What Does Constellation’s Deal with ConEd Solutions Mean to its Microgrid Business?

Exelon subsidiary Constellation, a competitive retail supplier that also has a microgrid business, has entered into an agreement to acquire the retail electricity and natural gas customers of ConEdison Solutions.

Both companies have been focused for years on the sale of competitive retail supply and energy services. Constellation more recently added microgrid development to its business model, working with partners Anbaric Microgrid and Bloom Energy. Constellation’s parent, Exelon, also is strongly focused on microgrid development.

So what does the deal mean to Constellation’s microgrid business – if anything?

ConEdison Solutions is based in the Northeast. And that’s an area targeted by Constellation’s microgrid business, noted Omar Saadeh, senior analyst at GTM Research. The acquisition, he said, may offer Constellation “some upsell opportunities to deploy on-site renewables and microgrids to existing retail customers looking to enhance sustainability and/or reliability at mission-critical sites.”

But he added that these opportunities seem “more of an ancillary bonus of this deal. Bottom line, I don’t expect this to highly impact Exelon’s microgrid strategy.”

Kelly Biemer, Constellation’s manager of external communications, underscored that Constellation is acquiring only the retail electricity and natural gas business of ConEdison Solutions.

But she said after the transaction closes and customer contracts are transferred to Constellation, “ConEdison Solutions customers will gain access to Constellation’s energy products and services including distributed energy solutions.”

Utility microgrid business

Both companies also have an indirect connection to the microgrid industry via their regulated utility affiliates, which operate in deregulated states.

Constellation is a subsidiary of Exelon, a $35 billion company whose utility units have proposed public purpose microgrids in Illinois, Maryland and Pennsylvania.

ConEdison Solutions is an affiliate of Con Edison, the utility whose New York service territory is an epicenter of community microgrid activity, largely because of the NY Prize. The utility is a partner in over a dozen microgrid proposals in the greater New York City area that were named as  Stage 1 winners in the $40 million state-sponsored competition. Stage 1 winners received $100,000 each toward microgrid feasibility studies.

The acquisition will not impact the microgrid activity of either utility, since Constellation and ConEdison Solutions are competitive affiliates operating in restructured states, meaning a wall exists between them and the operations of the regulated utilities.

microgrid business

States where competitive suppliers by law can compete with utilities to sell electricity to retail customers.

Details of acquisition

In all, Constellation plans to acquire more than 560,000 commercial, industrial, public sector and residential ConEdison Solutions customers across 12 Northeastern, mid-Atlantic, and Midwestern states, Texas, and the District of Columbia, according to an announcement the companies made July 27.

Constellation says that the purchase strengthens its position as the nation’s largest competitive energy supplier to more than 2.5 million residential and business customers.

Following the close of the deal, ConEdison Solutions says it will retain its focus on renewable energy, sustainable services, and energy efficiency solutions for commercial, industrial, residential and government customers.

The companies expect to close the transaction in the third or fourth quarter 2016. The terms of the agreement were not released.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Comments

  1. Fast Forward: I guess we know the answer now. Constellation is unwinding its DER business due to Exelon deploying capital into its utility based businesses (quite a fleet after their buying spree). Frankly, I don’t think Constellation was ever committed to this business other than a modest stake in solar. It was led by a left over SAP executive who came via acquisition and who was not knowledgeable in this area at all. Oh well, what goes around comes around so watch for another update soon.

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