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How technology adds value for clean energy investors

Reposted from FinTek News, published 4/4/19.

CleanCapital Solar Tech
Solar Tech

CleanCapital is sometimes described as a fintech company. While I’m not sure that label really suits us, it’s certainly true that my experience with fintech provided the ‘light bulb’ moment that led to founding CleanCapital. Today, technology underpins all that we do.

Clean energy assets present enormous opportunity.

Renewable energy is at a ‘hockey stick’ moment for worldwide growth. Bloomberg New Energy Finance projects that $11.5 trillion will be invested in new power generation capacity between 2018 and 2050, with $8.4 trillion of that going to wind and solar and another $1.5 trillion to other zero-carbon technologies like hydro and nuclear.

Why are investors so bullish on renewable energy? Clean energy sources will make up 80% of the world’s new energy capacity through 2050, with renewables providing at least 50% of the world’s electricity that year. That creates enormous opportunity for infrastructure investment. Investors looking to add real assets to their portfolios are drawn to solar, wind, and storage generation for a number of attractive attributes. Renewable power infrastructure portfolios boast stable cash flows, low volatility, diversification of risk, and alignment with investors’ ESG goals.

But barriers to entry pose challenges for investors.

Despite growing demand for these investment opportunities, the complexity of clean energy deals has historically kept investors away.

As an attorney working on landmark clean energy financing deals, I saw how the lack of standardization in contracting, regulations, and diligence made it near-impossible to invest in distributed clean energy assets at scale. Having seen how fintech was streamlining other industries, like student loans, I sensed an opportunity to leverage technology to simplify the process and enable more investors to buy in.

Any given clean energy acquisition is comprised of close to a hundred documents; multiply that by the ten, 20, or 60 projects that make up a single portfolio and you’ll get a sense of the organizational issue at hand. A buyer often works with five to ten parties in addition to the seller to close an acquisition, so project management and communication are also a challenge. We envisioned a technology-based solution that would organize information and process flow.

Our tech-based solution will power the transition to a clean energy economy.

Today, our leading edge platform enables us to underwrite, diligence, and manage renewable energy portfolios efficiently. The response from the market has been robust; industry leaders, including BlackRock, rely on our platform capabilities to meet the demand for clean energy investment and deliver value to clients. Going forward, I envision greater adoption of technology, including data analytics, in all facets of clean energy investment to underpin the dramatic growth of these resources around the world.

BlackRock investment will fuel CleanCapital’s growth

Today we announced that BlackRock’s Renewable Power Group took a stake in CleanCapital. Their investment fuels the continued growth of our company and provides capital to accelerate our clean energy acquisitions.

Read the press release.

For CleanCapital, this marks a kind of end to the beginning of our company story. Marc Garrett, Jon Powers, and I launched CleanCapital with a clear vision: to attract institutional capital to clean energy investment. Not only have we achieved that founding goal, we’ve done it by earning the trust of the world’s largest asset manager.

CleanCapital Solar Photo

Expanding our partnership

We’re thrilled to expand our partnership with the team at BlackRock. Led by David Giordano globally and Martin Torres here in the Americas, the partnership gives institutional investors—who are showing increasing interest in real assets—access to the growing renewables market. Their investment empowers us to grow our solar portfolio and also pursue opportunities in new geographies and new clean energy asset classes, like energy storage.

Last year, we partnered with BlackRock on our largest acquisition to date. It was no small feat; the 47 megawatt portfolio, comprised of 60 solar projects in three states, was one of the largest independent C&I solar portfolios in the U.S. A complicated deal like that turned out to be the perfect opportunity to show the team at BlackRock the value of the CleanCapital platform. Using our technology to perform detailed underwriting, our seasoned investment team provided BlackRock with a clear understanding of the opportunity at hand. And we closed the deal with speed and certainty.

Driven by a common mission

BlackRock Chairman & CEO Larry Fink has been outspoken in his belief that the best returns come when you invest with purpose. We believe that by providing access to the growing opportunities in renewable energy we can deliver value to investors and do good for the planet. Through this partnership, we will acquire more high-quality solar and storage projects to build superior portfolios for our investors.

I look forward to sharing more milestones with you as we put this capital to work.

CleanCapital is actively seeking to acquire solar and storage projects. Interested in selling your project? We should talk.

Living on Earth: Wall Street and the Green New Deal

Living on Earth: Wall Street and the Green New Deal

The Green New Deal resolution was recently introduced to Congress. It aims to address the climate crisis, in part, by committing to 100% zero carbon energy in the next ten years. It’s also a plan to alleviate poverty and create millions of new green jobs. One of the biggest criticisms of the ambitious plan is the cost. Even if Congress could agree in principle, critics say the government can’t afford to fund the proposed programs. However, they may be overlooking an obvious source of revenue: Wall Street. Sustainable investing is already a 12 trillion dollar market and growing. Jon Powers, president of Clean Capital and former federal Chief Sustainability Officer under President Obama, explains how investors might get behind portions of the Green New Deal. [/av_textblock]

Estonian Chamber of Commerce & Industry: Thorgate, CleanCapital partnership is accelerating clean energy investment through technology

Estonian Chamber of Commerce & Industry: Thorgate, CleanCapital partnership is accelerating clean energy investment through technology

Estonia-based Thorgate has worked with CleanCapital to custom-develop the platform that underpins CleanCapital’s acquisition process. The platform enables CleanCapital and its partners to assess the value of potential investments with speed and accuracy; conduct diligence and close deals in 60 days or less; and manage assets into the future, including ongoing communication with investors. Thanks to the technology, CleanCapital has become an industry leader in renewable energy investment and is giving investors access to the substantial untapped opportunities in the space.

Four challenges that will shape electric utilities this decade

Derek Daly is Director of Investments & Capital Markets for CleanCapital.

Electric utilities, traditionally known as defensive investments with below average market volatility, are dealing with several new challenges that not only add risk and uncertainty to the sector, but will dramatically change their business model over the next decade.

As shown below, for the past 20 years, total returns from utility companies in the S&P 500 have exceeded those of the entire S&P 500 for all periods except the 10-year mark. Despite rapid growth in the technology sector, driven by titans such as Apple, Amazon, Alphabet, Microsoft, and Facebook, utilities have dominated the index based on total returns.

Today, utilities continue to maintain their reputation for reduced risk. Leading investors and publications have reported about the “stability that comes from a highly regulated industry,” that “utilities are among the lowest-risk securities available,” and are “companies offering an essential service on an exclusive basis”.

While historically valid, supportive statements like these ignore or significantly underplay four major challenges electric utilities are facing today.

1. Declining Energy Consumption

Over the last decade, the U.S. reduced its energy consumption by 2% while population grew 6% (306.8M to 325.7M) and GDP grew 15%. We are clearly doing more with less energy.

This divergence of energy use from population and economic growth reflects improvements in both energy efficiency and productivity. The ratio of GDP to energy consumed grew 17% over the last decade, a major shift for an industry founded on the assumption of ever-rising energy demand.

BNEF 2018 Sustainable Energy in America Factbook graphs showing energy consumption, GDP, and energy productivity.

2. Expense of Repairing and Replacing Infrastructure

Even as  energy consumption declines, a record amount of new capital has been earmarked to replace aging equipment, improve reliability, and deliver renewable generation. In 2017, Bloomberg New Energy Finance reported that investor-owned utilities and independent transmission developers increased investment to an estimated $22.9B. This is 10% more than 2016 levels and 91% over 2011.

Josh D. Rhodes with the University of Texas estimates the average age of power lines and transformers is 28 years old and the average age of generation assets is 30 years old. The cost of replacing these assets is $4.8 Trillion. To put that into perspective, using non-inflation adjusted numbers, if electric utilities continued pace with 2016 spending, it would take just under 231 years to complete.

3. Mounting Costs & Liabilities from Climate-Related Disasters

PG&E filing for chapter 11 is being called the first climate change related bankruptcy, with recent announcements coming as a shock to many in the energy and investment communities. The company faces enormous potential liabilities from accusations that safety lapses and inadequate maintenance caused a string of disasters in California. While Cal Fire reported last Thursday that a private electricity system was to blame for the 2017 Tubbs Fire, investigations of at least a dozen other fires in 2017 and the Camp Fire in 2018, are still ongoing.

The risk of property damage and personal injury or death from fires tied to utility equipment has been exacerbated by prolonged droughts fed by climate change. While the company asserts that it has increased efforts in recent years to maintain equipment and perform preventative action, especially tree trimming and brush removal in areas that are at high risk for fires, the company has also repeatedly been cited by state auditors for completing work behind schedule.

PG&E’s situation, while extreme, is not unique. For example, in 2012, Hurricane Sandy cost New Jersey utilities $1.8 billion in repair and response costs. As climate change continues to impact the  environment, utilities will be forced to react to a world in which extreme weather is the new normal: a costly proposition.

4. Rapid Growth of Distributed Energy Resources

GTM Research in a 2018 report highlighted the “explosive growth” of distributed energy resources and the specific technologies behind the disruption: distributed solar, energy storage, smart thermostats, electric vehicles, and small-scale combined heat and power (below 50 MW). In 2017, these five classes contributed 46.4 GW to the U.S. summer peak, or about 6%, researchers noted. GTM anticipates this will more than double by 2023, to 104.2 GW of flexible capacity.

As the trade journal Transmission & Distribution World describes: “The century-old, one-way electricity delivery model that has been serving the utility industry traditionally, is proving to be inadequate to support the rising demand and diverse energy options being explored by today’s consumers.”

Time for U.S. Utilities to Transform

Together, these four challenges have compounded to drive energy prices higher. Over the last decade, some states experienced increases as high as 40% in both residential and commercial prices. Additionally, these rates are likely low given this past decade’s commodity prices

From an investor’s perspective, this is a sector that is facing unprecedented challenges. How does a utility forecast climate-related disasters, especially in states like California with such strict liability laws? Can we simply pass these costs onto the customer rate base? If so, how do we think about the substantial growth of cheaper alternatives coming in the form of distributed resources? If “utilities in general are as safe if not safer than they’ve ever been”, investors need to ensure these challenges are being addressed through diligent resource planning and creative solutions that don’t immediately seek to pass costs on to the consumer.

CleanCapital and BlackRock Announce New Partnership to Drive Capital into Distributed Clean Energy Markets

NEW YORK (Nov. 8, 2018) – CleanCapital is pleased to announce a new partnership with BlackRock’s global renewable power platform today with the closing of a 46.9 MW portfolio of solar assets from ATN International, Inc. subsidiary, Ahana Renewables. The portfolio consists of 60 operating solar projects located in California, Massachusetts and New Jersey. The acquisition is CleanCapital’s largest to date.

This transaction highlights both CleanCapital and BlackRock Real Asset’s ability to execute on large, complex deals in the distributed clean energy space. CleanCapital’s technology-driven approach, coupled with access to dedicated capital from funds managed by BlackRock, streamlines and expedites due diligence and analysis, allowing complex deals to close efficiently. In partnering with CleanCapital, BlackRock Real Assets has expanded its footprint in the renewable power sector and further demonstrated its commitment to the attractive investment opportunities in sustainable real assets presented by the global energy transition.

With today’s announcement, CleanCapital has now acquired nearly $250 million of operating solar assets in the United States since its founding less than 3 years ago. It has done so by pairing institutional capital with technology solutions that simplify underwriting in this fragmented space. In fact, this was the first acquisition that was managed entirely through CleanCapital’s diligence software platform.

“This transaction ushers in a new phase for CleanCapital as we launch our partnership with one of the world’s leading renewable power investors, BlackRock, leveraging our cutting edge software,” said Thomas Byrne, CEO of CleanCapital. “As the energy landscape becomes cleaner and more distributed, CleanCapital will continue to create solutions and partnerships that deliver capital throughout this transforming market.”

“BlackRock Real Assets is excited to launch this new partnership with CleanCapital, which will allow us to more efficiently deploy capital in the distributed generation sector of renewable power on behalf of our clients. Investors are increasingly interested in the investment opportunities presented by the rapidly changing clean energy space, and we’re pleased to invest in solar assets that are well-positioned to capitalize on those trends,” said David Giordano, Managing Director and Head of Renewable Power Americas and APAC at BlackRock. “We look forward to working with CleanCapital as we continue to grow our investments in distributed clean energy.”

To learn more, visit cleancapital.com

About CleanCapital
Founded in 2015, CleanCapital is a financial technology company that makes it easy to invest in clean energy. CleanCapital has built a proprietary technology platform that identifies, screens, and manages clean energy projects enabling project owners an opportunity to exit their portfolios while providing accredited investors, including institutional investors, family offices, and investment funds, unique access to the clean energy investment market. Stay up to date on the evolving market of clean energy finance by following the company on Twitter or Facebook or connecting via LinkedIn. Learn more at http://www.cleancapital.com.

About BlackRock
BlackRock helps investors build better financial futures. As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. As of September 30, 2018, the firm managed approximately $6.44 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com | Twitter: @blackrock | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock.

About Ahana Renewables
Ahana Renewables, a subsidiary of ATN International, Inc., is a specialized investment firm focused on alternative energy and long-lived real assets. The company brings its experience to various infrastructure asset classes, capitalizing on bankable technology and strong project fundamentals. Ahana Renewables’ core expertise lies in deal sourcing, public/private contract negotiations and financial structuring to take controlling, owner/operator positions in projects and portfolios. Headquartered in San Francisco with offices and affiliates in Massachusetts, Singapore, and Hyderabad, the company currently operates distributed solar portfolios in India. More information is available at www.ahanarenewables.com.

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The Cleanie Awards™ Selects CleanCapital For Startup of the Year

NEW YORK (Oct. 23, 2018) – CleanCapital has been chosen as The Cleanie AwardsTM recipient for Startup of the Year. The Cleanie Awards program is the first comprehensive awards program exclusive to the cleantech industry. The program, in its inaugural year in 2018, sets out to recognize innovation excellence, business leadership and superior outreach campaigns. Nominations were submitted from individuals and organizations of all sizes and across many facets of the industry.

For CleanCapital, this award signifies how influential this company has been within the cleantech field, specifically within innovative and competitive field of companies bringing new ideas to market.

“The Cleanie Awards set out to identify the unsung movers and shakers in the industry, from the top of the Fortune 100 list to hot startups, pioneering individuals and high impact advocates,” said Elyssa Rae, program director, The Cleanie Awards. “CleanCapital exemplifies the type of innovation and leadership that we are seeking in an award winner. Their accomplishments serve as an inspiration to the broader cleantech industry.”

“We are honored to be selected for a Cleanie Award as Startup of the Year. Finance has a critically important role to play in order to accelerate the deployment of clean energy at the speed and scale required to mitigate the most severe impacts of climate change,” said Marc Garrett, Chief Technology Officer of CleanCapital. “We are tackling these challenges every day at CleanCapital, as we leverage technology to increase the flow of capital throughout the clean energy market.”

CleanCapital is a financial technology company that makes it easy to invest in clean energy. Despite the historic growth in clean energy, the flow of capital within the distributed space remains limited. CleanCapital is solving this challenge using proprietary technology to identify, screen, finance and manage clean energy projects. This unique approach is giving owners and developers the capital they need to grow while also providing investors with unique access to the distributed clean energy investment market.

Founded in 2015, 2017 was a pivotal year for CleanCapital. The company established strategic capital partnerships to finance distributed generation assets. To date the team has acquired nearly $150M in operating solar projects. In 2017 alone, CleanCapital doubled its state footprint and increased its megawatt production by 150%, and with current acquisitions totaling over 100 MWs in 12 states. CleanCapital also successfully launched the Experts Only podcast with over 30 episodes and 30,000 downloads to date and closed $3.7M in Series A financing.

CleanCapital was selected by a cohort of judges and leaders representing a cross section of the cleantech and renewable energy sectors, including Allie Burns, Village Capital; Thiam Giam, Black & Veatch Management Consulting, LLC; Marissa Gillett, Energy Storage Association (ESA); Kristen Graf, WRISE; Gil Jenkins, ACORE; Shalini Ramanathan, RES; Chris Vlahoplus, Scott Madden; and Tom Weirich, Rubicon Infrastructure.

A full list of winners can be found thecleanieawards.com.

To learn more, visit cleancapital.com

About CleanCapital
Founded in 2015, CleanCapital is a financial technology company that makes it easy to invest in clean energy. CleanCapital has built a proprietary technology platform that identifies, screens, and manages clean energy projects enabling project owners an opportunity to exit their portfolios while providing accredited investors, including institutional investors, family offices, and investment funds, unique access to the clean energy investment market. Stay up to date on the evolving market of clean energy finance by following the company on Twitter or Facebook or connecting via LinkedIn. Learn more at http://www.cleancapital.com.

About The Cleanie Awards:
The Cleanie Awards is the first comprehensive awards program exclusive to the cleantech industry. It generates much needed visibility for innovators and disruptors in the industry who are creating life [and planet] changing solutions. The campaigns recognized by the award program aim to influence public opinion about technologies delivering on the promise of a clean energy future. For more information, visit our website at www.thecleanieawards.com. Follow us on Twitter or Facebook at @CleanieAwards and on LinkedIn.

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A rollercoaster week for the broader markets, but business as usual for clean energy assets

It has been a tumultuous week in the financial markets. It’s not the first time, and most certainly not the last time, that risky assets such as global public equities have seen such extreme short-term volatility. But it also serves as a reminder that asset classes such as renewable energy infrastructure are insulated from whipsaw action. At CleanCapital, we own and manage projects that deliver steady cash flows, underpinned by the long-term contracted sale of a basic necessity to our customers. We’ve known for some time that cumulative default rates for Infrastructure and Project Finance are significantly lower than for NFC (non-financial corporates); 1.83% vs 3.45% in the 2006-2016 period according to S&P Global Fixed Income Research. However even equity investment delivers highly predictable cash flow with annualized distributions usually within 1-2% of expected projections.

These assets have proven technology, limited operational risk, long-term residual value upside and  broad-based political and regulatory support, particularly at the state level. This week has been business as usual for CleanCapital—we’re paying attention to the broader markets but marching along to deliver steady value for our investor base.