A new joint venture focused on initially developing up to $100 million in distributed energy and microgrid projects will aim to speed up oft-delayed decarbonization efforts in the commercial real estate sector.
Correlate Infrastructure Partners and financial management firm eDGe Renewable Partners are uniting to form Distributed Energy Capital. The latter hopes to raise as much $100 million at the start as it works on developing solar energy projects dedicated to distributed energy and microgrids.
Industry reports indicate that many commercial real estate owners and managers want to decarbonize through on-site clean power, but are discouraged by upfront cost worries and long interconnection delays. A report from the Lawrence Berkeley National Laboratory indicated that many distributed energy and utility-scale renewable projects can take an average of five years from initial development to commissioning.
In fact, sometimes only of a fifth of announced projects make it to the operational stage, according to the LBNL report.
Correlate and eDGe’s joint venture will deploy upfront capital and distributed energy expertise to both shorten time and make the projects more economical and attractive for facilities owners and managers, the companies said.
“Distributed Energy Capital will play a pivotal role in addressing the pressing need for microgrid and distributed infrastructure development at scale,” Correlate Infrastructure Partners CEO Todd Michaels said in a statement.
“By providing early-state development capital, paired with Correlate’s unique technical expertise, our vetted developers can deliver on key milestones,” Michaels added. “Currently, the few capital-only offerings in the market for distributed projects are inherently inept for the current opportunity in our view.”
The microgrid market doesn’t lack for growth opportunity, as numerous forecasts have indicated. A recent one, by consulting firm SkyQuest Technology, predicted that the microgrid monitoring system market alone could be worth nearly $800 million by 2030.
Michaels and his team formed Correlate after doing work on development and differentiation needs of the commercial solar market for another developer. Correlate created its own version of an energy-as-a-service model by handling upfront costs for real estate owners want to upgrade and decarbonize properties.
Earlier this year, Correlate Infrastructure Partners secured $11.9 million in funding its work to install up to 5.2-MW of on-site solar power at EnerSys corporate facilities in Reading, Pennsylvania.
In 2022, the real estate renewable developer announced an agreement to install rooftop solar at the headquarters of Continental Envelope in Geneva, Illinois.
Overall and industry-wide, the cost of solar photovoltaic installation is expected to fall from around $50 per MWh to less than $30 per MWh by 2050, according to a DNV market forecast on the levelized cost of energy of various resources such as onshore and offshore wind as well as microgrid-scale solar.