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Capital Dynamics, Sol Systems form venture to invest in distributed generation market

Increase font size  Decrease font size Date:2019-07-11   Views:49
Capital Dynamics, an investment firm with a growing portfolio of big utility-scale solar assets, said Tuesday it is forming a joint venture with Sol Systems that will invest in the distributed generation market.

Sol Customer Solutions, as the JV will be known, will focus on providing "large pools of institutional capital direct exposure to the distributed generation market, a segment that offers some of the most competitive and compelling renewable energy solutions for commercial, municipal, and educational customers," the partners said in a Tuesday in a statement.
They said that the declining costs of solar energy and storage, as well as increasing local, state and corporate renewable energy targets, "are driving significant growth" in the distributed solar generation space.

"Today, two-thirds of Fortune 100 companies have set renewable energy targets and are leading global corporate procurement through PPAs," the partners said.

DG refers to electricity produced at or near the point where it is used, with increased use of distributed energy resources, such as solar energy, being the main factor driving the market.

While the installation of renewable power has been soaring, the amount of DG is notoriously difficult to measure since so much of it is installed behind-the-meter, which means power generated by a distributed energy system is not seen or measured by power companies and grid operators.

Since 2008, Washington-based Sol Systems has financed and developed over 850 MW of solar assets for large corporations, municipalities, counties, utilities, universities and schools. It said Tuesday that it manages $650 million in solar energy assets for utilities, banks, and corporations.

New York-based Capital Dynamics is a subsidiary of the Zug, Switzerland-based global asset management firm of the same name. Its Clean Energy Infrastructure group manages a total of 4.7 GW of power generation across more than 100 projects in the US and Europe.

The CEI group has been particularly active in acquiring utility-scale assets in California. Among other acquisitions, it bought three California utility-scale facilities with combined capacity of 729 MW since late 2017.

"We are excited to partner with Sol Systems to acquire significant portfolio of DG projects while working alongside a premier development platform in the space," said Tim Short, managing director at Capital Dynamics.


Distributive generation does away with the need for building transmission. Low prices of DG compared with conventional energy generation, as well as feed-in tariffs in some regions, have been aiding market growth.

In a recent report titled, "Reliability and a Greener Grid: Power Trends 2019," the New York Independent System Operator said that a "tremendous change is taking place in consumers' adoption of Distributed Energy Resources to supply a portion of their energy needs."

DERs displace energy that was traditionally supplied by the bulk power system, the NYISO report notes, contributing to declining load on the grid, but adding complexity to operations, market design efforts and system planning needs," the report said.

The report said the "complexity" is due to the fact that shifting load from the bulk power system to local DERs "is not the same as eliminating load."

When the distributed resources are not producing energy, the bulk power system must still provide energy to homes and businesses. "As a result, planning for the reliable operation of the power system as a whole must consider total expected consumption of energy, including energy provided by the DERs," the NYISO report said.


Establishing a coherent regulatory framework to deal with DER complexities at either the federal, regional or state level, has thus far proven difficult.

The Midwest Independent System Operator, which operates the transmission system and a centrally dispatched market in portions of 15 states, is a prime example.

In 2018, some MISO states argued they should establish the rules for the aggregation of DERs, such as rooftop solar and electric vehicle charging, but the debate came to no conclusion.

MISO said that it may have to "contend with security concerns, communication constraints and even the eventual phase-out of the vertically integrated utility model as it strives to manage a grid with growing amounts of DER."


FERC has convened a number of technical workshops to discuss lifting barriers to market participation for DER aggregations, but has also arrived at no regulatory conclusions.

In June 12 testimony before the House of Representatives Committee on Energy and Commerce, Chairman Neil Chatterjee said FERC is "still evaluating barriers to the participation of distributed energy resource aggregations in the markets operated by RTOs and ISOs."

He said that information had been gathered regarding the participation of distributed energy resource aggregations in wholesale electricity markets. But he said that FERC "is currently considering the record as we determine how to move forward."
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