Author: Wirz, Matt
Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 July 2021.
Carlyle, led by CEO Kewsong Lee, is pivoting to cleaner technologies. PHOTO: Dorothy Hong for The Wall Street Journal
Private-equity giant Carlyle Group Inc. is launching a company to develop renewable-power-generation and storage projects in a push to reorient its energy business toward sustainable investments.
Funds Carlyle operates will inject as much as $700 million in the new venture, Copia Power, enabling it to arrange projects worth over $6 billion, according to Pooja Goyal, Carlyle's co-head of infrastructure and head of renewable and sustainable energy. Copia will focus on developing large-scale solar generation projects and battery facilities to store power and distribute it after sunset.
Carlyle has a long history of debt and equity investments in fossil fuels, but now the firm—and competitors like Blackstone Group Inc. and KKR & Co.—is pivoting to cleaner technologies. The money manager in April disclosed $22 billion of private-equity investments in traditional and renewable energy, representing 16% of total private-equity assets under management.
The initiative is part of a race on Wall Street, as large investment firms bankroll competing power projects amid a national push to revamp electrical infrastructure . The shift comes as investors clamor for environmentally friendly financial products and as national infrastructure initiatives offer potential opportunities to private-equity firms .
"There is a recognition by these companies that this is a new asset class and that there's an enormous amount of development prospects out there," said Jason Burwen, interim chief executive of the U.S. Energy Storage Association trade group. "It's a good time to be a capital provider."
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Carlyle sees opportunity in building clean-power projects for technology companies and others that are setting targets to reduce or eliminate their carbon-gas emissions, Ms. Goyal said. Such projects can be more profitable than bidding on power-supply agreements for regulated utilities that "have gotten so competitive that contracts are short and rates are low," she said.
Copia will launch with several projects acquired from Omaha, Neb.-based power developer Tenaska Inc., which are slated to produce about 6 gigawatts of clean energy. The startup will also join with Birch Infrastructure to help negotiate future power-purchase agreements with large corporate buyers.
"The biggest opportunity we're seeing is in large utility-scale developments, to the tune of 200 megawatts to 1 gigawatt," Ms. Goyal said.
Growth prospects are good in corporate procurement because industrial-scale electricity consumers have just started exploring long-term contracts for clean energy, Mr. Burwen said. Google helped kick-start the process last year, he said, when it pledged to operate 24 hours a day on carbon-free energy by 2030.
Carlyle's push comes as competitors are racing to build the best franchise in environmental, social and governance, or ESG, investing.
Blackstone, which manages about $649 billion, last year pledged to cut its carbon footprint globally, in part by looking at energy consumption of the companies it purchases. The firm is a big investor in Altus Power Inc., a builder of rooftop solar installations, and made one of the first large private-equity investments in renewable-energy storage last year by purchasing Aypa Power.
Private-equity firms are also facing off against fund-management titans like BlackRock Inc., which has become a large player in global infrastructure, and smaller infrastructure specialists, like Stonepeak Partners, which raised $2.75 billion for a renewable-energy fund this year.
Katherine Blunt contributed to this article.
Write to Matt Wirz at firstname.lastname@example.org
Carlyle Launches Renewable-Energy Infrastructure Unit
Credit: By Matt Wirz