GI Energy, a distributed energy and microgrid company, took major steps in its evolution this month: It was bought by power plant giant LS Power, and the company changed its name to Endurant Energy.
After launching in the United Kingdom, GI Energy started its US operations in 2011 with headquarters in Chicago. The company expanded from its initial focus on geothermal heat pumps into fuel cells, battery storage, microgrids and, more recently, batteries combined with solar as well as reciprocating engines for co-generation, said Tom Chadwick, Endurant CEO.
“What we found was we were an integrated house with one big gap, and that was capital,” he said.
Ultimately, a strong balance sheet is required to develop projects, according to Chadwick.
“You need it to be able to give the customer what they want, which I think is, increasingly, an alternative to utilities,” he said. Endurant’s projects range from single technology energy retrofits of historic landmarks to large-scale microgrids integrated with resource management and smart-city infrastructure.
In 2018, Shell New Energies US bought a majority interest in GI Energy, providing the company with a capital partner.
Under the arrangement, GI Energy would develop projects that Shell would own and operate.
However, GI Energy wasn’t able to provide the number of eco-district and microgrid projects at the pace or large size that Shell wanted to see, according to Chadwick.
Last year, GI Energy decided to separate from Shell, and it hired an investment bank to find a new partner for the company, Chadwick said.
LS Power provides capital, experience
Not only is LS Power providing Endurant with capital, but the company understands the power business, including the tariff, regulatory and incentive environment, Chadwick said.
Since 1990, LS Power has built, managed or bought more than 45,000 MW of power generation, including utility scale solar, wind, hydroelectric, natural gas-fired and battery storage projects, as well as 660 miles of transmission. The company said it has raised over $47 billion in debt and equity to support its projects.
LS Power bought Endurant with an eye on the transition away from large, fossil-fueled power plants to a more decentralized, clean energy system.
“As we decarbonize our energy system and rely more heavily on electricity, the value of reliability and resilience is increasing,” said Paul Segal, LS Power CEO. “Endurant can be a part of the solution and is an excellent addition to the LS Power family of companies, further demonstrating our long-standing commitment to innovation and investment in clean energy solutions.”
LS Power also owns CPower Energy Management and EVgo, an electric vehicle charging company.
Microgrid moment is now
LS Power’s purchase of Endurant is coming at a key moment in the energy transition.
“The moment of the microgrid is upon us,” Chadwick said. “Four or five years ago, it kind of wasn’t so much.”
There are various factors that set the stage for the rise of microgrids, including that people have become familiar with them and are more aware of the potential for power outages, he said.
Also, the Biden administration has reinforced the idea that climate change matters, according to Chadwick.
“People are only too aware that they need to find ways to future proof where they get their energy,” Chadwick said.
Endurant sees growth potential
In a sign of what LS Power means for Endurant’s growth opportunities, the power plant company has connected Endurant to several real estate projects, which is a key focus for the company, and Cpower has also brought Endurant potential customers, according to Chadwick.
Endurant aims to build sophisticated microgrids.
“We want to build microgrids with more than one technology,” Chadwick said. “We want to bring in solar and storage, possibly fuel cells, reciprocating engines.”
Where appropriate, Endurant offers geothermal energy to provide what the company calls a thermal grid, he said.
Chadwick said Endurant’s project pipeline includes resiliency projects in California and battery storage in New York, where the company worked with Consolidated Edison on a 1-MW demonstration project.
Last year, Endurant continued various projects with fuel cell company Bloom Energy, building on a relationship that includes their work on the Parkville microgrid in Connecticut, which came online in 2017. Bloom was a “robust partner,” according to Chadwick, who thinks Bloom’s development of a hydrogen fuel cell will be a “game changer” for the industry.
In addition, Chadwick sees university campuses as a ripe area for microgrids, although universities put projects on hold last year because of COVID-19.
Universities are beginning to realize that they need to go all electric, which means heating and cooling needs to be oriented toward geothermal, according to Chadwick.
Chadwick also expects real estate developers will increasingly want to build all electric buildings that include microgrids, with an eye toward turning their electric supply into a profit center instead of a cost.
One of the challenges for Endurant is figuring out how to bring tax equity into deals, which is an issue LS Power understands, according to Chadwick. Tax equity investors tend to go for large, “vanilla” deals such as utility-scale solar projects while a company like Endurant needs to bundle several projects to reach $100 million for a tax equity deal, he said.
With the backing of LS Power, Chadwick believes Endurant is ready to grow.
“Very few [companies] have got our mixture of different technologies and LS Power’s very substantial operating capability of power assets,” Chadwick said.
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