Private equity sees gold in solar power development

Solar power companies that generate large volumes of assets – those which can affect the bottom line of $100 billion funds – are in vogue these days. In the 1st quarter of 2018 we saw 7.7 GW of those assets change hands, but if you really want to make the money, developing those projects from the ground up over the long term is the most profitable.

Ares Management, L.P. is a publicly traded asset manager with approximately $106 billion in assets under management – and by the end of April, it hopes to close on a majority share of solar power developer and engineering, procuring and construction (EPC) firm Conti Solar, which has built 500 MW of solar projects to date.

Ares EIF, the energy infrastructure fund within the broader private equity group at Ares Management, has invested in approximately 130 power and energy infrastructure assets that today have a combined underlying value greater than $20 billion. Ares EIF also noted nearly 9,000 MW of greenfield generation and transmission projects, as well as 200 miles of greenfield pipeline projects worth over $11 billion in capital.

As per the companies listed portfolio (and the project map below), renewable energy in the form of hydroelectric has been a heavy source of deal flow – however – only one solar power project is listed – a 30 MW project in California.

The companies have communicated a goal of Conti Solar continuing to be involved in oversight and strategic direction.

With the Federal Energy Regulatory Commission (FERC) counting that more than 48 GW worth of utility scale solar projects under development, one should expect further purchases by investment firms hoping to make profits off of these pipelines of projects. When combined with the massive amounts of energy storage that is coming, we are talking hundreds of billions in construction contracts. Its no wonder we just saw the world’s second largest solar EPC open a new office in the United States specifically to act on solar power plus energy storage.