Corporate investors will play an increasingly important role in the energy technology world and perhaps even outshine traditional VC firms. The latest evidence: NRG Energy, Conoco Phillips and General Electric said Thursday have created a $300 million fund to invest in a wide range of sectors, from solar to coal conversions.
The corporate titans have formed Energy Technology Ventures and plan to put the money in about 30 “venture- and growth-stage” companies. Most of them will be in North America, Europe and Israel. The fund managers say they want to cast a wide net to invest in renewable power generation, smart grid, energy efficiency, oil, natural gas, coal and nuclear energy, emission controls, water and biofuels.
NRG and Conoco said the fund represents their first foray into the world of venture capital investing. GE isn’t a newbie here, and it likes to line up partners to pool money and no doubt other resources in hunting for technology deals. Last year, the company announced a $200 million smart grid fund with a bunch of venture capital firms.
The Energy Technology Fund already has made three bets: Alta Devices (materials for converting sunlight to electricity), CoolPlanetBioFuels (biomass to fuels), and Ciris Energy (coal-to-methane conversion). The amounts weren’t disclosed. Santa Clara, Calif.-based Alta Device, which is pretty mum about its work, received investment from GE last year as well.
Corporate VCs have always been a big part of technology investments, and many of them are increasingly putting focus on energy. General Motors launched its first venture capital fund last year. The automaker wants to use the $100 million fund to support not only technologies for building cars but also software for infotainment and new business models (such as car sharing). Earlier this week, GM Ventures said it had invested $7 million in battery startup Envia Systems.
Last year, corporate VCs, including Intel Capital, Shell and Cargill Ventures, contributed to some of the top cleantech deals. All these forays into energy investment came at a time when federal and state governments have put up billions of dollars and passed policies to support renewable energy, smart grid and other clean energy research and deployment. In his State of the Union address earlier this week, President Obama set a goal of generating 80 percent of the nation’s electricity from cleaner sources by 2035. He also wants to see 1 million electric cars on the road by 2015.
Although NRG is new to investing in companies, it’s been active in putting money into solar, wind, nuclear and electric car charting projects. The company, a wholesale electricity producer who also owns two utilities, plans to buy First Solar’s 290 MW Agua Caliente Solar project in Arizona once negotiations for a $967 million loan guarantee is complete. NRG plans to invest up to $800 million in equity in that project. The company also has committed up to $750 million for solar energy projects by SunPower and BrightSource Energy.
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Photo courtesy of Tracy O.