INTERVIEW: Excelsior Energy Capital operational portfolio coming to market this year; co-founder discusses growth of Lydian platform
Excelsior Energy Capital is readying a sale of its portfolio of US operational clean energy projects later this year even as it continues to deploy capital from its second flagship fund, said Alex Ellis, a partner and co-founder at the Minneapolis, Minnesota-based fund manager in an interview with NPM.
The sales process will come out of the first fund, Excelsior Fund I, which raised USD 504m in 2020, and was fully deployed across 16 investments totaling 1.95 GW of wind, solar and storage assets.
The remaining Fund I assets coming to market are six projects totaling 1.1 GWac.
Deployment comes following the final close of its second fund, Excelsior Fund II, which secured capital commitments of just over USD 1bn. Fund II is over 50% deployed at present including the April 9, 2024 launch of utility-scale solar and storage developer Lydian Energy.
“Fund I typically focused on late-stage and operational projects, while the second fund moved up the risk spectrum seeking a value-add return profile, through investments in mid-to-late-stage development projects,” said Ellis.
“Lydian Energy was a business built from scratch, and something we had planned for the previous 18 months,” he said, adding the company has added New York, Utah and Arizona as new markets alongside the 1.75 GW pipeline it had initially started out with in New Mexico and Texas.
Ellis said they decided to build versus buy an independent power producer in 2023 at the tail end of some high platform valuations as the fund decided that acquisition prices did not align with the underlying value of the various platforms and their pipelines. Moving forward, Ellis expects Lydian to remain active in the M&A market and is looking at select greenfield opportunities.
“We see a good opportunity as development fees have come down, as there are concerns about both development risk and sponsors looking to take their money off the table,” said Ellis.
The mandate for Fund II also includes a 15% bucket to invest in energy transition opportunities outside of core renewables.
*This story was originally published exclusively for NPM US subscribers.
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