I Squared founder discusses recent USD 400m equity capital investment in DG developer RPower

RPower will get to benefit from its recent USD 400m commitment from I Squared Capital in two ways.

The first is to scale up its behind-the-meter (BTM) business model, while the second is to tap some of the portfolio companies in I Squared’s infrastructure technology fund to enhance its roster of services to perspective clientele.

The Woodlands, Texas-based RPower was founded in 2021 by Jeff Starcher, former MP2 Energy CEO, to provide microgrid solutions ranging from Resiliency as a Service (RaaS) to design-build-transfer contracts. Typical customers include municipalities, supermarkets, and other businesses with mission critical resiliency requirements. RPower’s resilience generation solutions will include BESS, solar and natural gas fired reciprocating engines that meet or exceed regulatory requirements for emissions.

RPower earns a material portion of the revenues necessary to support a project by selling super-peak energy and capacity into the ISO market. This approach materially reduces the amount that a customer pays in return for receiving a resilient generation solution for its mission critical operation. The reliability provided by RPower’s microgrids facilitates the continued addition and integration of intermittent renewable energy.

“RPower can be a backstop for both communities and businesses with its microgrids providing power during emergencies as well as reliable power to the grid,” said I Squared’s founder Sadek Wahba in an interview with NPM.

I Squared deal

Wahba sits on top of a global juggernaut with USD 37bn in assets under management in North America, Europe, Asia and Latin America via a portfolio of flagship infrastructure funds and other offerings. While in Wahba’s words, the firm has over 50% of its assets in North America and Europe, it has developed a very specific niche building energy resources in emerging markets such as its investments in Ocensa in Columbia and Inkia Energy in Peru. It was also an early investor in onshore wind in Texas, having built projects for Amazon.

I Squared is amongst a slew of funds seeking to invest in distributed generation helped by passage of the Inflation Reduction Act of 2022, but also greater execution certainty given the material headwinds facing utility-scale builders today. Since the beginning of 2023, emerging market investors Denham Capital Management and Actis have made bets on Solops and Catalyze, respectively.

“The Inflation Reduction Act of 2022 is genuinely unprecedented as it launched the biggest transformation of our generation system in decades and fundamentally changed the way the US looks at modernizing its core energy infrastructure and electricity grid to increase efficiency and mitigate climate change,” said Wahba.

While initially focusing on reliability, Wahba envisions C&I solar and storage as an important component for RPower as it builds out its business across ERCOT, PJM, NYISO, ISO New England and MISO.

“C&I customers are looking for certainty in terms of dispatchable resources,” said Wahba adding that these “microgrids are complementary with utility-scale solar and wind, by providing dispatchable energy during times of peak demand or when the intermittent renewable resources are not generating power.” RPower plans to displace diesel generators with clean burning, ultra-low emission, natural gas generators.

RPower could also tap into other portfolio companies of I Squared to add to its roster of services. For example, I Squared is an investor in Fermata Energy, a vehicle-to-everything (V2X) technology services provider which has a software that enables EVs to dispatch electricity into the grid when prices are high, and GridPoint which specializes in behind-the-meter (BTM) energy efficiency solutions for multi-site commercial buildings and distributed energy resources for grid operators.

*This story was originally published exclusively for NPM subscribers last month.


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