The distributed generation (DG) energy sector will undergo a significant transformation in 2026 as consolidation accelerates and market dynamics shift in response to regulatory changes and evolving financial pressures. Drawing insights from leaders at JLL Energy and Infrastructure Advisory, CleanCapital, ClearGen, and Renewable Properties, NPM explored the forces driving consolidation, the strategic responses of DG platforms, and the outlook for the sector as it heads into 2026.

With the phase out of Investment Tax Credits (ITCs) in One Big Beautiful Bill Act (OBBBA), the last several months have been increasingly difficult for small-to-medium-sized developers to operate independently. A rise in liquidity management activities and bankruptcies is expected to hasten the consolidation in coming months.

Earlier in 2025, regulatory filings showed that Luminace’s sponsor Brookfield engineered an in-house restructuring where it split the business into an operating company and a development company, brought in Temasek to invest in both entities and then transferred the operating company into a new vehicle controlled by another Brookfield vehicle Brookfield Super-Core Infrastructure Partners and Temasek. With far less levers to pull, Green Lantern Solar struck a deal to be acquired by Dispatch Energy in a deal announced this past November.

JLL, formerly Javelin Capital, predicts that over the next 12-to-24 months, a quarter of DG platforms will be acquired, liquidated, or exit the DG space entirely.

JLL Energy was retained by Green Lantern in 2024 to facilitate a capital raise, but by mid-2025 following a shift in messaging from the federal administration, Green Lantern pivoted to divesting its business.

“So instead of raising institutional capital to execute a growth strategy, they became sellers as part of this consolidation theme,” said Matt Eastwick, Senior Managing Director at JLL Energy. “We pivoted in the market to that, and they ended up selling the business, the assets, and the pipeline to Dispatch Energy.”

“That’s a good example of changes in the marketplace,” Eastwick continued. “Going back several years, we’ve made a number of successful capital raises for DG companies similar to Green Lantern, but the landscape has changed enough so that consolidation, actually selling the business, became the preferred strategy rather than continuing as an independent developer.”

“There’s money out there; there are new entrants in that marketplace, but it’s a lot tougher to raise that type of capital as a small independent,” Eastwick said. “That’s the big challenge if you’re a developer like that.”

On the buy-side, Eastwick predicts that large DG platforms “will be aggressive acquirers of businesses and assets,” leaving about a dozen mega DG players by the end of the decade. These platforms are likely to demonstrate strong capabilities across development, financing, investment, acquisition, and asset management.

Building and growing a DG businesses organically takes a lot of time so acquiring other businesses and their pipelines “is a great way to turbo charge that consolidation strategy,” Eastwick said.

For developer CleanCapital, CEO Thomas Byrne told NPM that firms with strong financial backing will be at an advantage in 2026. CleanCapital owns, operates, and builds distributed solar and battery projects in both the community solar and C&I sector and has hundreds of MWs in its executable pipeline.

“There’s dozens and dozens of megawatts that we are now buying, primarily pre-construction assets that I don’t think we would have bought had it not been for OBBBA, and that’s because we’re very well capitalized, and the developers need to find capital for their projects,” Byrne said.

“That trend will only continue and enhance as we go into 2026,” Byrne added. “There’s going to be the well capitalized companies who are going to be able to take advantage of a more disjointed market, and then there’s going to be the developers who are less capitalized or under-capitalized, and they’re going to be struggling to figure out what to do with their assets.”

Kevin Fox, Vice President of Finance with ClearGen, told NPM that the company is leaning into several transactions as an “unprecedented number” of operating portfolios hit the market. ClearGen, which was acquired by CBRE Investment Management in 2025, acquires, owns, and manages DG projects. Since its 2020 founding, ClearGen has acquired more than 250 DG projects across 14 states.

“I think the developer of the past has been ‘how do I get this project built’ and then worry about selling the project later,” Fox said. “There has been a focus on ‘this project’ whereas I think the future is more thinking as an infrastructure investor would think which is ‘how do I provide scale by selling similar types of projects that all fit in within a box’.”

“It is about thinking like you are owning the portfolio versus how much can I sell this for right now—it is how the project is going to perform long-term. So, not taking really heroic underwriting assumptions that usually never play out,” added Fox.

ClearGen aims to double its number of workflow partnerships in 2026 and lean into both large and small acquisitions. While ambitions are high in investing capital, ClearGen intends to keep the same standards they have underwritten in the past; “We’re not sacrificing our underwriting standards to make that happen—which I think is key,” Fox said.

“Some developers in the past or owners of assets in the past have got off course focusing too much on growth without thinking about whether it makes sense to make those investments,” Fox said. “They’re doing it in an interest of growth rather than in the interest of scale.”

Founder and CEO of Renewable Properties, Aaron Halimi, told NPM that he is seeing strong demand for well-developed assets. “In the same token, we are seeing a lot more opportunity in the market or a lot more assets coming to market where maybe a smaller developer wasn’t as well capitalized, wasn’t able to safe harbor, or wanted to make the transition to an IPP but in light of everything that happened last year, is unable to raise the money to do that.”

“We are seeing more project acquisition opportunities over the last three-to-six months than we’ve seen historically because of that,” added Halimi. “What you’ll see first is guys trying to sell projects at a price that is distressed and if they can’t do that then the music stops.”

Halimi said that his read is that the big infrastructure funds that are investing in the space putting large amounts of money behind developers are doing it with an eye towards wanting the developer to acquire a bunch of projects and platforms in order to scale quickly.

“I know that through our capital raise efforts and conversations that we’re having that there’s a handful of big infrastructure funds that are wanting to back a platform to then go and consolidate,” said Halimi.

Halimi said the company is planning to start construction on 125 megawatts in 2026. Renewable Properties’ total development pipeline is more than 1.7 GW across 240 projects.

*This story was originally published exclusively for NPM subscribers.