Encore Co-CEO discusses SUSI investment, transition to IPP and utility scale development plans
SUSI Partners (SUSI) recent investment in Encore Renewable Energy will convert the Burlington, Vermont-based developer into an IPP model at the distributed generation level, while also accelerating its utility-scale development plans, said Encore’s co-CEO Blake Sturcke in an interview with NPM.
SUSI, the Swiss-based infrastructure investment manager committed USD 150m in project debt and tax equity to support the development of about 500 MW of new community solar and energy storage projects over the next five years. The funding will also capitalize the Vermont-based company to build a gigawatt of utility-scale projects in that same time.
A portion was funded at closing and the remaining balance will be utilized to fund projects as they come onto their balance sheet, Sturcke said. The initial funding amount, which was not disclosed, went largely into providing growth capital and to refinance and retire debt on the company’s balance sheet. Encore’s Chief Financial Officer & Chief Investment Officer, Chris Clement, spearheaded the transaction and Javelin Capital acted as Encore’s financial advisor.
The investment will complete the conversion of the company’s decades-long strategy of developing distributed assets and selling them at notice-to-proceed (NTP) to an IPP model where they also own and maintain assets over the long term.
“We think that in order to be the ideal partner and further strengthen those strategic relationships that owning assets over their useful 25–30-year life is the optimal model--as opposed to the development model whereby you’re working up to NTP or commercial operation date (COD), and then passing the assets over to someone else. It’s really a customer centric transition,” added Sturcke.
Encore is currently in early-stage development on several utility projects in Colorado, Montana, Wyoming, and New Hampshire, according to Sturcke. State incentives such as Colorado’s USD 1.7bn Power Pathway program and retiring coal plants in Wyoming and Montana have made these attractive markets for utility scale development for Encore.
Unlike the community solar portfolio, they have no intention of being the long-term owner and operator of the utility-scale assets.
“They don’t fit with our long-term ownership portfolio, and as a result, we will be working with infrastructure investor partners to either jointly develop those projects or to sell those projects to such groups at NTP or COD,” Sturcke said. “So, the utility-scale model will continue to be a develop sale model, as opposed to the IPP model on the DG side.”
SUSI has been active in the US energy space over the past 12 months, having taken stakes in energy storage developer SMT Energy last August and EV charging infrastructure developer OBE Power earlier this year. Earlier, its dedicated Energy Storage Fund invested in a portfolio of behind-the-meter California assets.
On the DG side, Encore has projects in active development or under construction in Vermont, New Hampshire, Maine, Connecticut, New York, Pennsylvania, and Virginia. They are currently evaluating entering new markets, such as Maryland, Ohio, and select states along the eastern seaboard, Sturcke said.
The business plans will also lead to considerable internal growth. Over the last three years, Sturcke estimated the company tripled in size. And with SUSI’s investment, he anticipates they will be scaling their team another 40%-50% over the next several years depending on how the pipeline activity progresses.
Prior to the SUSI investment, Encore developed about 100 DG projects over the last decade with team members spread across the northeast, mid-Atlantic and western states. A core part of their business model focuses on impact and sustainability. As a certified B Corporation business, they add pollinator friendly coverings on every project, focusing on agrovoltaics, contaminated and environmentally challenged sites such as landfills and brownfields.
“We think it lines up really well with where the industry is going--as can be seen in what we think is really good government policy in these areas within the IRA by virtue of the additional adders associated with contaminated sites,” he said.
*This story was originally published exclusively for NPM subscribers last month.
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