Sustainable Investment Briefs: Money Flows to Solar Providers, Battery Projects, Water

Solar developers from New Jersey to Singapore announced big fundraising successes this month. Investor money also continues to flow into battery storage projects around the world, and waste and wastewater also are providing good investment profiles. Here’s a look at some of the important fundraising news around renewable and sustainable energy over the past few weeks.

Residential Solar Loans Provider Raises $500M

New Jersey-based Sunlight Financial raised $500M from Technology Credit Union on May 10 to finance about 20,000 new residential rooftop solar loans.  This fundraising is another example of the shift away from solar leases through Power Purchase Agreements and instead more toward loans that allow homeowners to own solar PV systems. In 2016, Mosaic raised $450 million in total for its residential solar loan platform. Sunlight is backed by private equity firms Hudson Clean Energy Partners, Tiger Infrastructure Partners and Route 66 Ventures.

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Southeast Asia’s Solar Deals Attracting Capital

Singapore-based Sunseap, a leading SE Asia solar developer, received $10.7M in financing from the United Overseas Bank (UOB) on May 9 to develop commercial solar projects. To date, it has developed more than 160MW of solar in Singapore and has a pipeline of projects across Southeast Asia. It raised $4.8M in a Series C venture round on May 2 from ISOTeam Ltd and received financing from the Asian Development Bank in April to build a 10MW solar project in Cambodia. Sunseap raised $55M in a Series B venture funding in 2015 and its investors includes Goldman Sachs and Singapore-based TRIREC. It plans to raise additional capital to fund its expansion plans.

India’s Solar Sector Gains Interest from Institutional Investors Worldwide

Institutional investors from around the world are showing strong interest in India’s solar sector, which the country has targeted for $100 billion of investment over the next five years. Big pension plans investing in the sector include Canada Pension Plan Investment Board (CPPIB), Caisse de dépôt et placement du Québec (CDPQ), and the Ontario Teacher’s Pension Plan (OTPP). CDPQ plans to invest in India’s solar sector with solar PV developer Azure Power.

Other international investors that have already entered India’s solar sector include Dutch fund manager APG, Brookfield Asset Management, the private equity arms of Goldman Sachs, JPMorgan, Morgan Stanley, and European utilities EDF, Engie and Enel. These new funding sources will help the country to meet its commitment to install 100GW of solar power capacity by 2022 it made at COP21.

The Indian government’s support of its solar sector enabled Finnish company Fortum to develop a 750 MW, $500 million solar project at a record low price of 4.4 cents per kilowatt-hour, allowing India to achieve grid parity.

New Funds Launched Amid Growing Investor Demand of ESG & Impact Strategies

Morgan Stanley Investment Management raised more than $125M in commitments for its first “global impact fund,” called the PMF Integro Fund I, the company said in May. The fund will invest in private equity funds that offer the potential for “compelling financial return while demonstrating positive environmental impact, social impact or both.”  Investment themes will include reducing the effects of climate change, improving access to jobs, education, and healthcare in developing economies.

The new fund comes amidst growing demand for impact investment funds by large investors including the Rockefeller Brothers Fund, Zurich Insurance and the Ford Foundation, which recently announced that it will invest $1B of its assets in impact investment funds.

The International Finance Company (IFC) and Amundi are creating what they say is the largest green bond fund dedicated to emerging markets, in order to expand financing for climate investments. In April the IFC invested $325M in the new fund, which has a goal of raising $2B in assets. Green bonds are seeing strong institutional investor demand, as issuance is expected to reach $120B in 2017, however there are continued issues around disclosure and the need for global standards for green bonds.

Corporates & Utilities Increasingly Focus on Battery Storage

Amid the growing focus on resiliency being driven by growing concerns over climate change, which is driving demand for backup power systems, ABB has launched a new modular microgrid solution that combines solar power and battery storage. Microgrids are local energy networks that are able to separate from the electrical grid during extreme weather events and emergencies. ABB says its new system is designed for the small C&I market and for remote villages and will be available by the end of this year.

On May 10, National Grid, a global investor owned utility, selected Redwood City, Calif.-based AutoGrid, which provides controls for distributed energy resources, to manage 400 MW of demand response programs across New York, Massachusetts and Rhode Island.

Autogrid is gaining traction as a leading software integrator for distributed energy assets, and raised $20M of Series C venture funding in 2016, which drew a slew of strategic investors including E.ON, Total, Xcel Energy and National Grid. Battery maker Sonnen also tapped Autogrid’s software in 2016 for its behind-the-meter and utility projects.

Mercedes Enters U.S. Home Energy and Storage Sector

Mercedes-Benz will compete against Tesla in the U.S. home energy and storage sector, through a new partnership with Vivint Solar. Mercedes-Benz Energy will combine its 2.5 kwh batteries with  Vivint’s rooftop solar into a combined product for the residential market. The program should be available to consumers in California by mid-year.

Britain Named as ‘Hotbed’ for Battery Projects

Two out of three of Europe’s biggest utility-scale battery projects are taking place in Britain, which is turning into a hotbed for such technologies, Reuters reports. Swedish utility Vattenfall, which is developing battery projects in Germany and the Netherlands, is building its biggest such projects, 22 MW, at a windfarm in Wales. Vitol is spending more than $300 million to build two battery projects of its own, while Centrica is building a 49 MW battery project in the northwest of England. These projects are more viable now due, of course, to battery prices having plummeted by some 40% since 2010, Reuters notes.

Water, Wastewater Draw Strong Interest Across the Globe

Aqua America, the Pennsylvania-based water and wastewater utility, will spend $450 million in coming years to rebuild and replace water infrastructure across eight states, the company announced. That’s on top of the $1.5 billion the company spent from 2012 to 2016, which included more than 700 miles of water mains, Aqua America said.  America’s aging water infrastructure needs investments of about $1 trillion over the next 25 years to keep up with population growth and maintain existing systems, experts say.

New York State has approved spending $2.5 billion on a wide range of water-related projects. The 2017 Water Infrastructure Improvement Act, which passed the state legislature in April, includes $1 billion to help municipalities upgrade their water and wastewater infrastructure. Also earmarked is $350 million for clean water infrastructure projects after 2021, $245M to improve water quality in lakes, rivers and streams, and $200 million to improve the wastewater infrastructure in the New York City watershed area.

Los Angeles-based water treatment company OriginClear will build a landfill leachate treatment system at a landfill south of Kuala Lumpur, Malaysia, the company announced. OriginClear will retrofit an existing but underperforming treatment system with its own technology that must treat more than 100,000 gallons of leachate per day. Malaysia has more than 300 landfills, and OriginClear is optimistic that if this project is successful, it will have a good chance of winning contracts from other landfills in Malaysia, China and elsewhere across Asia.

Venture backed water network management company TaKaDu, based in Israel, is teaming up with Danish pump manufacturer Grundfos  in a deal that will use big data to improve the efficiency of water networks. The two companies have started a joint pilot at Danish water utility to test solutions in a live environment. The partnership will provide real-time information about water leakages or other problems, and use data analytics to help water utilities improve their operations. Corporate venture capital backers of TaKaDu include ABB and 3M.



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