join Hydro Green Energy?
Maley: In the long run, you have to seek to be the low-cost producer. I was looking around at different technologies, and I met these guys (Krouse and Stover). I was fascinated. I looked at the numbers for the levelized cost of energy. They looked low to me. We spent three days going over every number. I convinced myself the numbers were nominally correct and that our chance to be the low-cost producer in renewables was very high.
I kept looking for fatal flaws. I couldn’t find any. Then I convinced myself that the technology works and was protected. Then I pushed the numbers around and evaluated the returns.
It was an easy decision to come on over. In the long run, I want to be the low-cost producer in my sector. I don’t think wind and solar can come close to what we can do.
Q. Describe the deal with Providence Renewables. How did it come about?
Maley: I took it to a very smart guy by the name of Michael Childers (president of Providence Renewables). I sent him our book and I said “I’ll call you tomorrow to go over it.” I called him the next day and he said, “I get it. We don’t need to go over it.” He saw it exactly the same way I saw it. An energy person looks at deals differently than a venture-capital, pure-money player. They did a lot of due diligence though, which was prudent. I’d rather not get into the amounts of funding, but they have committed a significant amount of money to the company and to development.
Q. Describe your patented technology. How does it work?
Maley: People think that our intellectual property is our turbine. But it isn’t. That’s the only thing that isn’t our intellectual property. Our turbine design is a modified bulb design. It is more than 80 years old.
The crux of why we will be successful is the ability to cost effectively install a low-head project. If you do a big civil play with a lot of concrete, your cost per kilowatt goes way up. What Wayne came up with was an idea for a steel frame where we put turbines at the bottom of the frame.
That steel frame is installed easily at an existing impoundment. It can be 100 feet wide or much smaller depending on the site. Wayne came up with the concept of stacked modules.
That is what he patented — the frame with turbines in an array and stacked modules. It was a great solution to what you do when hydro resources decrease in size. There are thousands of those types of resources in this country. Our goal is not to have the most efficient turbine. Our goal is to have a very effective turbine with the lowest levelized cost of energy. My goal is to be the low-cost provider to our customers.
We are very focused on the U.S., but after we get established here, this technology could be more valuable internationally. There’s just a lot of opportunity.
Q: How do you determine which sites to pursue and develop?
Maley: We have 28 projects that we’re actively pursuing. We’re very active in 14 different states. Developing power plants is like making popcorn in a way. You really don’t know which one is going to pop. If you try to force one to pop, it won’t.
The bottom line is you have to have somebody who wants to buy the power. You have to talk to those people to find out where they’re at in their process. Even if you have a low-cost producer in an area where a person is over- subscribed, they can’t buy your power. You have to find a customer that’s ready to buy power. We have to make sure we don’t put too much time or money into a loser, which is why we analyze all sites in great detail and toss back the ones we think won’t work. This is something I’ve learned over so many years of doing it different ways.
We are getting an incredible amount of interest. Some of our Mississippi River units have as much as a 90 percent capacity factor. That’s what lowers your levelized cost of energy.
Q: What can regulators and lawmakers do to encourage more development of hydropower?
Maley: Every one of our facilities is at an existing dam. So we are low impact. The U.S. Army Corps of Engineers and Federal Energy Regulatory Commission coming together to put together the updated memorandum of understanding has been a step in the right direction, but we need more ways to get our projects developed more quickly. I would also like to see us get every benefit every other renewable gets. Why shouldn’t we get the same production tax credit that wind and solar get? I would like to be treated the same. I’ll go toe-to-toe with those other technologies, especially with the same incentives.
Q. Describe your experience in developing new power generation facilities. Before joining Hydro Green Energy, what kinds of projects did you develop?
Maley: I have been involved with virtually every fuel type from nuclear, coal, natural gas, oil, biomass and now hydro. I have done the majority of my development work with natural gas. Interestingly, I have learned there are many similarities in the development process, irrespective of the technology or fuel type. Hydro is similar in many ways to other asset classes I have developed, with the biggest difference being the licensing process, which is quite unique. A developer is a risk manager that spends development dollars wisely while avoiding fatal flaws. Development is also very enjoyable because every day is different: one day, you’re dealing with engineers, the next day it’s bankers. Day three might be politicians, and so forth. It’s a roller coaster ride, but there’s also a great deal of satisfaction.
Q. Your company was recently selected to receive a $1.8 million grant from the U.S. Department of Energy to help fund development of your low-head system. How do you plan to use those funds?
Maley: Hydro Green Energy was fortunate and thrilled to receive two grant awards from DOE. It was a very exciting moment for the company and investors. The first grant award will help us complete the final design of our modular bulb turbine, which we intend to deploy in nearly all of the projects we are currently developing. After completing the design and modeling of the turbine, we are going to build a 1/3 scale unit and test it at Alden Laboratory for performance. The design and model testing will put us in a position of high confidence when we move into commercial scale design, fabrication and deployment, which brings us to the second grant award. With the second grant, DOE will assist in the fabrication of our first commercial low-head unit and supporting infrastructure at a project of ours in Pennsylvania that is presently in the FERC licensing process. Once the first unit is installed and tested successfully, we will then install and operate four additional units to complete the 4-MW project. In addition to partnering with DOE, Hydro Green Energy is proud to be partnering with HDR, Mechanical Solutions Inc., and Alden Lab for both grants. We will make sure DOE’s funding is put to excellent use.
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