GE Unit Increases Investment in Renewable Energy

BY JESSICA PAPINI
E Energy Financial Services, recognizing opportunities in renewable energy, recently increased its investing target in the space by 50%, to $6 billion by 2010. The initiative began over five years ago and the allocation to renewable energy has steadily grown. The group, a unit of GE, recently crossed the $3 billion mark with its largest wind power transaction deal to date. GE EFS made a $300 million investment in a 600-megawatt portfolio of wind farms in Oregon, Minnesota, Illinois, and Texas owned by Houston-based Horizon Wind Energy, a subsidiary of EDB Energias de Portugal SA. The group is no stranger to investments in wind projects which look like a forest of mammoth pinwheels. Technology continues to improve, making wind energy more cost-effective.

"Our main focus is on wind investments, and we've been active for many years in the area," says Kevin Walsh, managing director and leader of renewable energy at GE EFS whose investments have moved beyond the US. GE EFS has $16 billion in assets under management and 350 experts that invest globally. The group invests more than $5 billion a year in energy and water. Federal and state mandates, public concerns on issues such as climate

change and the price of oil as well as energy security are a few factors driving seemingly endless opportunities in the renewable energy sector. More than 20 states have mandates to switch to renewable portfolio standards, which ensure that a portion of their electricity production comes from sources such as wind, solar or biomass - any material made from plants or animals. Most of the deadlines don't kick in for several more years, but some states are taking early initiatives to comply, including replacing foreign energy supplies. There is an increased interest driven by multiple factors, says Jeff Lipton, managing director and head of CleanTech investment banking at Jefferies & Co. The demand for renewable energy sources will not go away, even if the economy slows down, according to Lipton. Walsh says demand for financial backing comes from clients such as developers of wind farms who need capital to buy the hardware. Also, longtime clients of GE EFS in the energy space are now looking to get into renewable energy. GE EFS' investments are geographically spread out. Wind farms need to be on open land that is large enough for the wind turbines and conducive to regular wind. GE EFS is active globally as well. Much of the renewable energy movement started in Europe, say experts. From a public policy standpoint, the US is behind Europe and parts of Asia, says Lipton. There are solar projects in Spain and

Portugal, two nations that have good sun quality, while Italy and France are getting more involved in wind projects. China and India are developing their infrastructures and the industrialization of these countries will create enormous demand for traditional and alternative sources of energy, says Lipton. While GE's Energy Financial Services added professionals last year and the firm is not looking to hire more people in the near-term, the group likely will add professionals as demand dictates, says Walsh. Wind energy is far from the only opportunity within the world of renewable energy. Solar energy and biofuels, too, have captured the interest of investors. "Everyone is intrigued by solar energy and wants to identify the next innovative technology," Lipton says. Areas of solar technology being looked into are concentrated photovoltaics, where mirrors or lenses focus light onto solar cells to produce electricity, solar thermal, low cost silicon and next generation thin film technologies. The potential of solar energy have not gone unnoticed by GE's Energy Financial Services. The group's venture capital arm has backed the development of solar technologies. Last month, GE EFS group partnered with SunPower Corp., a Silicon-Valley-based manufacturer of high-efficiency solar cells, panels and systems, to provide financing for five California solar power projects. The projects total eight megawatts and include a system for Toyota's Parts Center that will be the largest single-roof solar power installation in the US. jessica.papini@sourcemedia.com
FEBRUARY 4, 2008 IDD 7