PERSPECTIVE
WORLD-GENERATION NOV/DEC 2015
26
need storage.
So, yes, storage is a market
for us, and we are in it, but it is a fraction of
the solar or wind potential market in terms
of capital deployment.
Storage is a diverse universe. We can
talk about a battery bought by a residential
customer all the way to a pumped storage
hydroelectric project or thermal storage
facility for a city that is huge in scale. I
think it will be all of the above. You need to
manage the grid in a way that you can pro-
vide some load-shifting equipment or load-
following equipment.
The question about battery storage is
the timing. The timing depends on the tran-
sition to distributed generation. Battery
storage at the residential or commercial
level is only viable if there is no net meter-
ing. Net metering is not viable above a cer-
tain percentage of distributed generation
because it imposes a cost on the utility.
Someone has to assume the storage.
If distributed generation grows quickly,
then we will reach the ceiling for net meter-
ing and any additional storage will have to
done by the customers.
Storage will happen; there is no ques-
tion about it. Whether it happens in three,
four or five years depends on the distribut-
ed generation market.
WHAT WILL BE CARBON’STIPPING POINT?
Tristan Grimbert:
Carbon pricing is
the most American way to address global
warming. What is more volatile than CO2?
It goes everywhere. It is a global issue, and
carbon pricing is the capitalist way to
address it. Cap and trade was proposed by
Americans, and then it was shut down.
Carbon pricing would be a better way than
a haphazard mix of subsidies with, for
example, a New Mexico PTC and some tax
exemptions and different provisions in
Arizona. No. Let’s price what is creating the
problem and, then, if we have to produce
massive wind in California or Texas, we will
do it because the market is sending the
right price signals. It may take some cata-
strophic climate event, but I have no doubt
it will come because it is the American way
to address global warming.
WHAT ARE DEVELOPER RETURNSTODAY?
Tristan Grimbert:
Too low. I am not
in the business of deploying at the lowest
cost of capital. I am in the business of creat-
ing value. The cost of capital is one part of
the equation, but the job is to find differen-
tiators. It is not the size of the market; it is
not the growth; it is how much better you
are than your competitors. The returns for
this effort are always too low.
SOME OF YOUR COMPETITORS HAVE YIELD
COS. DO YOU SEE EDF RENEWABLE ENERGY
MOVING INTHAT DIRECTION?
Tristan Grimbert:
No, I don’t. Right
now our business model is that we develop
projects for ourselves and we sell up to 50%
to co-investors. Sometimes we sell more,
and sometimes less. We do tap the market
by selling assets. We see yield cos playing
in that market, but they are only a portion
of that market and there are plenty of
investment firms and other people who are
trying to deploy long-term capital at com-
petitive rates, so we do not think it neces-
sary to have our own yield co.
We can sell to yield cos or we can sell
to people who are not yield cos but have an
efficient cost of capital and are looking for
long-term investments.
EDF RENEWABLE ENERGY HAS BEEN A
BUYER OF DEVELOPMENT RIGHTSTO
PROJECTS FROM SMALLER DEVELOPERS.
ISTHAT PIPELINE GETTING SMALLER,
STRONGER, OR REMAININGTHE SAME?
Tristan Grimbert:
We have done
some acquisitions. What is difficult about
the development business is that when you
think you are 90% done, it means you are
only half way through. Getting the project
to be completely de-risked is what really
trades value.
Because the market has run faster than
anybody expected, and we have been very
successful, the pipeline is a little small
today. We started about a year ago to
rebuild our pipeline. We are doing that part-
ly by acquisition. We may buy a pipeline.
We may buy a project. We will keep devel-
oping ourselves. The overall supply of new
projects is low compared to the appetite of
the market. I attribute this to the impend-
ing expiration of the tax credits.
SOMEONE ONCE SAID,“NO MISTAKES, NO
EXPERIENCE. NO EXPERIENCE, NO WISDOM.”
WHAT HAVE YOU LEARNED ALONGTHE WAY
THAT WOULD COUNT AS WISDOM?
Tristan Grimbert:
There are so many
things that we have learned. Do not be
afraid to pay the right price when it is the
right project.
NEWTRENDS: A DEVELOPER’S PERSPECTIVE
CONTINUED FROM PAGE 6
PREDIX,GE’S DIGITAL
MANIFESTO
CONTINUED FROM PAGE 10
JOINTHE REVOLUTION
“To solve the biggest problems in the
world, you have to solve the whole prob-
lem—across generation, grid, and con-
sumption, bring together hardware servic-
es and software for a complete solution,”
Bell said. “So I want to invite all of our cus-
tomers, partners, independent software
vendors, developers, solution providers
across the entire energy landscape, and
startups to partner with us, innovate on top
of Predix, and solve the whole problem.”
Predix is more than a platform—it’s GE’s
digital manifesto, urging companies to join
in the productivity revolution. GE execu-
tives urged business leaders in the audi-
ence to test out its beta version and build
apps onto its platform, and to take advan-
tage of Predix Cloud once it’s launched.
