Private Equity Supports Renewable Energy Investments
|Private equity has been a critical partner for businesses investing in sustainable energy projects, both large and small. The industry recognizes the critical role that these investments will play in mitigating the growing effects of climate change and moving the economy in a more sustainable direction. In 2019, the publication Private Equity International examined how, “private equity and infrastructure funds are increasingly focusing on wind, solar, and other renewable energy assets – an exciting and rapidly expanding new asset class that has the added advantage of furthering sustainability and green investing goals.”
Private equity invested more than $11 billion into renewable energy projects in 2020 alone. Copied below is a graph from Pitchbook showing how private equity has steadily increased support for renewable energy investments in the last decade.
|Below are just some of the many investments private equity has made in renewable and sustainable energy projects across America:
- Blackstone to Cut Emissions by 15 Percent – AIC member Blackstone recently announced that the firm plans to reduce carbon emissions by 15 percent within the first three years of investing in a new portfolio company or asset. Blackstone plans to begin the initiative in 2021, and progress will be tracked by French energy and digital-automation company Schneider Electric SE. “Now that we have the experience, the team, the capabilities and the technology, why don’t we set a real goal?” said Blackstone President Jonathan Gray. “We’re numbers-oriented people, so by putting a target on it, we give the companies something they’re really going to go after.” Read more about the new initiative from the Wall Street Journal.
- Carlyle Invests in Maine-Based Solar Project – AIC member The Carlyle Group recently invested more than $130 million in Acadia Renewable Energy, which is comprised of eight solar projects across Southern Maine. Once completed, Acadia will generate enough power to sustainably supply 19,000 homes in Maine with solar energy. The project is the largest solar development in Maine and is one of the largest in the northeast. “We are excited to be at the forefront of solar development in the Northeast. We see significant value in renewable development in the region and the support for these projects has been tremendous … This is an investment in Maine and its communities,” said Pooja Goyal, managing Director and Co-Head of Carlyle’s Infrastructure Group.
- Apollo Invests in Offshore Wind Farm – In August 2020, AIC member Apollo Global Management announced its funds committed to invest $265 million in US Wind, which plans to develop an offshore wind farm approx. 17 miles from the coast of Maryland. The first phase of the project will have capacity to produce 270 MW – enough to power 75,000 Maryland homes with renewable energy – and is anticipated to come online in 2024. “We believe our strategic partnership with Apollo will create significant value for US Wind and the state of Maryland in advancing development of our offshore wind projects,” said Riccardo Toto, President of US Wind. “Apollo is a creative and dynamic partner, with global expertise, and together we believe we can make a positive impact on the energy transition in the United States.”
- KKR’s Launches Global Impact Fund – In February 2020, AIC member KKR raised$1.3 billion for its new Global Impact Fund designed to invest in and support businesses focusing on social and environmental challenges. KKR intends to partner with middle market companies that contribute to reaching the United Nation’s Sustainable Development Goals. “The UN SDGS were developed to mobilize citizens, policymakers, technologists and investors to address global challenges. As investors, we have a significant role to play in building businesses that contribute to SDG solutions while also generating financial returns for our fund investors by doing so,” said Robert Antablin and Ken Mehlman, KKR Partners and Co-Heads of KKR Global Impact.
- EnCap Launches Renewable Energy Team – AIC member EnCap Investment formed a team dedicated to exploring renewable energy investments late in 2019. The four-person investment team will focus on wind, solar, and low-cost battery storage projects. “Renewable energy sources are poised for rapid growth. In fact, renewables are projected to be the fastest growing source of electricity generation in North America,” said EnCap Managing Partner Doug Swanson.
- Blackstone Expands Solar Capacity – AIC member Blackstone recently installed 22 acres of solar panels on the rooftops of New York City’s Stuyvesant Town apartment buildings. The solar panels produce 3.9 megawatts of sustainable power, which can support up to 1,000 apartments each year. This single project is the largest rooftop solar array in the U.S. and tripled the amount of solar capacity for Blackstone properties in New York City.
- Warburg Pincus Supports Clean Energy – In 2016, AIC member Warburg Pincus led an equity commitment of up to $220 million in energy financing startup Mosaic, which provides loans to homeowners looking to install solar panels on their properties. Mosaic has built their business model around allowing customers to own their own solar installations, as opposed to renting or leasing. Additionally, in 2020, the firm announced an equity commitment of up to $300 million in Scale Microgrid Solutions, a leading distributed clean energy and microgrid platform focused on delivering cleaner, cheaper and more reliable power through fully-financed solutions to commercial and industrial customers.
- Carlyle Supports Valcour Wind Energy – Since 2018, AIC member The Carlyle Group has partnered with New York based Valcour Wind Energy. The portfolio contains six separate wind farms that generate sustainable energy for residents and businesses in Northern and Western New York State.
- Apollo Forms JV to Back Great Bay Renewables – Apollo Funds also expect to invest up to $200 million in a joint venture with Altius Renewable Royalties to accelerate the growth of their US-based operating subsidiary, Great Bay Renewables. Great Bay provides strategic capital to renewable energy developers via an innovative royalty structure that can be applied at all stages of a project’s life cycle. The investment is expected to support growth of wind, solar and storage projects and help corporations, states and cities to reach their ambitious sustainability goals.
Click here to read the American Investment Council’s guidelines for responsible investing, which encourages private equity firms to, “consider environmental, public health, safety, and social issues associated with target companies.”
Click here to watch a short video examining the private equity investments in renewable energy projects.