FINANCE INTERVIEW: CLEANCAPITAL DIRECTOR ON ITS NEW CAPITAL RAISE INITIATIVE AND 'BUSY' 2021

Founded in 2015, solar asset owner and investor CleanCapital has remained focused on streamlining asset acquisition within the distributed generation solar space and encouraging investment from newcomers. But after five years and a successful partnership with investors CarVal and BlackRock, the firm is preparing to flex some newfound investor muscle. The company is in the midst of a targeted USD 500m equity raise with plans to direct that capital into both the distributed solar and standalone storage markets.

To learn more about the firms ongoing capital raise initiative, its approach to buying and bundling solar projects for investors, and the outlook for the storage industry heading into 2021, NPM spoke with CleanCapital's Director of Marketing Carly Battin.

NPM: Can you describe Clean Capital's background and strategy?

Carly Battin: CleanCapital began with the idea of bringing accredited investors who were not invested in renewables to the DG space. We have always focused on distributed generation assets, mostly C&I. To date we've done operating solar, so we are acquiring projects when they come out of the ITC recapture period, normally five to seven years old. Around 2018, we formed equity partnerships with CarVal investors and BlackRock, who made their first investments into renewable energy with CleanCapital. We now have about USD 500m of operating solar assets under management.

Really our appeal to the market is on the investor side. We're giving investors an opportunity to invest into the DG sector which has, often times, higher returns than the utility-scale side or residential. We understand those projects and the value drivers there, are able to acquire them, and then package them into portfolios for our investors. On the developer side, our appeal is really having ready access to capital. We have these very trusted investors with equity to invest and we're also able to close fast.

NPM: I understand that the firm is looking to raise up to USD 500m in corporate equity to invest in solar and battery storage projects. Is that still ongoing or did you reach your target?

We had a quiet 2020 based on everything COVID-related that was happening in the market. Our partnerships with CarVal and BlackRock are coming to their natural close, so we're looking to the next steps in our evolution. We're looking to raise USD 500m in this capital raise that we're in the midst of right now targeting institutional investors like pensions, insurance funds, and infrastructure, and we're looking forward to having a very busy 2021. Over the next three years, we want to become one of the top players in the DG sector.

NPM: So, you will remain focused on the DG space?

We will. We think it's a really attractive sector that is still under-invested. Our new capital will allow us to explore some asset classes that we haven't done to date like new builds, community solar and energy storage. We're really looking forward to that.

NPM: How do you expand your client base?

We're fortunate enough that our founders have a vast network in the space that has certainly brought deals to the table. We also have newer channel partnerships with developers and even manufacturers that help to generate deal flow. But with what we anticipate that we're going to be able to invest over the next couple of years, we're always looking for new potential partners or even individual standalone deals that we can potentially invest in.

NPM: Can you discuss Clean Capital's interest in storage because a lot of investors are still hesitant to get into that arena?

If you look at industry trends like the rapidly declining cost of storage and the prevalence of solar+storage model, we really see an opportunity there not only for standalone storage, but for adding storage to our existing solar arrays. It's a no-brainer that storage will become a great opportunity, but it is a relatively new, complex sector that has not seen a lot of investment to date. There are question marks about how to underwrite that and make sure returns are what we would expect, so we're working through all of that right now. I would expect to see us close our first storage deal by the end of 2021.

Because storage is so critically important, I think we might see some policy on the federal level. I think if we had a standalone storage ITC or other supportive policies, it would just make it so much easier to justify that investment and bring that piece of the industry forward.