It’s a tough time to raise money for a renewable energy infrastructure fund, given the political headwinds. GDEV’s focus on small and mid-sized on-site solar and storage projects, which have largely escaped broader attacks on renewable energy, have given it something of a “policy-proof” edge, says the firm’s Benjamin Baker.
“I think that we’re going to see the industry focus on distributed energy resources, which positions us very well,” he told ImpactAlpha.
The Republican spending bill phases out federal tax credits for any solar projects that get placed in service after 2027, which Baker said favor projects with a shorter development cycle. If anything, he added, phase out “might cause an acceleration of the build out of certain facilities by the end of 2027.” And Treasury Department guidance that would make it harder for solar projects to meet the standard for having commenced construction omits projects under projects 1.5 megawatts AC.
GDEV, launched in 2020 by Greenbacker Capital, clinched its second fund with support from US insurance funds and the pension fund of Ontario Power Generation, a returning investor.
Scaling development
GDEV invests in early stage solar, battery and hydropower developers and helps them scale. It brings in partners once its developers have large capital needs. For example, when portfolio company Relevate Power, a hydropower developer, acquired Gravity Renewables, GDEV turned to Apollo Global to finance the deal.
It invested in battery energy storage developer Lightship Energy (formerly Delorean Power) in 2021, and helped the company raise more than $100 million from additional investors in 2023 for its grid resiliency solutions.
“We’ve been creative in scaling businesses despite having a small fund,“ said Baker.
Fund II has already invested in Nexus PMG, an infrastructure advisory and engineering firm, Lightshift Energy, a utility-scale energy storage developer, and multi-family EV charging company 3V Infrastructure. GDEV’s first fund raised $140 million in 2022, and invested in ten primarily on-site or “behind the meter” developers.
