Source: GE Reports
Jul 22.07.2019, XNUMX - GE and BlackRock, the giant investment firm with trillions of trillions of assets under management, have agreed to build a new powerhouse for the solar industry. As Distributed Solar Development, the company will design, build, own and operate distributed solar and storage solutions for customers.
The new company will be built on the foundation of GE's solar business, which was launched in 2012 by GE Managing Director Erik Schiemann. He founded GE Solar as a nimble start-up to design and build on-site renewable energy solutions for customers. Today the company employs more than 60 people - with a total experience of more than 3 gigawatts - who have developed more than 125 solar power plants for customers from industry, trade and administration. GE will keep 20% of the business; BlackRock takes over 80% of the shares.
The BlackRock deal aims to position Distributed Solar Development (DSD) well in response to demand for new capacity for decentralized solar energy generation. In fact, DSD has ambitious growth targets. Currently, around 100 megawatt solar projects are being built locally each year. In five years, the project pipeline is to be quadrupled. "
BlackRock Real Assets will capitalize on this development expertise. The company manages 6 trillion in assets and operates one of the world's largest 5 billion dollar renewable energy investment platforms, investing in 250 solar and wind projects worldwide with a total generation capacity exceeding 5,2 GW. "This investment will help our customers gain access to the tremendous growth potential of the US solar industry," said David Giordano, global renewable energy leader at BlackRock. "DSD provides extensive internal capabilities and a strong team of experts across the business and industrial value chain. We look forward to working with the DSD team to capitalize on the opportunities for development resulting from the growing interest in renewable energy for our customers. "
Operating as an independent company will also streamline the operation of DSD. "Removing myself from GE in this way will make things easier for me now, with lower capital costs, lower transaction costs, [higher] execution speed, and a kind of one-to-throat-to-choke from the perspective of our customers. Says Schiemann.
When DSD went into operation seven years ago, the on-site solar power market was served primarily by local solar companies, which sometimes promised more than they could deliver. The prevailing business model focused on building installations that customers would finance and own. The idea behind DSD was to reduce the relatively high barrier to entry. By leveraging GE's resources, DSD has endeavored to provide a consistent, high-quality service that makes solar power decisions easy.
DSD would not only build and operate solar systems for its customers, but also finance and retain them, and its early success provided evidence of this concept. Schiemann recalls that a paper manufacturer north of New York had received wind that wanted to supplement its local energy supply with solar energy. "First, we focused on whether we could build a solar field for them. Then we figured out how it works (as a company). "
After the contract was signed, employees at rival energy development companies began contacting Schiemann to find out what GE was up to. “People in the market started saying, 'Wow, you could be into something,' he says.
From the start, DSD was not a standard GE company. It offered to put together optimal solutions for its customers, even if it meant using products that were not made by GE. There were no factories or large service contracts. Some executives saw distributed solar as a threat to the traditional power business, which has been based on a hub-and-spoke model of power transmission since the pioneers of GE and its customers a century ago. “There was a lot of discussion about what I was doing,” says Schiemann. "I've argued that if we don't try to disrupt our own business, someone else will."
He got it right. In the end, Schiemann's customers wanted the benefits of having a local power source that was tailored to their needs, which does not require a lot of capital. When Home Depot agreed to allow DSD to build more than 10 megawatts of solar power in its East Coast stores, the logic of decentralized power was well on its way. Now it is conventional wisdom.
