Private Equity in Clean Energy – The year’s most exciting transactions thus far
Published 21st April 2022
By David Stent, Digital Producer, Climate Council
The global renewable sector has matured it has seen many challenges, many great successes and has established a market that can compete with traditional avenues of energy production. Yet, the global energy crises defining the global economy, have created a moment for pause among many private equity investors as to whether or not renewables can provide the returns they were once used to with oil and gas. Despite such uncertainties, private equity investors committed to the energy transition have been sourcing projects that have potential to rapidly grow and assist in achieving the vision for a net-zero future.
Climeworks – Capturing carbon in the atmosphere and capital in markets
Climeworks, a leading carbon dioxide direct-air capture developer operating out of Switzerland, has attracted many of the world’s largest institutional investors together with several leading private equity firms in a CHF600 million ($650 million) deal. This coalition of capital clearly recognizes the capacity for Climeworks to effectively contribute to the energy transition while earning significant returns in the process.
According to Climework’s press release, “The financing is co-led by Partners Group (acting on behalf of its clients) and GIC, with further participation from (in alphabetical order) Baillie Gifford, Carbon Removal Partners, Global Founders Capital, John Doerr, M&G, Swiss Re, as well as other new and existing shareholders including long-term investor and anchor shareholder BigPoint Holding AG. J.P. Morgan Securities LLC served as sole placement agent for Climeworks in connection with the transaction.”
The deal is intriguing; firstly, due to the sheer size of capital committed to the company, but secondly and importantly, it recognizes the role that direct-air capture technologies must play if global society seeks to reduce the impacts to the atmosphere. Climework’s approach has been rapid but effective, in 12-years they have gone from start-up to owner of the world’s largest direct-air capture and storage plant in the world situated in Iceland.
ChargePoint – Setting the foundations for the EV future
As EVs become more pervasive throughout society, as have the need for charging stations – a sector which ChargePoint has been growing steadily for the past decade to position themselves as one of North America’s most extensive EV charging networks. Now in a $300 million investment, through means of a purchase of senior notes, will underpin the California-based company’s expansion plans.
“Under the terms of the investment, Antara Capital LP will purchase a total aggregate principal amount of $300 million in 3.50% / 5.00% Convertible Senior Notes due 2027 (the “Notes”). The transaction is expected to close on April 12, 2022.”
ChargePoint’s expansive network supports and operates with any station infrastructures, car type, driver payment preferences – all of which are connected to their support team. ChargePoint’s full-stack capability to support EVs across the US will act as a model for global markets, and makes it unsurprising why Antara Capital have committed a significant chunk of capital to the project.
ARC Clean Energy Canada – The next-phase in low-carbon nuclear power
One area of clean energy generation that continues to divide low-carbon advocates, is the use of a Small Modular Reactor (aSMR), to generate generous supply of electricity at a low-cost to greenhouse gas emissions. To support the continued research and development of a technology that holds immense potential to support a clean energy transition – has been the Series A funding of CAD$30 million toward ARC Clean Energy Canada.
Primarily supported by the Province of New Brunswick’s investment fund and a selection of private sector investors, the funding reflects the confidence in ARC’s capability to produce a 100-MW, modular reactor capable of supplying consistent, low cost, low carbon electricity to over 250,000 people.
New Brunswick Power, the publicly-owned operator of the provinces power grid, will oversee operations of the aSMR, effectively adding more than 6% to the provinces generation capacity and 15% to the province’s total generation capacity.
ClimeCo – Providing the projects for carbon abatements
ClimeCo is undoubtedly one of the more exciting and progressive companies on this list – seeking to be an early-entrant into the relatively new field of carbon abatements. By establishing a range of projects through which industrial partners can purchase carbon credits (or the regulatory equivalent), ClimeCo presents market solutions that aid the energy transition and net-zero future.
Having developed a, “diverse portfolio that includes carbon offsets, plastic credits, Renewable Energy Credits (RECs), Forecasted Mitigation Units (FMUs), criteria air pollutants, and water quality credits” – ClimeCo has positioned themselves to advise, develop and enact ESG objectives in an manner that directly mitigates carbon and GHG emissions impacts.
ClimeCo’s $50 million investment round was led by leading Private Equity investor Warburg Pincus, and joined by The Heritage Group, who had previously invested into ClimeCo’s project in 2021.
Climate VC – funding sustainable alternatives
While not technically private equity but rather an Angel-backed climate change VC fund – Climate VC, has announced its three newest investments, after launching last week. Offgrid.Finance, Treeconomy and Deep.Meta are the latest UK-founded start-ups being supported to achieve Climate VC’s aim of removing a gigatonne of CO2e from global emissions through investments in high-potential, high-impact, climate-focused businesses
Climate VC is a newly launched Angel-backed VC fund seeking to use their climate-focused investments to remove over a gigatonne of CO2 from the atmosphere. The first of these will be to support three companies: Offgrid.Finance, Treeconomy and Deep.Meta – each with unique solutions to solving the challenges presented by the energy transition. And while not technically private equity, the fund has announced their arrival into clean energy with some exciting investments.
First, Offgrid.Finance is looking to support SMEs who cannot afford to purchase their own clean energy supply with flexible financing to shift their needs away from energy insecurity. One on hand, the platform supports lenders by supplying a variety of options to consumers, and supports consumers by providing this variety of loan pipelines. As energy needs evolve, so do our financing needs – and Offgrid.Finance engages directly with just that.
Second, Treeconomy is a project developer of re-forestation carbon offsets. In essence, Treeconomy connects rural landowners with land for tree-planting with industrial companies in need of carbon offsets. This process is managed effectively through the use of digital technologies, such as LiDAR, to track and analyse the efficacy of particular woodland ecosystems.
Third, Deep.Meta is looking to revolutionise the carbon-intensive metallurgy sector by, “diagnosing and predicting metallurgical defects is just the first way we are ‘making metals simpler”. The company also tracks the manufacturing and installation of metals, so that one can track metals across the supply-chain but importantly, know if those metals can be reused and repurposed from decommissioned structures. In a future world of increasingly finite resources, the recycling and repurposing of materials will only become more prominent.
EMICOOL – Solving the constraints of air conditioning
Two giants in the investment and energy worlds have joined forces to develop the Emirates District Cooling Company (EMICOOL), a sustainable infrastructure project that distributes cooling capacity through a network of chilled water pipes, saving up to 35% more energy than traditional air conditioning units.
Actis has purchased a 50% stake in EMICOOL to enter into a JV with Dubai Investments, that will give the company a corporate valuation of $1 billion. Air conditioning has been highlighted as one of the most damaging processes to the climate, where in places such as Singapore, residential air conditioning is responsible for over 30% of GHG emissions.
For this reason, wherever smart cities are being considered, one will notice the attention given to centralized and energy efficient air cooling technologies. EMICOOL’s market position and experience in driving these solutions within the UAE, places the company in good stead to continue to make in-roads into the air cooling sector.
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