"We're very bullish about the renewable energy market," says Ian Schapiro, of GFI Energy Ventures LLC of Los Angeles, the company that lead the purchase. A subsidiary of Trace, Trace Engineering, is licensed to use the power electronics technology at the centre of a patent dispute between Enron Wind Corp of California and German wind turbine manufacturer Enercon (page 27). In pursuing the power electronics patent, Enron is apparently aiming to dominate manufacturing of wind turbines and thus wind plant development.
The acquisition of Trace is backed by RIT Capital Partners plc, a publicly traded London investment group headed by Baron Rothschild of the prominent European banking family, and Oaktree Capital Management, a Los Angeles based investment company which manages funds worth more than $10 billion. GFI, which concentrates on investing in the deregulated electricity market, is an acronym that means 'go for it.' Among other trail blazing activities, GFI has invested in Caminus Energy, the leading provider in the UK of software for trading in electricity.
GFI's Schapiro says the purchase of Trace, announced on August 6, is attractive because of electricity deregulation and, in the longer-term, because of global warming. "It's a good niche product," he says of the future of green power within the US. In the Third World, GFI expects demand for renewables to increase most rapidly in Asia and Latin America, where both power quality and affordability are crucial issues. And GFI hopes that its purchase of Trace is strategic, in that it is a key supplier of inverters to all renewable energy technologies, regardless of which one prevails in any part of the global market.
Previously Trace had been owned by the company's senior management -- the original entrepreneurs who founded the company. Based in Arlington in Washington state, it supplies more than 60% of inverters used by renewables. Clients include household names such as oil company British Petroleum as well as makers of small turbines such as Bergey Windpower Company, South West Windpower, and World Power Technologies of Duluth, Minnesota.
"Energy collected or generated from solar panels, windmills, flywheels, next-generation batteries or any other such source is an imperfect, irregular and unpredictable form not usable to power electrical devices," comments GFI. "The Trace products perform the crucial task of converting this energy into a smoother, steadier more usable form whether the ultimate use of purified electricity is an isolated site powered by a stand-alone source, a recreational vehicle or boat, or a back-up power supply supporting a facility in an area with unreliable power."
Another, broader perspective on energy development came recently from within the Rothschild family. The power sector is an ideal vehicle for strengthening and deepening a domestic financial market, wrote Sir Evelyn de Rothschild, chairman of N M Rothschild & Sons Ltd and a member of the same branch of the banking family, in the official publication of last month's Word Energy Congress. Privatisation of electricity markets, a trend that started in the UK, has shown that competition can work well for investors and consumers within the right framework, he says. Indeed the top 25 international private power developers are expected to commit $40 billion of equity to power projects internationally over the next five years, adds Rothschild, a former chairman of The Economist news magazine.