Aspen Power Partners is launching with $120 million in funding to support its focus on smaller scale solar developments, the company tells Axios.
Why it matters: The announcement is the latest sign of surging investor interest in distributed and community solar, especially community.
2021 transactions included acquisitions of developers Pivot Energy, Dimension Renewable Energy, and Community Energy, each with a large footprint in community solar. Community Energy was bought by Fortune 500 firm AES Corporation (AES:NYSE).
Aspen, which was incubated at the prominent clean-energy VC firm Energy Impact Partners, represents one of the first significant deals in the space this year.
Context: Dallas-based Aspen focuses so-called distributed solar and community solar projects.
Distributed solar generally describes projects less than 1 MW in capacity, such as rooftop solar panels atop homes and businesses. Community solar refers to slightly larger developments — typically about 2 MW in capacity — that may serve a neighborhood or other geographic area.
While larger utility-scale solar projects, as well as residential solar markets, are more “mature,” Aspen hopes to capitalize on a segment of the solar market that’s generally seen as more challenging — and therefore more nascent, in its view.
Lead investors include Ultra Capital and Redball Power, as well as an unidentified “global Swiss asset manager,” family offices, and high net worth individuals.
What they’re saying: “Utility-scale solar and residential solar — from a business standpoint the returns have compressed along with the maturity,” co-founder Jackson Lehr tells Axios. “So one of the things we like, from a business standpoint, for less mature segments, is that there’s an opportunity to earn higher returns.”
The big picture: Supply chain disruptions and interconnection delays last year hamstrung new installations of community solar, as well as the commercial and industrial segments of distributed solar.
The market research firm Wood Mackenzie in December reined in its growth projections for the sectors.
However, in a report earlier this month, it projected a 9% increase in the community solar market through the next five years.
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