The Cornerstone Conversation: Russell Stidolph, AltEnergy, Tres Amigas

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We recently talked to Russell Stidolph, founder and Managing Director of AltEnergy, a clean energy-focused private equity fund with $110 million of committed investment capital. The fund is based in Rowayton, Conn. and invests across the clean energy spectrum – in wind and solar generation, biofuels, as well as smart grid and transmission projects. In October, one of AltEnergy’s portfolio companies, Tres Amigas, officially launched a grid interconnection project in New Mexico, , will connect the U.S.’ three grid systems. Stidolph, a graduate of Dartmouth College, is a veteran clean energy investor. Before founding AltEnergy in 2006, he worked at PE firm J.H. Whitney & Co., where in 2001 he was instrumental in launching the firm’s clean energy practice. This interview is part of our ongoing Cornerstone Conversations series with leading executives of the clean tech sector.

GER: Last month AltEnergy’s portfolio company, Tres Amigas LLC, launched a major grid infrastructure project in New Mexico.  Can you tell us more about it?

Russell Stidolph: Tres Amigas will for the fist time connect the country’s three grid systems (ERCOT of Texas; the Western and Eastern Interconnections). This means that a wind farm in West Texas will be able to export power to the East Coast or West Coast by going through the Tres Amigas interconnect, which will then pipe that electricity into one of the country’s three grid systems. Tres Amigas will open new power markets that are now off limit because of the way the U.S. grid is set up.

GER: The growing consensus on the state of the U.S. grid is that it’s outdated and in need of a serious upgrade. What’s your assessment?

RS: Over the past few years a lot of the clean energy investments have flowed into the generation side of the clean energy equations. There’s been a lot of focus on adding new wind or solar capacity and that will continue with the Obama administration’s stimulus funds. Yet, despite growing awareness about the need to build more transmission and to modernize the U.S. grid system, it does seem sometimes that the grid is the ‘forgotten child’ of the clean energy sector. The reality is that unless we start expanding and modernizing the grid, at one point we’re going to hit a wall and we won’t be able to add capacity. Specific to green energy, an expanded grid would connect wind or solar farms, which are often developed in remote areas, to high demand power markets.

It does seem sometimes that the grid is the ‘forgotten child’ of the clean energy sector.

GER: Tres Amigas is a first of its kind project, at least in the U.S. Will project finance banks understand it? Are you confident you’ll be able to fund it?

RS: We’ve been talking to banks for a while now and yes they understand our revenue model. As I said earlier, what we’re building is a bridge that connects power markets that now operate independently of each other. We are providing a missing link and electric utilities will pay a fee to Tres Amigas to use that link via long-term agreements so that their power crosses the interconnect and is sold into a new market. This is not a new model, we’re not reinventing the wheel and Wall Street and investors in general understand that revenue model and how these types of contracts operate. Read More »