FlexEnergy, Distributed Generation Co. Ink $400 Million Deal.

Source: Forbes

Distributed energy is about to leap from the puddle into the pond.

If – or, when – it does, you may want to thank a little manufacturing company based in Portsmouth, NH for bringing distributed energy from the margins into the mainstream market.

Flex Energy, a microturbine manufacturer spun off from the industrial equipment conglomerate Ingersoll Rand, landed a landmark sales deal today with a venture-backed investment group based in Russia, the Distributed Generating Company (DGC).

Based in the Russia’s industrial Samara region, DGC agreed to pay FlexEnergynearly half a billion for a whopping 200 megawatts of microturbine generating capacity over the next three years.

The first delivery of microturbines is scheduled to take place in January.

Established in 2012 by a Russian venture fund, DGC is focused on filling a growing demand for distributed power solutions for small to medium sized enterprises.

“The basic plan is to use the microturbines as a platform for developing a set of standardized solutions for quick deployment, and offer customers long-term, predictable contracts, for on-site power generation, with no grid connection fees,” said Dennis Shomko, a partner at Avicon-UK who represents DGC, during an international project finance conference held today in New York City by Broad Street Capital.

The cost of connecting to the electric grid in Russia can be astronomical.

“As a rule of a thumb, grid connection fees are about $1 million per megawatt,” said Shomko. “That is steep, by all standards. What is more, the process is extremely bureaucratic, there are waiting lists, brown envelopes, restrictions – and no other options.”

Shomko said that lack of access to affordable, reliable power supplies has hampered the growth of small, entrepreneurial enterprises in Russia.

The solution: natural gas-fired onsite power solutions.

“A large number of enterprises are already connected to the gas mains, and, overall, the situation with new connections to the mains is a no-brainer: it is relatively cheap and quick, and does not require expensive downstream infrastructure,” said Shomko.