The surging U.S. solar sector is attracting interest from unlikely places, including an asset manager in a Swiss lakefront town betting on solar’s falling costs, low risk and potentially bright future.
Zug, Switzerland-based Capital Dynamics has gone from almost no American presence a few years ago to owning some of the largest U.S. solar projects. Its portfolio includes seven of the 20 largest solar projects in the U.S., company officials told Greentech Media. The company’s total investments include 6 gigawatts of renewables capacity, the vast majority in the U.S.
Capital Dynamics switched to solar from wind investments only a few years ago after a decade in renewable investing.
“It’s extremely important for us to focus on assets that have low risk,” Benoit Allehaut, managing director with the Capital Dynamic’s clean energy infrastructure team, told GTM. “What we find is that solar as an asset class really meets that criteria.”
Capital Dynamics is one of many investors jumping into solar energy, and private equity significantly has outsized venture capital. PE invested $11.3 billion last year, a 24% jump from 2018. VC investments hit a low point in 2017 when only $587 million were spent on solar energy, less than half of 2011. It slowly recovered and reached $902 million last year.
Capital Dynamics claims that it has $16 billion of assets under management, with $6.5 billion in clean energy. Falling costs and secure returns probably made the asset manager’s move into solar inevitable, Allehaut said.
Clean Energy Infrastructure, a Capital Dynamics subsidiary, and 8minute Solar Energy announced a partnership on Jan. 22 for the development of what will be one of the largest U.S. energy storage and solar projects when completed in 2023. The project will provide the electricity needs of more than 1 million people in Los Angeles County. Its storage component will be the second-biggest in the country, trailing only a solar battery under construction in Florida.
“We are convinced that storage is going to play a huge role going forward in the power grid and, in particular, over time may replace gas speakers and enable a much greater penetration of renewable energy,” Allehaut said. Peaker plants, usually fossil-fuel fired, are turned on to meet surging electric demand.
U.S. solar capacity rose by 2.6 gigawatts during the third quarter to a total of 71.3 gigawatts of installed capacity, enough to power 13.5 million American homes, Wood Mackenzie Power & Renewables and the Solar Energy Industries Association said in December. Total solar capacity will more than double in the next five years, according to the report.
- U.S. renewable energy use is projected to continue growing, the Energy Information Administration said. Renewables are forecast to account for 38% of electricity in 2050, up from 19% now. At the same time, natural gas will see its share drop to 36% from 37%.
- Investment in the U.S. renewable sector surged 28% to a record $55.5 billion last year, according to a BloombergNEF report.