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Constellation Energy to Acquire 7.8 MW Solar Project from Community Energy, Inc., One of the Three Largest Solar Projects in New Jersey

BALTIMORE and RADNOR, Pa. (February 14, 2011) – Constellation Energy (NYSE: CEG) and Community Energy Solar, LLC (Community Energy), today announced that Constellation, through its retail business, has agreed to acquire a 7.8 megawatt (MW) DC solar generation project from solar power developer, Community Energy.   The electricity generated from the photovoltaic project in Vineland, New Jersey, will be sold to the Vineland Municipal Electric Utility under a 25-year power purchase agreement obtained by Community Energy and assigned to Constellation Energy.  Constellation Energy will finance as well as build, own and operate the solar installation.  The project will begin delivering emissions-free peak power this summer and will be among the three largest solar generation installations in New Jersey.

“Constellation Energy is pleased to include Vineland’s solar installation among our renewable energy projects serving customers in New Jersey,” said Michael D. Smith, senior vice president of green initiatives for Constellation Energy’s retail business. “This solar installation will help Vineland Municipal Electric Utility to provide stable utility costs for its users over the long term through a renewable energy source. By structuring solar projects as power purchase agreements, we can provide energy solutions that require no upfront capital from customers and provide them with fixed power costs that are less than projected market rates. ”

“The Vineland Project represents an exciting delivery on Community Energy’s solar development strategy.  We were able to advance this solar project quickly based on a strong partnership with the City of Vineland, our development team and Constellation Energy.  With the strength of Constellation Energy’s pre-construction purchase, we are able to deliver a win for all parties in a very competitive market, which is always our goal.” said R. Brent Alderfer, CEO of Community Energy.  The project will be ground-mounted on two sites in Vineland, N.J., totaling approximately 40 acres, including a 4.8 MW DC West Vineland and 3.0 MW DC North Vineland site. The project is expected to generate approximately 10 million kilowatt -hours of electricity per year. Generating the same amount of electricity using nonrenewable sources would result in the release of 7,182 metric tons of carbon dioxide, or the equivalent emissions from 1,373 passenger vehicles annually.

About Community Energy Solar
Community Energy Solar is a venture-backed development affiliate of Community Energy Inc., a leading renewable energy developer since its founding in 1999.  Community Energy Solar develops utility-scale solar projects nationally with offices in Pennsylvania and Colorado, and since 2009 has steadily expanded its solar project development team and pipeline.   With long-established roots in renewable energy marketing, the Company has a proven track record of delivering renewable power generation ahead of the market on terms that work for its customers, utility partners and investors.  For more information, visit www.CommunityEnergyInc.com.

About Constellation Energy
Constellation Energy (www.constellation.com) is a leading competitive supplier of power, natural gas and energy products and services for homes and businesses across the continental United States. It owns a diversified fleet of generating units, totaling approximately 12,000 megawatts of generating capacity, and is a leading advocate for clean, environmentally sustainable energy sources, such as solar power and nuclear energy. The company delivers electricity and natural gas through the Baltimore Gas and Electric Company (BGE), its regulated utility in Central Maryland. A FORTUNE 500 company headquartered in Baltimore, Constellation Energy had revenues of $14.3 billion in 2010.

SJF stands in support of California’s A.B. 32 and against a recent ballot initiative Proposition 23.  The passage of Proposition 23 would essentially overturn A.B. 32, the state’s landmark cleantech legislation that is set to take effect in 2012.  While Proposition 23 would have an immediate negative impact on entrepreneurial start-up businesses, job creation, and investment in California, it would also have a more profound impact nationwide.  A.B. 32 not only put California on a path to renewable energy but also led to numerous clean energy initiatives in other states and regions. It was a major factor in the push for federal energy and climate bills, prompting many business leaders and legislators to conclude that the easiest way to reconcile certain rules would be to advance California’s standards nationally.  A recent New York Times article captures much of the debate.

Defeating Prop 23 is essential to driving further growing of cleantech businesses in the United States.  A.B. 32 has helped stimulate rapid growth in investment and job creation in the cleantech sector by setting a very clear low-energy target.  In 2009, despite the recession, cleantech venture capital funding that went to California was nearly double that of 2005, the year before A.B. 32 was passed.  If A.B. 32 is overturned and negatively impacts other states’ initiatives, much of this private capital is likely to seek more business friendly environments like China, Spain and other countries that have already taken steps to build clear market signals to favor innovation in cleantech and renewable energy.  The United States’ entrepreneurial and small business community stands to lose billions in investment capital and many thousands of jobs.

If you would like to find out more on this topic please visit Clean Economy Network’s site here.

No, the venture capital model is not broken. If the output has been upsetting of late then let’s double check the inputs.

What are some of the ingredients that have caused some to hold their nose? And more importantly, are there components we can control to create a better outcome? Key market inputs that are out of our control include (1) poor macroeconomic growth and demand (2) tight capital/debt markets and (3) withered IPO markets that limit high value exits. Given these are, unfortunately, part of what the model has to process, are there other elements we CAN alter as investors to ensure the “venture model” is still palatable?

When I consider our investment in FieldView Solutions, I’m convinced the answer is yes. FieldView is a software company that provides a solution to data center managers to better handle energy needs, capacity planning and risk mitigation of their critical assets. So what is it about FieldView that addresses these three negative market factors in such a way that makes me believe?

1. Take painkillers: For faltering economic growth, it’s tough to find sectors that haven’t been hurt by the downturn in one way or another. But those that have been more resilient are in markets wrestling with critical problems that require a solution even in downturns. The venture adage of funding painkillers instead of vitamins is doubly true in recessions.

Data centers are dealing with two separate problems that are only becoming more severe. The first is the increasing amount of data that these strategic assets need to process and store. The second is the increasing energy demand necessary to maintain these assets. A recent DOE report highlights both these problems when it indicates that energy use could double to more than 120 billion kWh from 2006 to 2011, equal to annual electricity costs of $7.4B. Neither of these problems is going away any time soon and since FieldView provides managers with transparency into both of these critical needs to enable better decision making, they’ve continued to grow in a “down market” by bringing on some of the largest financial, insurance, co-lo, and pharmaceutical companies as customers. The ROI and need of the product has been compelling, with examples of customers able to avoid unnecessary capex in the tens of millions of dollar range, minimize the amount of data center downtime through better load management, and reduce energy consumption through consolidating assets.

2. Go with capital efficiency: Given tight capital markets, companies with capital efficient business models are better suited. Capital efficiency has been a core investment mantra of SJF’s since the beginning and especially so when we consider our cleantech investments. Limiting the amount of capital ensures that both the entrepreneur and investor are more financially aligned and generate attractive returns even at modest exit valuations, which is a reality especially with IPO markets dried up. FieldView’s business model and design delivers this.

The software architecture and UI is highly flexible, cost efficiently scalable and user friendly, which enable both installations to take days not months and easy customer adoption across a variety of levels without complicated and costly training and support. The offering is configurable across hardware vendors and protocols to adapt easily to different customer needs while not being burdened by complex customization. This low cost to serve and lean business model means that significant additional capital investment will likely only be necessary for strategic reasons rather than as a matter of course.

3. Assume strategic exits: Given atrophied IPO markets, finding companies that have, or provide access to, high value assets that will be sought after by strategic investors paints a more reasonable exit scenario.

FieldView’s product is used by Fortune 1000 companies and resides on their networks and hardware worth tens to hundreds of millions of dollars. The software also connects two groups that have long operated separately – Facilities and IT – both of whom are critical decision making groups in the energy management and data center equation. These customers and the entrée FieldView provides to this valuable asset base and key decision makers can make the company strategically complimentary to a number of potential acquirers.

Obviously having a capital efficient business that solves a key market need in a sector that has acquisitive players isn’t automatically a recipe for success, but it’s certainly some of the right ingredients. Fred Dirla the company’s CEO and other senior members of management have deep expertise in and understanding of market needs. The references from some of the largest companies in their sectors praised Fred and his team’s ability to continuously innovate in anticipation of new market trends.

If a model isn’t giving you the results you expected to see, it’s always good to reflect on what inputs are going in. In an environment with some “down market” drivers to contend with, it’s even more important to be careful what other factors should be mixed in to ensure the right outcome. But if we’re able to do this, I think we’ll come to realize that, depending on the fund strategy, the venture model isn’t broken.

Arrun Kapoor

Read more about SJF Ventures’ investment in FieldView

Living in New York City for the fall after being a North Carolinian for three decades is giving me a widened perspective.   For one, walking around the city when the United Nations, the Clinton Global Initiative, and many heads of state are all meeting here creates gridlock in the streets!   New York seems a place of intensely local neighborhoods but also a world city, looking out from the harbor to the globe.    This plus my review of a recent China Greentech study, along with my special interest given my daughter being from China and our having traveled there, has gotten me thinking about the role of China and the US, particularly the South, in climate change.   A few of those thoughts:

1. Climate change is accelerating and optimism about an international treaty to be negotiated in Copenhagen in December is waning given slow political progress on a low-carbon policy in US and China.   (See Secretary-General Ban Ki-moon’s opening remarks to the UN Climate Change Summit Plenary here yesterday.)
2. China’s rapid economic growth is continuing, despite the recession, with the IMF predicting 8% GDP growth in China will the world has -1% GDP reduction and the US -3%. (International Monetary Fund, “World Economic Outlook Update, July 2009″.)
3. China produces most of its electricity from coal, and adds as much electric generation (90 gigawatts, GW) in one year at the total electric generation in the United Kingdom (78 GW)
4. China’s population is twice that of all of the US and Europe combined.
5. China and the United States are the largest carbon polluters, each emitting about 20% of the world’s carbon emissions.   However, the US has only 5% of the world’s population while China has 20%.
6. China will likely never agree to a binding international carbon reduction protocol unless the US agrees, despite encouraging carbon reduction and renewables growth voluntary goals stated by President Hu Jintao yesterday.
7. US energy and climate legislation is stalled now in the Senate, and Southern Senators are a key group that is in opposition.
8. The South has much to lose with global warming (witness Katrina) and much to gain in a low carbon economy – especially diversified employment in efficiency, recycling, solar, insulation, wind, sustainable agriculture, biomass, green IT and biotech companies.
9. SJF can play a role in promoting the green, low-carbon economy as an upside opportunity for the country, and particularly the Southeast.  (As we have done in our Green Economy Summit in NC in June, our Cleantech CEO Panels in NYC, the REBNs, through cleantech portfolio companies such as groSolar, RealWinWin, CleanScapes, Intechra … with many more to come).

Those are my Manhattan musings for today, I welcome your comments!

Dave Kirkpatrick