Private Investors Betting on Clean Energy Despite Market Selloff

Source: By Amrith Ramkumar, Wall Street Journal • Posted: Tuesday, June 28, 2022

Intersect Power is building some of the largest solar and battery-storage projects in the U.S.

Green technology companies have been hammered in the stock market, but private investors are still pouring cash into the sector. The latest deal is a $750 million investment into a fast-growing renewable energy provider by several funds including TPG Inc.TPG -2.11%

Intersect Power LLC and three other climate startups have together raised more than $1.6 billion in the past week. Large investment firms and venture capitalists, many with hefty cash piles, appear to be optimistic about the sector despite worries about high inflation and rising interest rates.

Intersect develops some of the biggest solar and battery-storage facilities in the U.S. to generate clean power for utilities and companies such as Apple Inc. and Morgan Stanley. The company aims to be more profitable than its competitors by signing power contracts that are shorter and more flexible. That allows it to manage big moves in power prices and offer investors greater returns, the company says.

Founded in 2016, Intersect is expanding into so-called green hydrogen that is produced from renewable electricity. Many industrial customers hope to use hydrogen as a clean alternative to fossil fuels to power transportation and chemical processes.

The equity fundraising includes TPG’s climate fund plus existing investors Climate Adaptive Infrastructure LLC and Trilantic Energy Partners North America. It brings the company’s total financing to about $2.7 billion in debt, construction and project financing, $900 million in equity and $400 million in equity linked to tax credits.

Intersect also hopes to set itself apart by going beyond typical large solar projects in states such as Texas and California and offering power from many different sources, Chief Executive Sheldon Kimber said in an interview. It plans to produce green hydrogen from a combination of solar and wind power and eventually move into other nascent industries such as capturing carbon directly from air.

“The scale of this investment should tell you how excited folks are about what the potential of these industries really is,” he said. Intersect declined to provide its valuation.

Intersect’s goal of combining many different clean-energy segments under one company through so-called vertical integration makes it a potential industry leader, said Ed Beckley, a TPG partner and senior member of its climate investing team.

Investment firms such as TPG, Brookfield Asset Management and General Atlantic have together raised tens of billions of dollars to back startups in the space, supporting the sector despite this year’s market swings. Money from venture capitalists and large companies is adding to the momentum.

In the past week, solar developer Pine Gate Renewables, clean-hydrogen startup Electric Hydrogen and nuclear-fusion company Zap Energy together raised more than $850 million from investors focused on sustainability including Generate Capital, Bill Gates’s Breakthrough Energy Ventures and funds backed by Amazon.com Inc. and Chevron Corp.

One of Intersect’s solar projects in Southern California is slated to be completed by the end of the year.Photo: Intersect

Intersect is partnering with Electric Hydrogen and counts Generate Capital among its debt investors. It expects its first large hydrogen project to be completed by 2026.

Because Intersect gets most of its solar panels domestically from manufacturers such as First Solar Inc., it has been insulated from supply-chain snarls and a tariff-dodging investigation that have set back other solar developers, Mr. Kimber said. It anticipates several solar and battery-storage projects will be completed on schedule by next year.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com