Political resolve, geothermal risk and global capital & perspective: ACORE Finance Forum

With finance the focus, Day 2 of the American Council on Renewable Energy (ACORE) Finance Forum (Day 1 here) remained centered on the Inflation Reduction Act’s (IRA) ongoing political uncertainty. But amid concern over the current version of the reconciliation bill, panelists voiced a sense of readiness, grounded in global investment experience and more than a decade of maturity in utility-scale renewables within the country. None supported the bill as written, but all were preparing for its potential passage.

The day opened with a candid conversation between two industry heavyweights: Sandhya Ganapathy, CEO of EDP Renewables North America, and Jim Murphy, president and co-founder of Invenergy. The session was moderated by Ed Zaelke of McDermott Will & Emery, who began by asking how CEOs are adapting to the evolving contours of the IRA.

Murphy pointed to two provisions in the reconciliation bill that developers are watching closely: the Foreign Entity of Concern (FEOC) designation and the 60-day construction start requirement. He suggested the start-date rule could overshadow FEOC by forcing developers to fast-track projects. Still, he warned that FEOC’s long-term impact could be significant, given that most components across the industry trace back to China, including through Invenergy’s Ohio Factory, developed in partnership with Longi Solar.

EDP’s Sandhya Ganapathy offered a cautious but strategic perspective on how the reconciliation bill might move forward, saying, “I am not using the word optimistic, but hopeful, because things are all over the place.” She explained that EDP is working aggressively to move projects into construction to comply with the potential 60-day start requirement. Ganapathy acknowledged this could drive market inefficiencies, as many renewable developers likely pursue similar fast-track strategies.

However, over the long term, Ganapathy said the market demand for renewable energy and capital deployment remains strong. Renewable projects will move forward regardless of the legislation’s outcome.

Moderator Ed Zaelke next highlighted the recent shift from nearly two decades of historically flat U.S. electricity demand to today’s period of rapid growth, asking the panelists what they made of this transition and how companies might navigate it.

Ganapathy clarified that electricity demand was not truly flat during the past two decades, but rather significant efficiency gains offset what would have otherwise been growth.

Invenergy’s Murphy elaborated, saying that historically, renewables replaced retiring coal, gas and nuclear plants. Today, he noted, solar and storage make up the vast majority — around 95% — of new capacity additions. Murphy said that market interest in gas remains, particularly gas peaker plants. However, due to ongoing supply chain issues and limited availability of equipment and EPC contractors, Invenergy may struggle to deploy new gas units until the end of the decade.

Financing next-generation geothermal

Next on stage, ACORE President Ray Long held a one-on-one conversation with David Ulrey, chief financial officer of geothermal upstart Fervo Energy, exploring how investors approach financing emerging renewable technologies.

Ulrey began by highlighting the technological advancements in modern geothermal energy. While geothermal has proven itself over the past 70 years, drilling has always carried substantial financial risk due to a 30% to 40% rate of ‘dry holes,’ — failed attempts at finding underground pockets of hot water. As a result, total geothermal capacity in the U.S. has remained around 9 GW.

Fervo’s approach, however, targets a much larger potential capacity, potentially hundreds of gigawatts, by drilling deeper, employing modern fracking techniques, and bringing in their own water. This strategy removes the reliance on naturally occurring hot-water pockets and virtually eliminates the dry-hole risk, shifting the challenge toward securing adequate financing.

Ulrey said Fervo already has 660 MW of power purchase agreements signed and could immediately secure several gigawatts more in an ideal scenario, and is actively developing 20 GW worth of projects. He sees geothermal contributing 10% to 20% of total electricity generation as a firm, clean energy source complementing wind and solar plus storage.

According to Ulrey, Fervo’s drilling costs are rapidly decreasing while technical expertise is advancing, opening new markets. Initially focused on the easier-to-access resources in the Western U.S., Fervo’s first well reached 11,500 feet depth in 72 days. By comparison, a typical gas well reaches 20,000 feet in only six days. Yet recently, a Fervo well achieved a depth of 14,000 feet in 17 days, coming in under budget. Ulrey believes that such progress will soon make drilling economically feasible even on the East Coast, in states like West Virginia and Pennsylvania, where depths around 15,000 feet are required.

Sharing strategic advice for fellow innovators, Ulrey said, “If you wait for the perfect finance, because you don’t know what people are going to ask for, you are going to delay your project.”

Ulrey described how Fervo proactively approached commercial banks much earlier than normal, despite knowing the firm lacked a track record and that banks tend to avoid early-stage risk. He said the timing was “ridiculous”—but the meetings yielded valuable insight into what documentation would eventually be required.

Equally important, Fervo began building relationships with investors who weren’t yet in a position to finance them. By clearly laying out their next steps and long-term goals, they earned credibility. Years later, Ulrey said, Fervo was able to return to these same investors and show not only that they met their milestones, but exceeded them. “Even though they didn’t want to finance us yet, we met them. And then we got to show them that we met our goals, and we grew.”

Global investors see opportunity amidst U.S. turbulence

The next panel shared perspectives from international asset investors on navigating the political and business climate in the U.S. One recurring sentiment was that, despite turbulence in the U.S. market, similar challenges exist globally.

Sean Toland, a partner at Copenhagen Infrastructure Partners, noted he’s been active in the United States for nearly a decade, with some team members having even longer tenure. He emphasized that firsthand experience in navigating market cycles is critical to maintaining stability in turbulent times.

“As a global investor, you have broader perspectives and realize there are challenges everywhere you go,” Toland said. “In these complex moments, though, as a greenfield investor who has resources, this is where we can really step up and differentiate ourselves.”

Martin Torres, managing director and head of Americas at Wren House Infrastructure, said, “We’re bullish,” though he acknowledged Wren House doesn’t currently hold U.S. assets.

Torres provided additional context, explaining that Wren House has a single, long-term oriented investor committed to fundamentally sound investments with durable economic profiles. “Fortunately,” he said, “we’re not under pressure [to exit] in any quarter or six-month period.”

Sean Toland of Copenhagen Infrastructure Partners added that when they put together a fund, they’ve set clear objectives—including a defined risk profile.

“We’re a greenfield investor,” Toland said. “The institution is used to taking development risk. We’re used to it: political risk, supply chain, and other embedded risks. Having this experience helps people stay calm during events like this. But you’ve got to communicate that back to your LPs [limited partners]. And when you communicate what’s going on in your market, sometimes in multiple ways, you can see the shoulders of the LPs relax.”

When asked by moderator Mona Dajani of Baker Botts if he was deliberately overcommunicating these days, Toland said, “Yes.”

Dajani then asked the panelists what they see in terms of demand beyond solar, wind and energy storage. Specifically, she asked if there is still a place for further gas development.

Torres described gas as more of an operational resource, complementing and backing up wind, solar, and storage. He acknowledged continued market demand for gas but noted that current off-takers are specifically seeking capacity. Renewable assets, Torres said, can be deployed more quickly than gas plants.

Copenhagen Infrastructure Partners also sees a continued role for gas, Toland said, though the company is “renewables mainly.” He emphasized that buyers are fundamentally looking for energy solutions, leading most firms toward an “all of the above” energy strategy.

Dajani next asked the panelists to look beyond the immediate six-month outlook and describe their longer-term market perspectives.

Torres said, “When my board asked six months ago, I said ‘U.S. Power. There are a lot of opportunities elsewhere. But if we have a limited set of resources, then the U.S., and in particular, the [power] sector’”.

Expanding on that point, Torres said that Wren House also sees strong potential in Europe, especially for storage in Germany and Spain. He said the firm is actively evaluating what’s realistically buildable across those markets. Still, Torres summed up his view by calling the U.S. “the best environment to invest in globally.”

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