GE investment arm reaches milestone in renewable-energy investments

STAMFORD — GE Energy Financial Services started investing in renewable energy years before the signing of the world’s leading climate-change agreement. A rupture in that pact likely will not undermine its commitment to the strategy.

The Stamford-based GEEFS announced late last month its cumulative investments in renewable power sources such as wind, solar and hydroelectric had surpassed $15 billion. Representing its fastest-growing business segment, the scope of investment shows the increasing economic viability of fossil fuel alternatives and its ability to withstand President Donald Trump’s decision last week to pull the U.S. out of the 2015 Paris climate accord.

“It’s a high-growth area,” Kevin Walsh, managing director of GEEFS’ renewable energy group, said in an interview last week. “The technologies have been reliable, and costs have come down significantly. The industry is delivering on all those fronts. It’s a global phenomenon.”

Global investments

GEEFS has committed the resounding majority of the $15 billion to projects since 2006, when it formed its team dedicated to renewable ventures.

“We saw in ‘06 that renewables were gathering a lot of momentum,” Walsh said. “Prior to that, we were investing in hydro projects, a few wind projects, but with very small dollars.”

Fifteen billion dollars in commitments to renewable energy does not sit on GEEF’s books, as the total reflects investments through the years. Returns from earlier projects contribute to new ventures.

The firm now invests about $2 billion to $3 billion each year, with about $1 billion to $1.5 billion of that total going to renewable energy. In 2016, GEEFS invested tax and cash equity in 16 U.S. renewable energy projects

Its investments span 17 countries, including Mexico, Canada, India, Japan and France. Wind energy accounts for 75 percent of the total, followed by 18 percent for solar energy and 7 percent for renewable technologies. Recent wind investments include the first U.S. offshore wind farm, located a few miles from Block Island, R.I., and the Merkur wind farm in the North Sea off the coast of Germany.

GEEFS principally invests in projects that use GE equipment.

“Typically, these are significant financings in the hundreds of millions of dollars, in which oftentimes we’re one of the lead investors,” Walsh said. “We can provide a number of options such as construction financing or long-term debt or equity financing — whatever the customer may need.”

With the Block Island investment, the wind farm’s developer, Deepwater Wind, received long-term financing to acquire the five GE turbines that power the project. Deepwater officials declined to provide terms of the deal, but said they were pleased with the support they receive from GEEFS.

“Our success at the Block Island Wind Farm was supported by world-class U.S. investment partners like GE Financial Services, and we couldn’t have asked for better financial partners,” said Deepwater CEO Jeff Grybowski. “Their backing is a testament to the significance of this innovative project and the strength of the American offshore wind industry.”

The fourth quarter of 2016 ranked as the second-strongest quarter for U.S. wind installations on record, with GE renewable energy projects leading in market share, according to the American Wind Energy Association.

GEEFS’ $15 billion in investments in renewables have generated enough energy to power 3.5 times the number of homes in Los Angeles, avoid more than 41 million metric tons of greenhouse gases, or take almost 9 million cars off the road.

Long-term commitment

GEEFS’ announcement of reaching the $15 billion investment mark preceded by a week the U.S. president’s decision to withdraw from the Paris accord, which has been signed by 195 countries. To meet its goals within the pact, America had pledged to cut greenhouse gas emissions 26 percent to 28 percent below 2005 levels by 2025 and allot up to $3 billion in aid to poorer countries by 2020.

A number of chief executives of Fortune 500 companies, including GE CEO Jeff Immelt, have criticized Trump’s decision.

“Disappointed with today’s decision on the Paris Agreement,” Immelt tweeted June 1. “Climate change is real. Industry must now lead and not depend on government.”

Walsh also expressed his disappointment with the U.S. exit from the climate agreement. He said GEEFS would press on with its investing in renewable sources. Clean energy would not soon eliminate the need for fossil fuels, but Walsh foresees them continuing to compete well with traditional power sources such as natural gas.

“You’ll still need gas generation to address your baseline requirements,” Walsh said. “We think that the future is a gas-fired-plus-renewable equation, with a shift to more and more renewables.”


Source :

Smart Grid Bulletin July 2019

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