GE, partners to invest $55 million in power-grid tech

NEW YORK Tue Nov 16, 2010 12:25pm EST

NEW YORK (Reuters) - General Electric Co and a group of venture-capital firms said on Tuesday they would invest $55 million in a dozen startup ventures and partnerships working on new power-grid technologies.

"This is the first inning of smart grid," said GE Chief Executive Jeff Immelt at a New York event unveiling the investments. "The extent to which we do investing (in smart grid) it will be like this -- small software companies that we can scale, partnerships, those sort of things."

Smart-grid technologies aim to make it easier for utilities to communicate with power users -- for instance, sending signals that they intend to raise prices at peak demand times, and encouraging electricity users to lower their power use to avoid outages.

GE, the world's largest maker of electric turbines, is working with venture capital firms Kleiner Perkins Caufield, RockPort Capital, Emerald Technology Ventures and Foundation Capital on this venture.

Foundation and RockPort invested in the $55 million round.

In all, GE and its partners plan to allocate $200 million in funding to this kind of investment. The remainder will be allocated over the next 12 to 18 months, officials with the Fairfield, Connecticut-based company said.

The largest U.S. conglomerate has said it aims to quickly expand its presence in the market for smart-grid electrical systems, which it calls a "$20 billion opportunity," by 2015. Immelt said the challenge facing global business is to make clean energy more mainstream.

"What you see today is, we've allowed the notion of clean energy to become too precious," Immelt said. "The challenge is to say, if you want energy security, if you want job creation, and (to be) in control of your energy future, clean energy is the way to go. This is exactly the time to be investing."

GE's investment accounts for $45 million of the initial $55 million. GE will also dedicate $10 million starting next year to support university engineering programs, and will fund five early-stage technologies, such as one to remove ice from wind turbines, with $100,000 grants.

GE shares were down 23 cents at $15.97 in midday trading.

'OPEN ARCHITECTURE'

The initial 12 investments come after GE opened its product development process to venture capitalists and entrepreneurs, an "open architecture" approach it said was appropriate for emerging technologies but might not be for, say, GE jet engines.

Several of the investments are in smart grid software, while others focus on energy efficiency in places like data centers, or in the home.

One of the 12 investments is in a Swedish company, ClimateWell, developing air conditioners that run on solar power.

"There's potentially a fertile area in clean tech products sold into the home," Immelt said.

Thomas Zarrella, CEO of SustainX, maker of compressed-air storage technology, expects to get about $2 million to $3 million, enabling the New Hampshire-based company to commercialize its products earlier.

"Being able to access GE's technology centers will help us move this product to market much, much quicker," Zarrella said

Separately, Immelt said the bulk of GE's roughly $30 billion it plans to spend on acquisitions will be aimed at infrastructure investments.

"(It will be) things that you've seen us do like when we announced the Dresser acquisition, big businesses that fit into our footprint of being a global energy enterprise."

Immelt also said his view of the U.S. economy has not changed since the company's third-quarter earnings conference call last month.

"The economy is recovering," he said. The signs "continue to be encouraging," he said. Immelt declined to comment on whether the outlook has changed since the U.S. mid-term election, when the Republican party won control of the House of Representatives.

(Reporting by Nick Zieminski, writing by Scott Malone, editing by Dave Zimmerman)

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