Carlyle launches renewable energy infrastructure unit

Private equity giant Carlyle Group Inc. is launching a company to develop renewable energy production and storage projects with the aim of reorienting its energy business towards sustainable investments.

Funds operated by Carlyle will inject up to $ 700 million into the new company, Copia Power, enabling it to organize projects worth more than $ 6 billion, according to Pooja Goyal, co-head of infrastructure at Carlyle and responsible for renewable and sustainable energy. Copia will focus on the development of large-scale solar generation projects and battery installations to store energy and distribute it after sunset.

Carlyle has a long history of debt and fossil fuel equity investments, but now the company and competitors like Blackstone Group Inc.

and KKR & Co. — moving towards cleaner technologies. The fund manager in April disclosed $ 22 billion in private equity investments in traditional and renewable energy, which represents 16% of total private equity assets under management.

The initiative is part of a race on Wall Street, as large investment firms fund competing power projects as part of a nationwide push to revamp power infrastructure. This shift comes as investors demand environmentally friendly financial products and national infrastructure initiatives present potential opportunities for private equity firms.

“These companies recognize that this is a new asset class and that there are huge prospects for development,” said Jason Burwen, acting general manager of the US Energy Storage Association’s business group. . “Now is the right time to be a provider of capital.

Carlyle sees an opportunity in building clean energy projects for tech companies and others who set goals to reduce or eliminate their carbon dioxide emissions, Ms. Goyal said. Such projects may be more profitable than bidding on electricity supply agreements for regulated utilities which “have become so competitive that contracts are short and tariffs low,” she said.

Copia will launch several projects acquired from Tenaska Inc., an energy developer based in Omaha, Neb., Which are expected to produce approximately 6 gigawatts of clean energy. The startup will also join Birch Infrastructure to help negotiate future power purchase agreements with large companies.

“The biggest opportunity we see is in large scale developments, to the tune of 200 megawatts to 1 gigawatt,” Ms. Goyal said.

Growth prospects are good in supplying businesses as industrial-scale electricity consumers have just started exploring long-term contracts for clean energy, Burwen said. Google helped kick-start the process last year, he said, when it pledged to operate around the clock on carbon-free energy by 2030.

Carlyle’s push comes as competitors strive to create the best franchise in environmental, social and governance investing, or ESG.

Blackstone, which manages around $ 649 billion, pledged last year to reduce its carbon footprint globally, in part by looking at the energy use of the companies it purchases. The company is a large investor in Altus Power Inc., a builder of rooftop solar installations, and made one of the first large private investments in renewable energy storage last year by purchasing Aypa Power.

Private Equity Firms Also Face Off against Fund Management Giants Like BlackRock Inc.,

which has become a major player in global infrastructure, and smaller infrastructure specialists like Stonepeak Partners, which raised $ 2.75 billion for a renewable energy fund this year.

Write to Matt Wirz at [email protected]

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