Efforts to upgrade and expand infrastructure in the United States will have a major focus on sustainability, with the administration’s $1 trillion infrastructure plan earmarking funds for clean energy and smart and sustainable roads, water systems, transit networks, schools, airports, rail, ferries, and ports.
Among the companies looking to capture part of the sustainable infrastructure market is Ember Infrastructure, a New York-based private equity firm that targets middle-market businesses and assets that contribute to reduced carbon intensity and enhanced resource efficiency.
This summer, Ember announced that it had raised $340 million for an inaugural clean energy-focused fund to invest in companies that advance sustainable solutions. The fund, called Ember Infrastructure Fund I, was launched with financial backing from pension funds, asset managers, foundations, insurance companies, and other institutional investors from the U.S., Canada, and Europe.
As of July 1, the fund had completed investments in three companies. One is ReGenerate Energy, a bioenergy platform with a trio of facilities that generate 138 megawatts of renewable power. The others are Caban Systems, which provides energy storage and management solutions to the telecommunications industry, and SunShare, a community-based solar developer.
The funding round will help Ember accelerate its sustainable investment strategy to bring even more companies into its portfolio.
“On the portfolio side, we are excited about the partnerships we’ve built to date with strong operating teams ready to capitalize on the tremendous growth opportunity offered by a new generation of infrastructure technologies,” Ember Managing Partner Elena Savostianova said in a press release. “We are thrilled to direct our expertise and capital towards the businesses building the infrastructure that we believe can bring us closer to a sustainable future.”
The fund’s focus on clean energy comes during a period of rapid growth in the sector, boosted partly by U.S. government efforts to advance the energy transition. In July, the Department of Energy (DOE) announced that it would spend $18.4 million through the Technology Commercialization Fund to get more clean energy technologies into the marketplace. The goal is to ramp up the commercialization of these technologies in support of Biden’s goal to reach net-zero carbon emissions by 2050.
Ember’s focus on environmental, social, and governance (ESG) investing is partly driven by its commitment to various international ESG standards. The company is a signatory of the UN Principles for Responsible Investment (“PRI”), the world’s leading proponent of responsible investment. It is also a member of the Intentional Endowments Network, which aims to support an equitable, regenerative and low-carbon economy through a collaborative network of endowments, asset managers, investment consultants, nonprofit partners, and individuals.
Ember’s growth strategy involves identifying, managing, and improving ESG-related risks and opportunities that align with internationally accepted industry standards. Its main target sectors are energy transition, water, waste, and industrials/agriculture.
Ember looks to invest in companies that provide essential services, have proven technologies, and operate in markets with high barriers to entry. Beyond that, it eyes companies with exceptional management teams, visible cash flow, and strong growth opportunities.
An example is Ember’s $30 million investment in SunShare, announced in September 2021. SunShare, founded in 2011, has already demonstrated growth in community solar and has signed on more than 13,000 customers in 80-plus community projects across Colorado and Minnesota. SunShare is also one of the few developers to own and operate its projects. Ember’s investment has been used to accelerate SunShare’s business model.