Duke Energy Corp. is taking a cue from the market and fulfilling its plan to build up a "behind-the-meter" renewable energy portfolio through the acquisition of a California solar provider.
Duke Energy announced Dec. 6 that it acquired full ownership of REC Solar, which focuses on providing "comprehensive commercial solar and renewable energy solutions," in a cash transaction. Specific terms of the deal were not disclosed.
Charlotte, N.C.-headquartered Duke Energy acquired a majority interest in REC Solar in February 2015. The California company will now be managed as an independent business unit of Duke Energy Renewables Inc., the commercial renewables division for Duke Energy.
"One of the directions that Duke Energy Renewables and I think the whole market sees is more corporate customers," Chris Fallon, vice president of Duke Energy Renewables, said in a phone interview with S&P Global Market Intelligence. "The large corporates are out looking for longer-term renewable contracts. One of the areas that REC has been very successful in their marketing and development efforts is that they have a lot of relationships with those large corporate customers."
Fallon noted that these typically on-site energy customers have started to express more interest in utility-scale, off-site resources.
"Not only can we now, through REC, provide them an on-site solution to meet their renewable energy needs, but we also can provide them access to off-site solar and off-site wind projects as well," Fallon said.
There are a lot more corporations and large customers, such as Google Inc., looking to buy into large-scale renewables, Fallon added. "There's a number of different drivers and each company's different, but we do see a lot more of the corporate players getting into the marketplace," he said.
REC Solar President and CEO Matthew Walz said the company, which designs and builds behind-the-meter energy solutions and solar projects, is "enthusiastic" about leveraging the relationship with Duke Energy to better serve its customers.
Walz, who is an employee of Duke Energy and will continue to head REC Solar, said he was brought in a year ago to plan for the integration of the businesses.
"As the market's accelerating and we see movement in the industry, we thought this was the right time to move from a majority share ownership to a full ownership and then fully integrate inside the Duke Energy Renewables portfolio and bring the best of both teams together," Walz said.
"For me, running this business for Duke Energy Renewables, when I look at, the benefits are going to be that we can bring a wider set of solutions to our customers" whether they are looking for behind-the-meter, energy storage, microgrid or off-site energy solutions," Walz said. "Now we can bring the full force of Duke Energy Renewables' commercial business to those customers."
The full integration is expected to give "confidence" to customers that they now have an energy partner with a 100-year track record that will be there for them today and in the future, according to REC Solar management.
"At the end of the day, it's the 'Who turns the wrench?' thesis in the EPC business," Alan Russo, REC Solar's senior vice president of sales and marketing, said in the interview. "We now have with this acquisition removed every barrier to accessing the full depth of Duke's capability that we're marrying with our customer-side meter knowledge to help bring value that informs the long-term energy strategy of our customers."