GE’s Adventures in Clean Tech

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A Q&A with Kevin Walsh of GE Energy Financial Services About Recent Renewable Ventures
One arm of GE’s financial services is dedicated solely to energy loans and investments—it’s known as GE Energy Financial Services. More recently, GE has formed a joint venture called Energy Technology Ventures with companies Conoco Phillips and NRG Energy that’s solely focused on spurring new renewable energy technologies and ventures. If money speaks louder than words, than GE’s recent investments speak volumes: The company has put $150 million behind ventures in solar, biofuels and clean coal technology and $6 billion behind renewable energy projects, including what will be, when completed, the largest wind farm in the world, located in Oregon (with test runs happening this summer).

Here, Kevin Walsh, managing director and leader of power and renewable energy at GE Energy Financial Services, talks about GE’s plans to make renewable energy cost-competitive and drive a new era of energy innovation.

E Magazine: So Energy Technology Ventures has already invested in three main areas—solar, biofuels and clean coal?

Kevin Walsh: We’ve been investing in clean tech for three or four years on our own—now we formed this venture to continue investing in this area with these two partners which allows us to play bigger, to leverage their expertise in this area, to see more deals, given all three of us are now looking for opportunities. We’ve invested 20-plus deals in this space on our own. The venture side of clean-tech is fairly new, fairly small dollars but we think highly impactful for GE in terms of the technology window.

E: It seems like a lot of that $6 billion going toward renewable projects is geared toward wind.

K.W.: Three-quarters of it is wind, and that’s not surprising given the penetration. We have a lot of wind in the U.S. in terms of megawatts installed. Wind is less expensive than solar. So it’s had more appeal in the marketplace. We’ve supported large-scale, utility-scale wind projects in the U.S. for several years and are leading the world in terms of installed megawatts. We do have some investments outside the U.S. as well, but a good chunk of that $6 billion is here in the U.S.

E: Is that beginning to change this year—is GE investing more in solar?

K.W.: Solar has become much less expensive because the price of the panels has come down dramatically with supply-and-demand dynamics and the improvements in efficiencies. We are looking at some very significant solar projects right now. Of course, GE Energy just announced its renewed foray into solar PV, a big announcement, so we expect to be supporting them in that effort with financial muscle for the projects. We did a very significant project in Kansas that we just closed on—it’s still being built, so we’ll put our funding in place later this year. But that was a $70 million transaction.

E: What can you tell me about Shepherd’s Flat Wind Farm—the world’s largest wind farm—being built in Oregon?

K.W.: It’s very noteworthy. The largest wind farm in the world, 850 megawatts, $2 billion project. We worked with a company called Caithness Energy to finish the development of it. It’s currently under construction, and will use GE’s 2.5-MW wind turbine. This will be the introduction of that turbine to the U.S. market [the turbines were launched in Europe a decade ago]. The project has garnered a number of awards, given the size and complexity of the transaction.

E: California recently raised its Renewables Portfolio Standard (the amount of state energy that must come from renewable sources) to 33% by 2020. Do you see that having an impact on the demand for renewable energy?

K.W.: California has upped the ante with the 33% target. That does drive a lot of demand. There’s some back pressure on renewables right now that we need to be straightforward about—where the economy is right now, with the budget struggles we see in Washington, and with natural gas prices being very, very low, renewables are up against some head winds right now. Without a price on carbon as well. Renewables continue to need some incentive support. That’s difficult in this budgetary environment. We continue to need the important long-term policy support to enable renewables to continue to maneuver down the cost curve and compete. Particularly against technologies that don’t have the carbon burden that many of us believe should be in place. [At GE] we continue to do what we can on the technology side and the cost side to enable renewables to compete as best they can in that context.

E.: What do you see as the most promising renewable energy ventures?

K.W.: On the venture side, a company called Ciris is innovating ways to accelerate the conversion of coal to methane both within the mine itself and with coal that’s already been extracted. We think that if it works would be an absolute game-changer to accelerate that process. We have invested in a number of smart-grid related companies: software, hardware, enabling the conversion of our grid to a more useful tool. We have invested in solar technology—companies that we think have a very compelling cost take-down story or efficiency story. Biofuels, energy storage—batteries and compressed air storage, ultracapacitors. We’ve invested in some wind technology, mainly a blade manufacturer and a permanent magnet generator for technology wind turbines. So we’re spreading our bets across what we think will be the most impactful and where we can see some real quantum gains.