News Briefing: New York, LA Take Major Steps toward Low-Carbon Future; $2Bil Raised for New Sustainable Investment Funds; Fiat Chrysler Moves into EV Charging Infra; Schneider Electric Invests in Autogrid

There’s been big news in recent weeks out of both New York and Los Angeles, as each have taken big steps toward reduced — or even zero — carbon futures. The news out of Los Angeles, in fact, could have major implications for the future of energy storage, experts say.

This news roundup takes a look at both of those stories, as well as updates on new green investment funds, advancements in the world of impact investing, and more.

New York State Approves Ambitious Climate Mitigation Targets

New York lawmakers have approved an ambitious climate plan for the state — the most ambitious in the nation, in fact: a plan that calls for 100% carbon-free electricity by 2040 and net-zero carbon emissions economy-wide by 2050.

The state already produces about 60% of its electricity from carbon-free sources — primarily hydroelectric and nuclear, with a small but growing proportion coming from wind and solar. With its new targets, New York joins numerous other states that have recently adopted far-reaching climate-related targets, even as the federal government shows no such movement.

The legislation is considered the most aggressive in the nation, though experts say it lacks certain details regarding how the state might meet those goals. Still, the targets are expected to lead to massive spending to weatherize homes, replace oil-burning furnaces, and install solar panels and wind turbines, among other investments.

New York has adopted a wide-ranging set of other programs to reduce carbon emissions and mitigate climate-related disruptions. And other state agencies are continuing to roll out other programs.

For example, the $210 billion New York Common Retirement Fund released a Climate Action Plan that will likely include divestment from thermal coal and other carbon-heavy companies. Other activities the plan calls for:

  • A doubling over the next 10 years, from $10 billion to $20 billion, the pension’s Sustainable Investment–Climate Solutions Program. It will also hire staff dedicated to finding sustainable investments, including climate solutions.
  • Ongoing engagement with companies the pension invests in, to encourage and support climate risk management, strategic planning and reporting.
  • Encouraging index providers to integrate climate risks and opportunities into their index construction.

 

“This is a proactive plan to mitigate climate risk, capitalize on opportunities in the growing low carbon economy and protect the fund’s long term value,” says state Comptroller Thomas DiNapoli, who oversees the pension, in a statement.

And the New York Power Authority has paired up with New York University’s Tandon School of Engineering Urban Future Lab to support startups that focus on electric vehicles and energy storage technologies.

As part of the program, called the NYPA Innovation Challenge, the two organizations put out a call for startups to apply for funding and partnerships with large utilities. Winners of the applications are set to be announced later in July.

Los Angeles Set for “Revolutionary” Solar+Storage PPA

Across the country in Los Angeles, the city’s Department of Water and Power, the LADWP, wants to generate 100% of its electricity from carbon-free resources by 2050, which is five years after California will require investor-owned utilities to reach 100% clean energy.

Falling solar prices will help immensely, with the LADWP set to approve what’s being called a “world record-setting power purchase agreement” for solar+storage: 1.997 cents per kWh for solar and 1.3 cents per kWh for storage.

That represents the cheapest prices for solar+storage in the world, the agency says, and in the words of one LADWP official, will be “truly revolutionary.”

The PPA will be attached to a new 400 MW solar, 800 MWh storage project that 8minute Solar Energy will develop on some 2,600 acres of land in Kern County, north of Los Angeles.

NEW FUNDS AND FUNDRAISING

Generation Closes $1 Billion Sustainable Solutions Fund

Generation Investment Management has closed its Sustainable Solutions Fund III with $1 billion. It’s the firm’s third growth equity fund, and also the largest in that category. It will make “meaningful minority investments of $50 million to $150 million in innovative companies with high-growth potential,” according to a company statement.

The fund will focus on three investment themes: planetary health, including low-carbon solutions in the mobility, food, energy, and enterprise sectors; people health, working toward a lower-cost and more accessible healthcare system; and financial inclusion: supporting access to finance and an equitable future of work.

The first two investments made by the fund are SOPHiA GENETICS, which works to “democratize data-driven medicine”, and Andela, an engineering-as-a-service business in Africa.

Generation, cofounded by Al Gore, has $22 billion under management.

Gates-led Breakthrough Ventures Expands to Europe

Breakthrough Energy Ventures, the $1 billion fund backed by Bill Gates, Jeff Bezos, Jack Ma, Richard Branson and others, is expanding to Europe. The new Breakthrough Energy Ventures Europe launched with €100 million, or about $112 million.

Half of the funding is coming from Breakthrough Energy Ventures, with the rest coming through the European Commission.

The new fund is intended to “help develop innovative European companies and bring radically new clean energy technologies to the market,” the European Commission says in a statement. “It will support Europe’s best clean energy entrepreneurs whose solutions can deliver significant and lasting reductions in greenhouse gas emissions.”

Gates says the new vehicle is “a great example of driving innovative ways for the private and public sectors to collaborate, deploy capital, and build companies.”

Ecosystem Integrity Fund Raises $100M for Third Fund

San Francisco-based Ecosystem Integrity Fund closed its third investment vehicle after hitting its $100 million target.

The fund will invest in sectors that include utility-focused software and services as well as consumer-focused wellness and organic brands. Investments to date included electric charging company EV Connect; eMotorWerks, the charging demand management software and service provider that Enel acquired in 2017; solar mounting company Pegasus Solar; and probiotic adult beverage company Flying Embers.

EIF raised $20 million for its first fund in 2011 and $57 million for its second vehicle.

IMPACT INVESTING

Prudential Leads LeapFrog’s $700 Million Emerging Markets Impact Fund

LeapFrog Investments closed what it says is the largest-ever private equity fund run by a dedicated impact fund manager. The New York-based firm’s emerging markets fund raised $700 million, led by Prudential; other investors include pensions, insurers and large corporates from around the world.

The fund closed well above its $600 million target, and will invest in healthcare and financial services companies across Africa and Asia. It has already made five investments, backing companies in Africa and India.

This is the largest of LeapFrog’s three funds. The firm has $1.6 billion in commitments, which it says makes it the largest private equity manager to be entirely dedicated to impact investing.

Blackstone Launches Impact Investing Platform

Blackstone has launched a new impact investing platform that will focus on four specific investment themes: health and well-being; financial access; sustainable communities; and green technologies. The firm hired a former Goldman Sachs managing director, Tanya Barnes, to lead the program.

The platform will “make investments in mission-oriented businesses and managers, unlocking new opportunities for investors,” Blackstone says in a statement. The platform will be housed within the firm’s Strategic Partners group.

UK Pensions Back Neuberger Berman’s Impact Fund

The Brunel Pension Partnership, a collective of 10 local government pension funds from the UK, has invested $60 million as a “cornerstone” investment in the Neuberger Berman Private Equity Impact Fund, Brunel announced.

The Neuberger fund has an “ambitious approach” to impact investing and has identified investable themes that back 15 of the 17 UN Sustainable Development Goals, according to Richard Fanshawe, Brunel’s head of private markets.

The fund’s strategy includes encouraging traditional private equity managers to integrate ESG factors into their investment process, as well as helping specialist impact managers to reach scale.

Impact Managers, Investors Sign New “Impact Investing Principles”

Sixty asset managers, asset owners and others have signed a set of new impact investing principles” developed by the World Bank’s IFC unit. The “Operating Principles for Impact Management” are intended to “create clarity and consistency regarding what constitutes managing investments for impact in order to bolster confidence in the market,” according to a statement from KKR, one of the founding signatories.

Those signatories represent more than $350 billion in assets invested for impact.

OTHER CORPORATE ACTIVITY

Louis Dreyfus Joins Global Push Toward Sustainability-Linked Loans

Agricultural commodity group Louis Dreyfus Company has renewed a $750 million sustainability-linked loan, and several other companies have also signed on to such loans, whose interest rate falls as companies hit sustainability targets.

About $36 billion worth of sustainability-linked loans were issued globally last year, Moody’s says. In May, both Starbucks and Mercon Coffee Group announced their own sustainability-focused loan facilities.

Dreyfus will see the interest rate margin on its loan reduced if it hits targets on factors like carbon emissions, electricity consumption, water usage and waste management practices.

Fiat Chrysler Pairs with Enel, Engie on EV Charging Points

As Fiat Chrysler moves to offer more electric vehicles, the carmaker has struck deals with European utilities Enel and Engie to help offer charging points for those EVs.

Fiat Chrystler said in June 2018 it will invest some $10 billion over the next five years to introduce EV and hybrids to markets around the world.

The partnerships with Enel and Engie will help the installation of more charging points — both private and public — in a move the carmarker hopes will help support sales of two vehicles it will introduce soon: a fully electric Fiat and a plug-in hybrid Jeep Renegade.

Schneider Electric Takes Stake in Autogrid

Schneider Electric has taken a 10% ownership stake in Autogrid. The deal will allow Schneider to “add artificial intelligence-driven solutions for customers’ distributed energy projects,” which will “accelerate new capabilities for Schneider Electric’s leading microgrid and behind the meter solutions,” the French company says in a statement.

The investment is coming through Schneider Electric Ventures, which has nearly 40 “strategic active alliances with startups and incubation projects.” Redwood, Calif-based Autogrid has raised more than $75 million in funding.

Separately, Autogrid announced a deal with Japanese energy services and trading company ENERES, under which it will supply virtual power plant and customer engagement software to “aggregate, dispatch and market energy from demand response (DR) and distributed energy resources (DERs),” Autogrid says.

Grasshopper to Expand in Japan with New Debt Facility

Canadian solar developer Grasshopper Solar will expand in Japan thanks to a $185 million senior debt facility it took out with Deutsche Bank in Japan. “The Japanese market is a key part of our global asset mix and, with this investment, we will accelerate our expansion into this market,” says CEO Azeem Qureshi. The firm has $6.5 billion in assets under operation and under development globally.

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