Investment in distributed energy companies has tripled in value in North America and Europe since 2010, with more than $1 billion in investment in 2016 alone, according to new data from GTM Research.
The report, Utility Investments in Distributed Energy: Trends Among North American and European Utilities, analyzes the substantive capital invested in solar, energy storage, customer energy management and distributed energy resource (DER) integration companies by the investment arms of 42 utilities.
FIGURE: Utility Investments in Distributed Energy Companies, 2010-2016
Source: GTM Research
A key component of distributed energy integration has been tied to uncovering new economic benefits for utility customers. By building a portfolio of DER companies, utilities are further exploring the potential value of DERs and their ability to increase customer engagement. Since 2010, 37 distributed energy companies have been fully acquired by utility companies, and the five most active investors have developed a diverse portfolio that includes investments across DER functions.
“Utility companies have a reputation of being risk-averse, but it’s clear that many utilities see distributed energy as a growth opportunity, and are taking new, yet calculated risks through venture investments,” said Andrew Mulherkar, senior grid edge analyst and one of the authors of the report.
FIGURE: Top Five Utility Distributed Energy Investment Portfolios
Source: GTM Research
While regional differences are apparent, overall, investments point to a trend toward decentralization. The most active utility investors are headquartered in Europe due to growing DER penetration and a challenging climate for traditional utility businesses. Even so, a larger number of North American utilities have made at least one investment.
“While some of these investments are being made by in-house investment arms of utilities, there’s a parallel trend of investments made by third-party investment firms acting on behalf of the utility,” said Shayle Kann, senior vice president of GTM Research. ”This flow of capital from both utilities and investment firms parallels the broader support for decentralization from the global investment community.”
Download the free report here.
The analysis in Utility Investments in Distributed Energy pulls from a proprietary database of DER investments that utility companies in North America and Europe have made since 2010.