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UK-based Octopus Energy believes the US solar market has “massive” potential with the rapid rollout of new solar farms and rooftop installations, the company told NPM in a recent interview following new investments in the country.
Octopus Energy in late September announced a series of new investments in the US renewable energy market, funding stateside expansion of solar developers Circal and Zestec.
The new wave of investments, for an unspecified amount, are part of a larger USD 2bn plan for Octopus to expand in the United States clean energy market by 2030 and come just three months after the UK firm’s generation arm first entered in the country.
“The potential for the US solar market is massive, and we’re seeing that every year with the country breaking its records for installing new solar power,” said Matt Setchell, co-head of Octopus Energy Generation’s fund management team. “This is a fast-paced sector and there’s a very attractive investment opportunity both to develop new solar farms and rooftop solar projects.”
Zestec, a commercial and industrial solar developer specializing in servicing businesses such as warehouses and logistics centers, is targeting hundreds of projects markets such as Massachusetts, New York, New Jersey and Texas. Zestec is owned by funds managed by Octopus Energy Generation, Setchell said.
The company said Zestec has prioritized these markets because of both existing tariff regimes and availability of facilities for rooftop solar installation and existing relationships with C&I customers in these areas.
“There are supportive programs in many of Zestec’s key markets – including the Solar Massachusetts Renewable Target (SMART) program, the NY Value of Distributed Resources (VDER) Program and NJ programs,” Setchell said.
Zestec installs solar panels on rooftops or land for its customers at no cost, Octopus said and makes money through power purchase agreements. Per information from Octopus, Zestec owns and manages the assets post energization for its projects in the UK. This is also expected to be the case for the US assets it is developing, the company said.
“There’s a huge untapped market in the US, with some states like New York having only a fraction of rooftops utilized for rooftop solar, compared to much higher penetration in Europe,” Setchell said.
Solar farm developer Circal plans to rapidly scale its expansion with new funding from Octopus. Circal develops ground-mounted solar farms in the US and Ireland and is currently targeting the 600 MW of new solar farms in the US in the next five years, with a focus on Texas. Funds managed by Octopus Energy Generation took an ownership stake in Circal from the investment, Setchell said.
“Circal is initially targeting Texas due to the significant new generating capabilities required to support the load growth and legacy power retirements in the market,” Setchell said. “In addition, Circal will be focusing on solar as well as hybrid – solar plus storage – developments.”
In addition to acquiring solar farms in Ohio and Pennsylvania earlier this year, Octopus previously invested in California-based offshore wind technology company Ocergy and nature projects startup Cultivo, a public benefit corporation with offices in New York, San Francisco and London.
“We will continue to look for and invest into renewable projects in Ohio and Pennsylvania. However, the scale of our ambition in the US is not constrained to these states given the opportunity we see across the wider country,” Setchell said. “These strategies give us a route to expand our footprint across more parts of the country and given our long track record of scaling at speed across Europe we are confident on delivering this broader geographical spread.”
*This story was originally published exclusively for NPM subscribers last month.
