Investors put $130 million into Guzman Energy

Xcel Energy’s Greater Sandhill Solar Farm north of Alamosa, Colo. Colorado’s San Luis Valley has some of the nation’s best solar resource. About 100 miles south, Kit Carson Electric is now rapidly building solar farms with the aid of Guzman Energy. Photo/Allen Best

Guzman Energy gets $130 million in new money. What will it do with it?

by Allen Best

DENVER, Colo. — Guzman Energy Group—the financier of Taos-based Kit Carson Electric Cooperative’s bid to develop renewable energy sources—this week announced it has secured $130 million from two Colorado-based investors, Boulder-based Vision Ridge Partners and Denver-based Zoma Capital.

Guzman gained attention in the Rocky Mountains in 2016 when it paid Tri-State Generation & Transmission a $37.5 million exit fee to break Kit Carson’s contract.

The co-operative had previously been committed to buying 95 percent of its electricity from Tri-State, a Denver-area based wholesale supplier now made up of 43 electrical co-operatives in Colorado, New Mexico, Wyoming and Nebraska. Included are the cooperatives serving Crested Butte, Telluride, Durango, Wolf Creek and several other ski areas.

Several of the co-ops serving mountain communities have discussed, either informally or in elections, the idea of seeking buy-outs of their contracts with Tri-State.

Tri-State remains heavily reliant on coal-based generation. Kit Carson, with the aid of Guzman, has set out to develop the solar potential of northern New Mexico.

In 2017, 30 percent of Tri-State’s power came from renewables, most significantly from hydroelectricity. A little less than half of its electricity comes from its own coal plants, according to Lee Boughey, Tri-State’s  senior manager for communications. The G&T may also purchase coal-fired power from other sources, but how much is not clear. In contrast, 28 percent of electricity delivered by Xcel Energy in 2017 came from renewable sources and 44 percent from its coal plants. If the Xcel’s Colorado Energy Plan is approved by Public Utility Commission on Monday, Aug. 27, the renewable component will increase to 55 percent by 2026.

With Guzman as financier, Kit Carson plans to develop up to 35 megawatts of small solar arrays by 2022. That will meet 35 percent of all electrical demand and 100 percent during daylight hours on sunny days.

Kit Carson and Guzman say that hitching their wagon to solar, instead of coal, will save the co-op’s 30,000 members $50 million to $70 million during the next decade.

Guzman has made it clear it is interested in providing energy services to other such as it is now providing for Kit Carson. Last March, for example, company representatives spoke about what Guzman could offer Pueblo, Colo., at a forum hosted by Pueblo’s Energy future.

Electricity for Pueblo is provided by Black Hills Energy, but the city council has adopted a 100 percent renewable energy goal. Pueblo recently has retained a firm to study how it might go about ending its contract with Black Hills.

It’s not clear just how important these investments are to Guzman’s plans. One individual in the co-op world interpreted the announcement as further proof that smart money is moving toward rapid development of renewable energy. But another individual, also speaking off the record, was more skeptical of the importance of the money to Guzman. In this view, this isn’t enough money to allow the company to pick up new clients as it did with Kit Carson. In this view, Guzman is and will remain a niche player.

About the investors:

Zoma Capital was co-founded by Ben and Lucy Ana Walton. Zoma Capital, based in Denver, invests in a broad range of market-based sustainable solutions addressing environmental and social challenges, with an emphasis on energy, water and community development, and with a geographic focus on Colorado and Chile.

Zoma’s website says that in Colorado in the realm of energy, it is focused on “accelerating energy technologies to create a more efficient, responsive and modernized electric grid.”

Ben Walton is the grandson of Walmart founder Sam Walton and, an architect by training, was reported by Business Insider in 2013 to be living in Aspen.

“Guzman energy’s efforts to realign the energy economy—in unique bilateral markets in New Mexico, Colorado and beyond—aligns with our dedication to investing in a more efficient, responsive and modernized electric grid,” said Melissa Cheong, chief investment officer of Zoma Capital in a prepared statement.

Vision Ridge Partners, which is based in Boulder, is a fund of $430 million that in 2014 launched a Sustainable Asset Fund with Capricorn Investment Group and the Grantham Foundation for the Protection of the Environment, according to the firm’s website. It was founded by Reuben Munger in 2008.

“At Vison Ridge, we focus on opportunities that are good for the environment that we also believe can deliver strong financial returns,” said Munger in a prepared statement. “And with Guzman Energy having been very vocal in sharing its long-term mission of making communities thrive and be more competitive, we see this as an excellent fit.”

Guzman describes itself as a full-service energy company whose services include providing wholesale power, energy trading and hedging services.

Chris Riley

“We offer communities—empowered by their desire for a more sustainable and competitive energy future—a path to achieve their goals,” said Chris Riley, president of Guzman Energy.

“We accomplish this via a focus on renewables, mixed when necessary with traditional fuel types; smart-grid tech; increased efficiencies; battery storage; and more, thereby leading the efforts to transition our energy economy into the renewable age.”

Riley grew up in Utah, the son of a coal miner.

This story was updated on Aug. 23 to include details about the renewable and coal portfolios of Tri-State Generation  & Transmission and also the Public Service Co. of Colorado, a subsidiary of Xcel Energy. 

Allen Best