Commercial electricity users who find their electric utillity bills wildly inflated by so-called demand charges will soon discover that there is a way to dramatically reduce these charges thanks to a revolutionary new system developed by Arista Power (ASPW.OB). Arista's Power on Demand system integrates wind and solar energy, grid power and energy storage to reduce the spikes in power demand from the grid that can lead to these onerous charges.
The concept of a demand charge is confusing to many commercial electric users, but essentially it is a charge to reserve a certain amount of capacity based on a customer's peak usage. For example, if a business turns on its machinery in the morning and requires a surge of power from the grid for ten minutes many utilities will charge the customer for access to that amount of capacity for the entire billing cycle. The theory behind the demand charge is that customers who require the most capacity should share the cost of building and maintaining that capacity.
Demand charges can account for up to 30% to 70% of a commercial electric bill, and they are proliferating quickly across the United States, Canada and elsewhere in the world as utility companies look for ways to pay for increasingly expensive construction and maintenance costs by imposing additional charges on customers who require the most capacity -- even if they only use that capacity for a brief time each day.
Arista Power's Power on Demand system is designed to utilize energy created from the Company's proprietary WindTamer wind turbine, solar panels and also energy drawn from the grid during low-usage periods combined with a storage and management system that enables the customer to draw power from its own storage system when demand reaches a certain level. By smoothing power demand on the grid and 'shaving the peak' demand spikes, demand charges are reduced and electricity bills are lowered.
So far, Arista has sold three Power on Demand systems. The Company says its payback period for its system can be as low as 2 to 6 years, which is far below the payback period of most stand-alone renewable energy systems.
Arista has also adapted the Power on Demand technology for mobile applications that integrate wind, solar, fuel cells and energy storage as an alternative to diesel generators at off-grid locations.. Arista has sold two of these units so far, one to the U.S. Army and one to the Federal Bureau of Investigation. The military market potential for these units appears to be very large. Recent articles in The New York Times, on cnn.com and elsewhere have focused on the danger to military fuel convoys that deliver diesel fuel to generators at remote sites. The Arista Power mobile system could dramatically reduce the need for these fuel convoys.
Arista Power has a seasoned executive and engineering team that previously served at Ultralife Corporation (ULBI), a large and well-known energy storage company. By combining their expertise in energy storage with Arista's WindTamer wind turbine, solar energy and fuel cells, Aritsa appears to have hit upon a winning combination.
Demand charges are increasingly becoming a hot topic of conversation as more utilities impose them and a growing number of large electricity users are beginning to understand what they are and how and why they are imposed. Until Power on Demand came along, these electricity customers have had no alternative other than changing the way they run their businesses, by staggering shifts, or trying to use their machinery at different times in attempt to avoid the brief but costly demand spikes. Power on Demand is a game-changer in that it allows the customer the freedom to run its business as it sees fit, rather than changing its methods of operation in an attempt to reduce demand charges.
In Power on Demand, Arista Power appears to have come up with precisely the right product at precisely the right time.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: Long ASPW.OB