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CleanCapital to add $300M in project acquisitions, expand beyond US in 2019

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CleanCapital manages 108 solar projects in its portfolio, representing a combined capacity of 100 MW.
Source: Associated Press

Financial technology company CleanCapital LLC is looking to more than double investments for clean energy projects and expand its portfolio outside the U.S. as part of its agenda for 2019, building on its strategy to serve as an entry point for large investors to small renewable projects.

In an interview, CleanCapital CEO Thomas Byrne said the New York City-based firm wants to increase its acquisitions' value by $300 million, compared to the $250 million of clean energy projects acquired by the end of 2018 through its partnership with CarVal Investors LLC, an investment arm of Cargill Inc. The company's recent investment from BlackRock Inc.'s renewable power group will help CleanCapital reach its target, as it looks to invest in new renewable assets and non-US geographies.

"The BlackRock partnership vehicle allows us to do more assets and new markets," particularly with energy storage, Byrne said. "We're closing on our first deal in Canada next month. We're looking at deals in Australia, Mexico and even some in Europe, so we're expanding very quickly."

Since its launch in 2015, CleanCapital has focused on using institutional capital to purchase small-scale projects, mainly in the distributed solar sector, with the aim of driving clean energy deployment to address current and potential consequences from climate change. The company currently has 108 projects in its portfolio with a cumulative capacity of 100 MW.

Besides BlackRock and CarVal, CleanCapital has also worked with John Hancock Life Insurance Co. (U.S.A.), which invested senior debt into a $21 million solar project portfolio in 2016. CleanCapital executives tout their ability to close a deal in under 60 days through the use of proprietary software to organize reports and spreadsheets involved in a project investment.

"A lot of the existing tools out there are built by engineers for engineers," Marc Garrett, chief technology officer for CleanCapital, said in an interview, and these limited tools can complicate investment decisions for potential counterparties lacking an engineering background.

As the company looks to expand beyond the U.S., CleanCapital seeks large investors who previously avoided small-scale assets that required a lot of attention. "It's not necessarily a particular characteristic of an investor we're looking for, but rather an investor who should be in this space but was previously prevented from investing in the small-scale renewables because of its fragmentation and complexity," Byrne said, adding that pension funds and insurance companies are ideal partners.

CleanCapital also considers the level of policy support in the countries where it contemplates expansion. Byrne noted that clear commitments from political leadership has proven crucial for renewables deployment, like state renewable portfolio standards in the U.S. "When you look outside the United States, you also need political stability," he added. "We are investors, we are stewards of other people's capital and having a stable democracy is a key ingredient that there is not going to be some political hair-cutting or retraction of political support."

While CleanCapital wants to expand beyond distributed solar, the company is not looking to go into wind power assets or larger-scale projects; rather, executives believe the company does more when it is involved in investments for smaller-scale technologies.

"In the foreseeable future, certainly in the next two years, we're going to focus intensely on those clean energy asset classes that we add value and where there are barriers for entry for large institutions: solar, distributed solar, energy efficiency and energy storage," Byrne said.