CleanTech and Sustainable Finance News Briefing: Off-Grid Electric, A Major Institutional Investment Trend

A new billion-dollar corporate investment fund comes out of a three-way partnership devoted to sustainable transportation –

Carmakers commit $1 Billion to a new auto tech venture fund. The Renault-Nissan-Mitsubishi Alliance is creating one of the largest venture capital funds for automotive technologies and will commit $200 million per year for five years, says the Wall Street Journal. Renault-Nissan CEO Carlos Ghosn wants to counter an opinion common among entrepreneurs about working with venture funds backed by big companies. Renault and Nissan will each have a 40% stake in the fund, with Mitsubishi Motors funding the remaining 20%. (CleanTechIQ will publish a Q&A with managing director Christian Noske, who joined the alliance from BMW iVentures.)

A new major institutional capital source enters the sustainable finance market –

Dutch Bank ING launches a €100 million ($124 million) sustainable investments fund for “investments to support sustainable ‘scale-ups’ with a proven concept and a positive environmental impact,” it says in a statement. ING is increasingly focusing on its sustainability strategy to accelerate start-ups by offering financing solutions to early stage companies in the area of “the energy transition, the circular economy and water.” Mark Weustink, director in ING’s Corporate Investments team, will lead the Sustainable Investments initiative. “Sustainability has become a strategic priority and board room topic for many of our clients,” he says.

Notable recent fundings – 

Siemens invests in LO3 Energy to develop blockchain-based microgrids. The unspecified investment, made on Dec. 20, closed out LO3’s Series A funding round and follows venture investments in November from Braemar Energy Ventures and Centrica Innovations. Ralf Christian, CEO of Siemens Energy Management, says the decision to fund LO3 “represents our acknowledgement of the future potential of blockchain technology as an enabler of local energy market places.”

Brooklyn, NY-based LO3’s platform is intended to make it easier for people to buy and sell solar power; founder and CEO Lawrence Orsini says blockchain is the “key to unlocking the real potential of distributed generation.  LO3 Energy is working with Siemens Digital Grid and financer next47 to test a microgrid in Brooklyn. Under the test program, neighbors both with and without solar photovoltaic systems are buying and selling solar power from each other on a so-called blockchain platform that automatically documents each transaction. (Watch for CleanTechIQ’s forthcoming interview with the CEO of LO3 Energy and company profile.)

A new funding for renewable chemicals by a major beverage company. New York-based Anellotech, a sustainable technology company that produces renewable chemicals and fuels from non-food biomass, received a $9 million investment from Japanese brewing and distilling company Suntory Holdings, which was founded in 1899.  The funding is part of a new $15 million package that is based on Anellotech hitting specific milestones, and brings Suntory’s total investment in Anellotech to more than $25 million. The company is working to develop a 100% bio-based PET bottle.

Off-grid electric, a major institutional sustainable investment trend – 

A growing number of institutional investors are focusing on off-grid technologies and projects, particularly in Africa. This is a potentially very large and growing energy market, where power grid infrastructure is still lacking. Developing countries without a power grid are largely expected to bypass a traditional grid buildout in favor of new distributed energy technologies, such as renewables, energy storage and microgrid systems.

In early January, The Church Pension Fund (CPF), with $13 billion in assets, invested $17 million in Social Investment Managers & Advisors Off-Grid Solar and Financial Access Senior Debt Fund I, an off-grid solar and financial access senior debt fund with $75 million in assets that focuses on sub-Saharan Africa and South Asia. A year ago, the pension also invested in the $60 million Developing World Markets’  Off-Grid Solar and Climate Action Impact Note, which invested in 11 businesses promoting renewable energy and climate solutions across Latin America, Africa and Asia.

Investing in off-grid electric companies and projects is a key institutional investment trend and we’ve captured several off-grid fundings by institutional investors in our database:

In August 2017, the $42 billion Danish pension fund PKA committed to investing 10% of its assets to climate projects by 2020; projects in emerging markets, including Africa, will be a key focus, according to the fund’s CEO. Last August, it invested $550 million in a new African infrastructure fund managed by AP Møller Capital, with a focus on focus on transportation and energy.

In July 2017, Climate Investor One, a new fund launched by FMO & Phoenix Infraworks, raised $412 million for renewable energy projects in developing markets. Funding came from institutional investors including the Directorate-General for International Cooperation, Atradius Dutch State Business, De Nederlandse Waterschapsbank. Aegon Asset Management, Norwegian insurer KLP, Sanlam Investment Holdings, the Borough of Windsor and Maidenhead’s pension fund in the UK.

Such investments come in the wake of similar investments in years past CleanTechIQ has covered:

– In 2016, the Rockefeller Brothers Fund invested $10 million in Mainstream Renewable Power to expand renewable energy in Africa.

– In 2015, the $7.1 billion David and Lucile Packard Foundation invested in Off-Grid Electric, which spreads solar and energy storage systems using cell phones and pay-as-you-go financing in Africa. That was part of $45 million in debt financing the company raised that year from other investors including family office Ceniarth and the Calvert Foundation.

– In 2015, Generation Investment Management, a sustainable investment firm backed by major asset owners including CalSTRS, invested in pay-as-you-go solar finance start-up M-KOPA, based in Kenya.




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