The Latest in Microgrid Investments. Is the Industry Coming of Age?

Oct. 4, 2016
The fledgling microgrid industry eagerly awaits indicators that it is coming of age. And now two recent microgrid investments indicate it may be on its way.

The fledgling microgrid industry eagerly awaits indicators that it is coming of age. And now two recent microgrid investments indicate it may be on its way.

The investments – one by Ironclad Energy Partners and the other by First Niagara Bank – show a flow of private dollars into an industry that has relied largely on public funding for early growth.

Ironclad purchased a 121-MW portfolio from Recycled Energy Development (RED), which includes a microgrid in Rochester, New York.

Stonepeak Infrastructure Partners is part of the Ironclad partnership that purchased the assets. A private equity firm that manages $5.7 billion in capital, Stonepeak announced last year that it would make $250 million available to invest in microgrids. The RED project is Stonepeak’s first microgrid investment.

In all, Ironclad/Stonepeak acquired four RED cogeneration facilities. The Rochester plant is the largest of the four. It serves the Eastman Business Park. (Read more about the project in an article here by RED CEO Sean Casten.)

Owned by Eastman Kodak, the 1,200-acre business park serves more than 70 industrial and commercial customers in the chemical, food, healthcare, defense and manufacturing industries.

The grid-connected project is located in Rochester Gas & Electric’s service territory. It can run independent of the grid, but also makes real time import/export transactions.

RED acquired the power infrastructure assets from Eastman Kodak in 2013. Since then it has invested more than $30 million in modernizing the infrastructure. As part of the upgrade, RED began converting the facility’s coal-fired assets to natural gas.

Casten said that Ironclad/Stonepeak is the ideal partner to finish the project. He cited the investor’s financial capacity, coupled with its experience with ‘inside-the-fence’ utility services at complex manufacturing operations.

“Our customers and colleagues are lucky to have such experienced operators,” he said.

Although the park has “a vibrant and diverse set of businesses,” recent events made it difficult to secure traditional financing for the coal-to-gas conversion, he said.

Eastman-Kodak, the largest of the facility’s customers, emerged from bankruptcy in 2013, the year RED acquired its power plant. A photography pioneer that began selling consumer cameras more than 125 years ago, Kodak had fallen victim to the rise in digital photography. Since emerging from bankruptcy, the company has struggled to right itself with a new business model.

The other projects RED sold are in New Jersey, Massachusetts and California. They include RED-Burlington, an integrated cogeneration plant serving a wallboard manufacturer in New Jersey, RED-COI, an integrated cogeneration plant serving a dairy in California and RED-Franklin, an integrated cogeneration plant serving a dairy in Massachusetts.

Terms of the deal were not disclosed.

Ironclad is led by energy industry veterans CEO John Prunkl and president and CFO Christopher Fanella, both former executives at Primary Energy Recycling. Ironclad will assume management of the assets and employees. Casten, along with RED chairman Tom Casten, will stay on as consultants during the transition.

Microgrid investments in Bridgeport

Meanwhile, the Bridgeport Microgrid has received a $3.8 million loan from First Niagara Bank, which was recently acquired by KeyBank. The project also had won $2.9 million from the state’s first round of microgrid funding undertaken in July 2013.

The Bridgeport Microgrid includes three 600-MW natural gas-fired turbines, according to the Connecticut Department of Energy and Environmental Protection (DEEP). The microgrid will serve Bridgeport’s city hall, police station and Golden Hill Senior Center.

Connecticut-based OR&L Construction will act as the construction manager. The company says that it expects to complete the project in the summer of 2017. Other partners are Controlled Air, also a Connecticut company, and Power Island Energy of Florida.

The microgrid will serve about 144,000 citizens of Bridgeport, according to the construction company.

In addition to providing power, the microgrid will distribute excess heat from the generators to create both heating and cooling (by way of an absorption chiller) to buildings served by the microgrid.

DEEP has released three rounds of microgrid funding. The most recent is a $30 million solicitation that is still accepting applications.

The city hall microgrid is one of two that won DEEP funding in Bridgeport. The other microgrid is at the University of Bridgeport. That project, which will include a 1.4 MW fuel cell from FuelCell Energy, received $2.2 million from DEEP.

In all, 11 microgrid projects have won funds since the Connecticut grant program began in 2012.

In addition to the First Niagara loan, and the DEEP funding, Bridgeport Microgrid has received $500,000 loan from the Connecticut Green Bank, a quasi-public organization.

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About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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