Private Funding for Energy Projects Is Booming

Private Funding for Energy Projects Is Booming

In 2018, corporations “shattered records,” purchasing 13.4 gigawatts (GW) of clean energy through power purchase agreements (PPAs), more than doubling the 6.1 GW bought in 2017, according to a Bloomberg New Energy Finance report released last week.

A majority (60 percent) of the spending occurred in the United States. The total purchases in 2018 tripled from a year earlier to 8.5 GW, according to the report. Facebook led the way, buying more than 2.6 GW of renewables globally in 2018. However, last year marked the entrance of smaller, first-time corporate clean energy buyers, with 34 such companies inking their first clean energy PPAs—representing nearly one-third of the total U.S. activity.

Smaller companies are aggregating their purchases to achieve economies of scale from larger solar and wind projects, partnering with a larger, more experienced corporate buyer known as an “anchor tenant.”

“The aggregation model has heralded in a new generation of corporate clean energy buyers,” writes Kyle Harrison, a corporate sustainability analyst for BNEF and lead author of the report. "These companies no longer need to tackle the complexities of clean energy procurement alone. "They can share risks associated with credit and energy market volatility with their peers.”

Meanwhile, a report by Mercom Capital Group states venture capital funding for storage, smart grid and efficiency companies in 2018 nearly doubled from a year earlier to $2.8 billion.

In 2018, venture capital funding for battery storage companies rose by 19 percent to $850 million in 49 deals, compared to $714 million raised in 30 deals in 2017. Lithium-ion-based battery technology companies received the most funding with $236 million, followed by energy storage systems companies with $193 million.

Smart grid companies raised $530 million in venture capital funding in 29 deals in 2018, a 26 percent increase compared with the $422 million raised in 45 deals in 2017. Smart charging of plug-in hybrid electric vehicle, vehicle-to-grid companies had the largest share of venture capital funding in 2018 with $348 million in nine deals, followed by grid optimization companies with $59 million in two deals.

Venture capital funding for energy efficiency companies spiked to $1.5 billion in 23 deals in 2018, compared with $384 million in 38 deals in 2017.

“The rise of VC funding for energy efficiency companies reflects a growing focus on the sector and its potential to fuel economic growth while also reducing greenhouse gas emissions,” Utility Dive writes.

The rise jives well with the International Energy Agency’s (IEA) recommendation for a rapid increase in efficiency investment, according to Utility Dive.

“Last year, the IEA called for a doubling of global annual investment in efficiency through 2025—and then doubling it again between 2025 and 2040,” Utility Dive writes. “The agency believes improvements in efficiency by 2040 could allow the world to double the value of the energy it uses today.”

About the Author

Katie Kuehner-Hebert

Katie Kuehner-Hebert has more than three decades of experience writing about the construction industry, and her articles have been featured in the Associated General Contractor’s Constructor magazine, the American Fence Association’s Fencepost, the...

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