ClearGen CEO discusses microgrids and EV integration in its growing DG finance platform
Last November, an animal shelter in Montgomery County, Maryland, had a small private plane crash into a transmission tower nearby at night. It took out power for several square miles of the utility territory, but the shelter’s solar storage generator turned on immediately, and there was no loss in power.
The shelter is a customer of ClearGen, a portfolio company of Blackstone Credit, and GreenStruxure, a joint venture of Schneider Electric and Huck Capital. ClearGen invested in the decarbonized, on-site energy microgrid developer for the underserved medium-sized buildings market in 2021.
The night of the plane crash, the animal shelter saw tangible benefits of the partnership’s complex microgrid systems to optimize energy resiliency.
“A generator solution that can efficiently move between these two systems to deliver, not only the cost savings from solar, but also the resiliency from the genset is a complex achievement,” ClearGen’s CEO Rob Howard said.
ClearGen finances C&I development, inclusive of solar, storage and EV, depending on the needs of customers. Without third party financing from companies like ClearGen, business owners have to front financing for energy investment, and they have to manage operators of energy assets. The developers, which ClearGen supports are providing asset management, customer interface and either in-house or outsourced operations and mainenance (O&M).
Blackstone formed ClearGen in September 2020, then the following spring made a series of investments in the microgrid space including making up a USD 500m commitment for the Greenxstructure partnership and also agreeing to fund Verdant Microgrid, which at the time of the June 2021 annoucement had a USD 500m pipeline of projects. Finally, in May 2022, it entered a partnership with Wunder Capital to develop commercial and industrial-sized distributed solar projects.
“ClearGen to date has relied upon our development partners to provide customer service. This allows our partners to stay in front of the customer and create the opportunity for the next customer site,” Howard said.
GreenStruxure details
The company has invested a “substantial portion” of Blackstone’s USD 250m commitment into the highly standardized on-site microgrid assets developed by GreenStruxure, either operating or in construction, Howard said.
ClearGen and GreenStruxure also have several other sites going commercial in California this quarter. Bimbo Bakeries USA, a Mexico-based industrial baker, known for Thomas English Muffins, is installing solar and battery solutions.
Bimbo Bakeries is a customer of several of ClearGen’s microgrids that GreenStruxure designed and built in California. Bimbo’s day-to-day relationship is with GreenStruxure, which is managing these assets, but contractually, the relationship is with ClearGen.
“The reason why so many of these microgrids pencil well in California is because of higher energy prices and the resiliency need,” Howard said. “It’s been a great answer for companies that need that consistency for their manufacturing availability.”
The contracts are similar to a PPA in the sense that it’s long-term — 10 to 25 years in some cases — to find a compelling financial solution for each asset. But, ClearGen is paid on the basis of delivered energy and availability through an Energy-as-a-Service (EaaS) agreement.
“A customer pays for the outcomes only when they are realized,” Howard said. “For example, if they want solar energy, they pay only when kWh arrive on the meter. If they want resiliency, they only pay when the battery or generator capacity is available. This is different from a customer paying a developer to build the asset on site, because in that case they will pay for it even if it fails to perform.”
Each site is unique and ClearGen has to be sensitive to the needs of each customer, Howard said.
With resiliency in mind, much of the operations are made of rooftop solar and carports, with batteries and gensets shoehorned into tight quarters.
ClearGen prioritizes maximizing space for businesses, so delivery trucks don’t have to navigate a complex system of solar installations.
EV merge
Carports features take careful consideration of the fleet size, charging time and the availability of on-site energy infrastructure. Sufficient utility interconnection is a necessity for solar EV charging, so a genset is needed for operation resiliency during critical delivery times.
“As companies are shifting into EV’s as a means of controlling their costs and carbon footprint, they recognize the criticality of having onsite generation,” Howard said.
GreenStruxure already has an EV charging solution in-house, and ClearGen is also engaged with other EV charging businesses seeking capital.
“The EV market is not as mature as distributed generation, but the opportunity is real,” Howard said.
With features like EV, ClearGen’s mission is broader than just C&I and DG, but it is core to what it focuses on. Upon the company’s founding, the DG space was an opportunity that was heavily underbanked in the same way that, a decade ago, residential solar was also struggling to navigate some of the structural challenges that arose despite the technological and commercial opportunity.
“So, our mission is to deploy capital into these hard-to-reach spaces and C&I and DG is core to that,” Howard said. “We look for projects that require a little bit more attention — working with a developer to determine the right contractual terms for all their customers, or overseeing construction efforts in a series of small projects.”
*This story was originally published exclusively for NPM subscribers last month.
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