* Deal brings GE EFS investments to $1.4 bln this year
* Sees deal for Indian solar power coming
* LS Power project in Arizona will be 127 MW
By Matt Daily
NEW YORK, Feb 28 GE Energy Financial
Services, part of General Electric, said on Wednesday it
bought a stake in a large U.S. solar power project for $100
million, bringing its investments in the sector to $1.4 billion
in the last year.
The deal was the latest big solar purchase by companies
eager to own utility-scale plants that have benefited from
government targets for renewable energy and a now-expired
federal grant program that pays a portion of a project's costs.
GE EFS has so far invested in a gigawatt of solar projects
in the United States, Australia, Spain, Canada and Italy, and is
likely to sign a deal in India in the next few months, Chief
Executive Alex Urquhart said in an interview.
The new U.S. investment will give GE EFS a stake in the
127-megawatt Arlington Valley Solar Energy II plant being
developed in Arizona by LS Power, and more than doubles GE EFS's
investments in solar from the previous year.
"This year we made a conscious decision to try to
grow our solar investment," Urquhart said. "We've been
successful, in fact more successful than we thought."
The company declined to give details how large its ownership
stake in the plant would be, or expected return on investment.
Investors have been attracted to large solar plants like
Arlington Valley because they receive a steady, predictable
income stream from electricity sales and have very low
operational costs, unlike fossil-fuel plants, which must
purchase coal or natural gas.
GE EFS joined with NextEra Energy in a deal
announced last year to buy First Solar's 550-megawatt
Desert Sunlight plant in California, which is expected to cost
about $2 billion to build.
Several large-scale U.S. solar power plants have attracted
big investors, including Warren Buffett's MidAmerican Energy
Holdings, Exelon Corp and NRG Energy.
GE EFS targets investments in both renewable and
conventional energy around the globe, and last October bought
about $1 billion in energy project debt from the Bank of
Its move to develop solar in India would make it one of the
early investors in the country, which is expected to grow into
one of the world's largest solar markets in the coming years.
"I think there's a lot of opportunity for solar in India.
It's early days, and clearly there will be ups and downs, but
we're very interested and we're making our first investment in
the space," Urquhart said.
GE EFS also has a team looking at financing residential and
commercial solar rooftop installations.
A glut of solar panels helped drive prices down by 50
percent for the equipment, which turns sunlight into electricity
That decline, plus lower "balance of system" costs to build
solar installations, is helping solar narrow the cost advantage
that fossil plants and wind power currently have.
The LS project will be eligible for a U.S. cash grant
program that will cover about 30 percent of its $550 million
That grant program expired at the end of December, and
reverted to a tax credit for projects that were not started by
the end of the year.
Solar power plant developers typically sell those tax
credits in the "tax equity" market to financial groups or other
companies that use them to reduce their tax exposure.
In addition to GE EFS' energy stake, the LS Energy project
received $466 million in short- and long-term debt financing
from Prudential Capital Group, part of Prudential Financial,
Banco Santander and other institutional finance groups.
The plant, which will be built in Maricopa County, Arizona
by Fluor Corp, will sell its power output starting next
year to Sempra Energy's San Diego Gas and Electric,
which is required by California to meet 33 percent of its demand
with renewable power.