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With BlackRock as a partner and a new focus on project ownership, GE’s under-the-radar solar business may be in for noisier days ahead.
Photo Credit: GE
by Jeff St. John
July 17, 2019
General Electric is a big and sprawling company that’s undergone some dramatic reorganizations over the past few years, particularly in its renewable energy, energy storage and grid edge business lines.
But over the past four years, amid these large-scale corporate changes, a small unit of GE has built a growing business around developing distributed solar and solar-plus-storage projects.
On Tuesday, GE announced it’s taking this business to a new stage, via a partnership and majority investment by asset management firm and heavyweight renewables investor BlackRock Real Assets.
The new company, named Distributed Solar Development, will be 20 percent owned by GE Renewable Energy and 80 percent owned by a fund managed by BlackRock. The business, which has been incubated within GE since 2012, will focus on commercial, industrial and public-sector customers.
Erik Schiemann, CEO of Distributed Solar Development and a veteran of various GE business units, said in an interview that the investment would allow the company to expand its current project development work — and, for the first time, own the projects it’s developing.
“What we specialize in at Distributed Solar Development is the origination, development, design, execution, building, and asset management of distributed solar and storage projects,” he said. Most of its projects to date have been behind-the-meter.
“BlackRock’s investment further advances our growth in that platform, allows us to take on new markets, and allows us to double down in the markets we’re currently successful in.”
And while the business hasn't owned any of the projects it’s developed to date, that’s set to change with BlackRock’s investment. “The cash infusion allows us to participate as an owner of the assets,” he said.
BlackRock's push into distributed energy resources
BlackRock Real Assets has primarily invested in utility-scale renewables, with $5 billion invested in over 250 wind and solar projects with a total generation capacity of over 5.2 gigawatts. But it has made moves into distributed-scale solar projects this year, including April's undisclosed investment into small-scale solar project owner CleanCapital.
David Giordano, global head of renewable power at BlackRock, said, “This investment will deepen our clients’ access to the tremendous growth potential in the U.S. solar industry."
Distributed Solar Development has developed about 125 projects in 15 states, working with a variety of solar PV system providers and a set of regional electrical contractors, Schiemann said.
It has specialized in carport solar PV systems — “Our canopy solution, whether it’s in a carport or on top of a parking deck, is a big part of our volume, and something we’ve really differentiated” — and about two-thirds of its projects are behind-the-meter.
But it has also developed rooftop and greenfield projects, as well as front-of-meter, distribution-grid-connected systems, he said.
Battery storage systems now make up a small portion of its projects, but “a majority of our West Coast projects now have a high attach rate of storage,” he said, matching broader trends for solar power in those markets. “In most of the key states known for storage, almost all of our proposals and solutions incorporate them now.”
The U.S. commercial solar market has contracted in 2018 and 2019, according to Wood Mackenzie Power & Renewables, largely due to increasing market saturation and shifts to less favorable rate structures and incentive programs in key states such as California, Minnesota, Massachusetts, New York and New Jersey.
But WoodMac data also shows that developer-owners have captured an increasing share of this more challenging market, compared to those that limited their involvement to acquiring projects, while third-party financed projects have grown from about a third of projects in 2015 to more than half of all projects as of last year.