Clearway Energy announced today that it will significantly reduce its quarterly dividend “to proactively maintain balance sheet and capital allocation flexibility during this period of uncertainty with one of Clearway’s largest customers.”

The customer in question is PG&E;, which declared bankruptcy on January 29. The uncertainty is regarding the status of its long-term power purchase agreement (PPA) contracts. PG&E;’s bankruptcy filing automatically triggered default, and the long-term fate of those contracts is an open question. Jarring events like bankruptcy happen from time to time in every industry, but today’s news underscores the risk sometimes associated with concentrated investments.

While the ultimate financial impact of PG&E;’s bankruptcy on Clearway Energy and other PPA counterparties—if it impacts those companies at all—will not be known for some time, the magnitude of exposure to risk here is clear. At CleanCapital, a highly diversified acquisition strategy is our way of ensuring that we’re insulated from all types of “event risk”. We own and manage a broad spectrum of small-scale solar projects representing a wide range of geographies, a multitude of off-takers, and various types of contracted revenue. This diversification gives debt and equity providers comfort that the negative impact of any solitary issue will be limited and contained.

Diversification is a tactic designed to minimize risk and optimize returns; investing in distributed assets is one strategy to achieve that objective in renewable energy markets. I guess we’re putting a slight twist on the old adage: ”Don’t put all your electrons in one basket.”

For more insight on how PG&E;’s bankruptcy is changing the energy investment landscape, read Four Challenges that will Shape Electric Utilities this Decade from Derek Daly, Director of Investments & Capital Markets for CleanCapital.