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Clean Capital On The Financial Front Lines

It Takes Money to Accelerate Clean Energy Growth

The start of rising global temperatures can be traced back to 1830, when a steam locomotive filled with coal left Liverpool, England, and made its way to the manufacturing hub of Manchester – an intercity rail route that marked a major turning point in the world’s coming age of industrialization. Since then, a lot of money and innovation has been put into developing various traditionally powered factories, machinery, and construction, which has contributed to the warming of the globe – and it will take a lot of money and innovation to transition to cleaner energy alternatives.

One company leading the charge on the financial side is New York-based CleanCapital, which helps clients invest in renewable energy products through a platform that identifies, screens, and manages clean energy projects. The company specializes in developing and bundling small-scale solar projects, though it also dabbles in wind and battery storage. 

CleanCapital’s stated mission is to “accelerate the flow of institutional capital into clean energy” as a way of connecting investors to clean energy opportunities. The idea behind that mission is simple: By expanding renewable energy infrastructure and capacity, you can help reduce the world’s dependence on fossil fuels – while also helping clients make money.

To find the right opportunities, CleanCapital uses data and analytics that let it assess the market for renewable energy projects. It then bundles the projects into financially attractive portfolios for investors. The company’s technology is designed to streamline the process of acquiring, underwriting, and managing projects for the best returns.

Plenty of money should be available to do this kind of work in the years to come. A 2020 report from Goldman Sachs Group estimates that spending on renewable power will soon pass oil and gas drilling for the first time. The report projects that clean energy will represent a $16 trillion investment opportunity through 2030.

CleanCapital was co-founded in 2014 by Thomas Byrne and Jonathan Powers, who now serve as CEO and president, respectively. The company made a name for itself a year later by drawing high-profile investors like John Hancock, CarVal, and BlackRock. CleanCapital has since spent more than $500 million to acquire renewable energy portfolios in North America and abroad. 

An example of the kinds of deals CleanCapital makes was its 2019 acquisition of a 16.5-megawatt portfolio consisting of seven operating solar projects. The company’s acquisitions totaled 105 megawatts in 2019, which more than doubled its cumulative acquisitions of prior years. As of early 2020, it managed more than 180 megawatts of renewable power generation consisting of more than 100 sites in 12 states. 

You can expect similar investments in the coming years. In September, CleanCapital announced plans to raise up to $500 million to invest in solar and battery storage projects. Bloomberg reported at the time that CleanCapital was in discussions with North America-focused pension funds, insurance companies, sovereign wealth funds, and infrastructure funds that are seeking long-term investments. Javelin Capital was retained as the financial adviser.

That news came amid rising investor interest in renewable energy projects and products. Wind and solar power become bigger sources of energy in the U.S. and elsewhere. Meanwhile, demand has also risen for battery storage that can power grids when wind and solar energy are not feasible, such as when the wind’s not blowing and the sun is not out.

“If you believe that clean energy is going to be the primarily deployed source of energy over the next decade, you have to, by necessity, be bullish on storage,” Byrne told Bloomberg in an interview.

CleanCapital’s interest in addressing the problem is rooted in concern over what will happen if nothing is done to reduce dependence on fossil fuels and transition to renewable energy sources.

“Scientists have been ringing the climate change alarm bells for years, but their warnings are becoming increasingly dire,” the CleanCapital website said. “We must immediately cut carbon-dioxide emissions to avoid its worst forecasted effects; failing to do so will result in $54 trillion in damage by as early as 2040.”

The challenge is developing a system where the right money gets into the right hands to do the right kind of work in a complex industry with many different moving parts.

“We saw how the lack of standardization in contracting, regulations, and diligence made it near-impossible to invest in distributed clean energy assets at scale,” the CleanCapital website said. “Just as fintech was streamlining other industries, like student loans, we knew technology could simplify the process and enable more investors to buy in.”

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