Another community and commercial solar developer goes to an infrastructure fund, with the Monday announcement that U.S.-based JLC Infrastructure has purchased Connecticut's Greenskies Renewable Energy.
The benefits afforded by the JLC acquisition are threefold, according to Greenskies vice president of marketing Jeff Hintzke: the fund offers lower cost of capital, readily available capital and experience in municipal infrastructure markets where Greenskies sees growth opportunities.
“A large infrastructure fund like this … they have deep pockets,” said Hintzke.
The acquisition comes as further confirmation of a growing trend of infrastructure funds investing in solar.
“Infrastructure funds generally tend to have lower cost of capital,” said Michelle Davis, a senior solar analyst at Wood Mackenzie Power & Renewables. “This acquisition from Greenskies into JLC is a further evolution of the trend of commercial solar into more patient capital.”
Greenskies will now be known as Greenskies Clean Energy, indicating a widened focus. That's because customers have started expecting broader product offerings, Hintzke said.
“Instead of just a solar PPA … they’re looking at storage and resiliency, particularly in California, and how do they participate in wholesale markets and energy markets where there is additional revenue to be derived,” he said.
Greenskies differentiates itself from other C&I developers by owning and operating the projects it develops long-term, Hintzke said. That’s becoming increasingly common, said Davis, because it allows C&I developers to take more margin from projects by minimizing transaction costs.
Hintzke said long-term ownership indicates to customers that Greenskies has “vested interest” in solid construction and impeccable project operation because the company is the one receiving revenues. Greenskies also performs operation and maintenance services for third-party solar owners.
Greenskies’ latest acquisition comes just two years after Clean Focus Yield, a clean energy asset management firm, bought Greenskies in December 2017. Clean Focus Yield will continue to exist in some form, said Hintzke, as the group continues to execute on a small number of mid-development projects. Neo Solar Power Corp., the Taiwanese solar cell and module manufacturer that owns Clean Focus Yield, will sell out its ownership over time and other projects will be rolled into JLC along with Greenskies.
Davis suggested the two acquisitions likely offered Greenskies financial advantages.
“Greenskies probably got a bit of a boost financially from shifting into more asset management and then also having a parent company that could provide them with investment capital when Clean Focus Yield acquired them,” she said. “Now that they are owned by an infrastructure fund, they have that security plus the cheaper cost of capital that an infrastructure fund typically provides in contrast to other sources of capital.”
Under its new owner, Greenskies plans to grow the 350 megawatts of solar it already has in operation. Looking ahead, Greenskies is eyeing non-traditional C&I offtakers, including small businesses and manufacturers, and expansion among national retailers. The company already has operating projects with big purchasers such as Target, Walmart and Amazon.
Hintzke said Greenskies' 2019 installations were approximately flat with 2018, when the company installed 48 megawatts of commercial solar according to WoodMac tracking, but the company foresees growth in 2020 with 100 megawatts expected for completion within 18 months and a 500-megawatt pipeline.
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