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Forest Road invests $36M in Pathway Power for merchant solar

Illustration of rows of solar panels with abstract shapes and money elements.

Illustration: Gabriella Turrisi/Axios

Pathway Power, a utility-scale solar and storage developer, has landed a $36 million investment for its plan to branch into riskier but lucrative short-term merchant markets as well as more traditional PPAs.

Why it matters: Pathway is the latest in a small but growing number of utility-scale renewable energy developers that are looking to capitalize on volatility in electricity spot and merchant markets.

What's happening: The $36 million investment comes from Forest Road Renewables, an infrastructure-focused division of the Manhattan-based fintech Forest Road Company.

  • Pathway Power's co-founder is Jam Attari, former CEO of North American solar at BayWa, a large German energy, agriculture and buildings conglomerate.

Details: Pathway has contracted 1 GW of projects in the U.S., with an aim to build up to 4 GW in the next six months, Attari tells Axios.

  • It's largely focusing on greenfield or early-stage projects, with an emphasis on utility-scale solar or storage of about 300-400 MW. The company plans to break ground on these projects late in 2024 with delivery starting the following year.

The intrigue: A core of the company's strategy is balancing day-ahead merchant pricing with traditional, long-term PPAs.

  • A rising number of renewables developers have started looking at spot markets traditionally served by gas- and coal-fired power plants.
  • Spot markets are riskier, but promise a potential bigger upside. They've grown more appealing in recent years as PPA terms have gotten shorter.
  • Intersect Power, a large-scale renewables developer, earlier this year raised $750 million for its plan to concentrate in merchant structures.

Of note: Battery storage projects already tend to focus on spot markets.

What they're saying: "We’re maintaining optionality. There's arbitrage to be had as the energy transition happens," Attari says of Pathway's plan to pursue both PPAs and merchant structures.

  • "Could I foresee something that’s 50-50? Absolutely. Could I see something that’s 80-20? Possibly, in very specific markets. The more storage an asset it is, the more it’s going to feel merchant."
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