Exclusive: GSI Girds for Solar Supply Chain Disruptions

Greenwood Sustainable Infrastructure (GSI) tells Axios that it’s acquired a portfolio of utility-scale solar projects from Denver-based developer CMDAJ Holdings.

Why it matters: The transaction shows how some companies are preparing for expected supply chain constraints in 2022, especially in solar markets.

• "Developing utility-scale takes 2-3 years, minimum," GSI CEO Mazen Turk tells Axios. "We feel fairly comfortable that this will get resolved before we have the need to acquire panels and develop the plants."

Details: The deal will see GSI buy a 233 MW portfolio of utility-scale projects from CMDAJ, signaling GSI's start at larger-scale projects.

• GSI has largely focused on smaller distributed and community-solar projects, the biggest amounting to about 7 MW of generating capacity.
• The transaction will more than triple GSI's solar-energy holdings and double its footprint in the U.S. from 5 to 10 states, a company spokesperson says.

By the numbers: The transaction calls for GSI to develop an initial 40 MW of early-stage utility-scale solar in Minnesota, with the option to build an another 193 MW in Colorado, Pennsylvania, South Carolina, and Wisconsin,

• GSI budgeted $5 million for the deal with CMDAJ, CEO Turk says. The firm pegs the total value of the portfolio at about $200 million "once it's fully built and operational."
• The acquisition by GSI brings its parent company Libra Group’s global portfolio to nearly 1 GW of solar, wind, and waste-to-energy projects.

What they’re saying: "Now is the right time to engage on bigger projects," Turk says. "We feel that there is a lot of capital in the market but very little deals or projects, so we’re trying to step into that space."

What we’re watching: We’ve seen projections sharply diverge for the year ahead in utility-scale solar development:

• The U.S. Energy Information Administration in January predicted that new, utility-scale solar energy projects will account for nearly half of new U.S. electric generating capacity this year.

• These large projects will grow by 21.5 GW, the agency said — a nearly 40% leap from the 15.5 GW new capacity added last year.
• By contrast, Wood Mackenzie, in a report commissioned by the solar industry’s main trade group, projected in December that new utility-scale solar installations will drop in 2022.
• Despite a banner year last year, the market research firm predicted that “challenges related to high commodity prices and supply chain constraints are expected to hit full force throughout 2022 and early 2023.”

GSI and its parent anticipate bottlenecks. "This year is the year we may actually see the installation volume come down a little bit from last year because of that," Camilo Patrignani, Libra Group's EVP of Energy, tells Axios. " Our strategy to mitigate that is to focus on projects that will take at least two years of development and leapfrog that supply-chain constraint."

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