Generate Capital, the cleantech infrastructure investor, revealed Tuesday that it had raised another $1 billion in equity and debt finance.
Generate became an early investor in asset classes that conventional lenders shied away from, including fuel cells, anaerobic digesters, behind-the-meter battery storage, electric buses, microgrids and unconventional solar projects.
The new raise includes debt finance already allocated to projects and equity that should support operations for the next two or three years, said co-founder and President Jigar Shah. (Shah is the co-host of GTM’s Energy Gang podcast.) He declined to specify the size of earlier fund raises; the latest one is the largest that Generate has publicly acknowledged. The company said in a statement that it invested $1 billion over the last five years.
The deal marks a new degree of involvement in clean energy projects from a set of pension and sovereign wealth funds that dwarf anything in the venture capital. Investors include AustralianSuper, Queensland Investment Corporation, British fund Railways Pension and Swedish pension fund AP2.
“These are some of the largest infrastructure investors in the world,” Shah told Greentech Media. “It matters a lot that they’re paying attention. If we’re going to save the world from climate change, these are the guys who are going to have to weigh in on whether this is a good investment.”
Shah added that he hopes the commitment from these funds will bolster investor interest in clean energy as an asset class.
New energy technologies tend to scare away investors that want to see long track records of performance in the field. Solar panels have earned that trust, so investment decisions on solar projects have largely shifted to assessing the credit-worthiness of the off-taker. But other technologies, like electric bus charging or stationary storage, have yet to win the confidence of many infrastructure investors.
Novelty, though, is a matter of perspective.
“We don’t take any technology risk,” Shah insisted. “Everything we’ve done is a mature technology. It’s just new to the investor base in the U.S.”
When entering a new sector, Generate typically starts with deals entirely funded by equity, and brings in debt financing later, when there is more of a track record. The company fields on the order of 600 deal proposals a year, and is open to working with additional types of assets.
“We’re always looking for people to pitch us deals,” Shah said.
Along with the funding, Generate announced several additions to its board, which performs quarterly oversight of the company’s investments. Richard Kauffman, who led many of New York’s grid reforms as the state's energy czar, has become chair of the board. Lynn Jurich, co-founder and CEO of the leading rooftop solar company Sunrun, also joined the board, as did representatives from AustralianSuper and QIC.
Decarbonization discussions often emphasize the search for breakthrough technologies, like seasonal storage or next generation nuclear power. But Shah said he’s excited to steer the conversation to the underappreciated topic of infrastructure investment.
“It’s the deployment of tech that saves carbon emissions,” he said.