SNL Financial
January 27, 2020
By Lynn Doan

3 energy giants with 'different interests' unite in $300M technology venture

NRG Energy Inc., ConocoPhillips Co. and General Electric Co., three major companies with seemingly different interests, announced Jan. 27 that they will together invest $300 million in "emerging and innovative" energy technologies.

Through a new joint venture, Energy Technology Ventures, the companies said they will initially help finance about 30 venture-stage and growth-stage companies to spur the development of "next-generation energy technology" over the next four years. Officials from all three companies acknowledged Jan. 27 that they have traditionally had "different strategic interests" but stressed that their technology investments have been complementary to date and will make a larger impact when combined.

"In a sense," GE spokesman Andrew Katell said, "it comes back to the old adage that the sum is greater than its parts."

While GE Capital is already a heavy investor in energy technology, the joint venture marks the first formal engine that NRG Energy and ConocoPhillips have used to systematically finance developing technologies. America's greatest competitive advantage, NRG Senior Vice President of Financial Structure Clint Freeland said in a statement, "will always be our people's ability to innovate, and with only moderate capital investments, we will unlock this innovation."

The companies' announcement echoes statements President Barack Obama made in his State of the Union speech Jan. 25, during which he stressed the need to "unleash innovation across a range of energy sources." In fact, just hours before his speech, NRG Energy President and CEO David Crane told attendees of a clean energy conference that it could be more than a decade before the country sees cap-and-trade legislation and urged the industry to "tackle major new programs" itself.

Katell said the venture's announcement was not intentionally timed to follow Obama's speech. The companies have, in fact, been working on forming a joint venture for more than a year, he said.

"We started working on the press release for this about a week ago. I don't know when President Obama started writing his speech, but we didn't have access to it. It was really coincidental," Katell said. "It just so happens that our idea of innovation and entrepreneurialship happens to be in sync with our government right now."

Besides financing, the companies are offering their expertise to those developing technologies relating to renewable energy, the smart grid, energy efficiency, oil, natural gas, coal, nuclear, emissions controls, water and biofuels, primarily in North America, Europe and Israel.

"We know what it's like to take something from an idea to commercialization," ConocoPhillips spokeswoman Romelia Hinojosa said, "so that is the expertise we're offering."

ConocoPhillips is already working with General Compression Inc. on air energy storage projects, including a pilot plant in Texas designed to improve the reliability of intermittent resources, such as wind and solar power. It is also partnering with Peabody Energy Corp. to build a coal-to-natural gas facility in Kentucky.

NRG Energy has, meanwhile, committed significant investments to renewable energy technologies, including more than 2,000 MW of solar projects in development or under construction. Its NRG Solar LLC unit reached a deal in December 2010 to buy First Solar Inc.'s 290-MW Agua Caliente solar project in Arizona, contingent upon a U.S. Department of Energy loan guarantee approved this month.

The power generator has also announced plans to install electric vehicle charging stations in the Houston and Dallas-Fort Worth areas and market charging services to customers there.

"Obviously," Freeland said, "each of us will have different levels of strategic interest in the different companies and technologies. But we're all investing together, and we'll all be bringing our expertise to bear."

What some might view as an unusual partnership, Freeland said, is actually a marriage of complementary companies. While GE offers "world-class research and development" in both the power utility space and the oil and gas space, NRG and ConocoPhillips offer the experience of "incumbent operators with commercial views and strategies in their own relevant markets."

"When you combine the three parties together, GE's investment and R&D plus the two incumbents from different industries, you create a much broader and deeper platform and level of capability than any one of them could have brought to bear themselves," Freeland said. "It really is sort of one united front."

The joint venture will be making its first investments in Alta Devices in Santa Clara, Calif., which is working on improving the economics of advanced materials for high-efficiency, low-cost solar energy; Ciris Energy Inc. in Centennial, Colo., which is developing technology to biochemically convert coal to methane at a larger scale and lower cost; and CoolPlanetBioFuels in Camarillo, Calif., which is developing technology that converts low-grade biomass into high-grade fuel and carbon that can be sequestered.

Katell said the companies see their $300 million investment as just the beginning of their venture together. "There is definitely the intention to keep it going," he said.

The companies declined to say exactly how much each is contributing to the venture.