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Private Equity Giant Sends Surge into U.S. Microgrid Market

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Washington DC-based private equity goliath Carlyle Group’s entry into the microgrid business could help standardize the technology and position the industry for rapid growth, Greentech Media reports.

Carlyle leapt into the market last year with its decision to fund Dynamic Energy Network (DEN), a US$500-million start-up expected to “create microgrids, then operate them in an energy-as-a-service model for long-term contracts,” Greentech notes. The offer is tailored to customers that lack the initial capital to build their own microgrids, or that want clean power without having to step into the energy asset management business.

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After the initial cash infusion, Carlyle has apparently told DEN’s CEO that there’s plenty more cash where that came from.

Until now, “most companies have [had] a hard time coming up with the up-front cash to build a microgrid,” and would likely have been delighted if “an entity with functionally unlimited capital bought the project and operated it on behalf of the customer in exchange for service payments,” GTM states.

At least at the outset, the new company “could easily keep itself busy” catering to its Carlyle siblings. But with some 270 businesses, representing $40 billion in energy and infrastructure assets, in the parent company’s portfolio, the initial volume could also help secure a wider future for microgrids.

“Carlyle’s interest may prompt other private equity firms to consider microgrids as an investment vehicle,” sharply increasing the financing available to expand the resilient, distributed alternatives, GTM notes.