AES just acquired Main Street Power of Boulder, Colorado, a developer of distributed solar projects in the 300-kilowatt to 5-megawatt range. The acquisition follows the recent trend of utilities and financiers acquiring developers -- Duke's acquisition of REC and Coronal's acquisition of Heliosage are two more examples.
AES is a global power company that had 2014 revenues of $17 billion and owns operating power generation resources of more than 35 gigawatts. Its subsidiary, AES Energy Storage, has installed close to 200 megawatts of energystoragein the U.S. The company has the world’s largest fleet of grid batteries in commercial service, as well as laying claim to the single largest battery installation.
Main Street Power has built more than 200 commercial projects and has an existing financing relationship with MS Solar Solutions, a subsidiary of Morgan Stanley, the finance provider for PPAs and residential lease structures.
The company will now be known as AES Distributed Energy.
AES Distributed Energy has more than 50 megawatts of distributed solar projects operating across North America with 100 megawatts in development in the U.S., Caribbean and Latin America, according to the company. Adam James, GTM Research's Latin America solar expert, sees the acquisition as a positive for the region, given AES' existing footprint in Latin America.
Customers for the distributed solar firm include schools, municipalities, utilities, residential marketers and private commercial entities. "Once a project has been placed in service, AES Distributed Energy assumes ownership of the asset and will operate the PV solar system for the life of the contract," according to a release.
We spoke with Chris Shelton, Vice President for New Energy Solutions at AES, this morning. He confirmed that this was AES' first move into the distributed solar market. So why is the company jumping in now?
He said that AES has been "monitoring the technology curve and is excited to see the costs we're reaching." He noted that AES "operates in a lot of markets around the world where power prices are higher" and where the solar value proposition is becoming increasingly compelling. Shelton suggested that it is the company's belief that solar costs will continue to drop.
He noted, "While the U.S. opportunity is interesting, for AES, it's more exciting to think of other markets."
Nicole Litvak, Solar Analyst at Greentech Media, notes, "One of the major bottlenecks in the commercial solar market is matching up projects and investors, which adds time and cost to the process, as developers must find investors whose requirements align with the projects they currently have. One possible solution is vertical integration (financing and development), very similar to what has happened in the residential market. It wouldn't surprise me to continue seeing more developers, especially larger companies with consistent pipelines, get acquired by utilities or late-stage developers with access to financing."
Litvak notes that Morgan Stanley is still providing financing, but that could shift to AES.