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Investing Private Equity in Solar Photovoltaic (PV) Projects
Overview
Cherokee Renewables, LLC is an affiliate of Cherokee Investment Partners, one of the largest brownfield investors in the world. Cherokee Renewables’ mission is to provide capital for solar developers to source, acquire, develop, install, own and sell solar PV projects ranging from 2 to 20 megawatts (MWs), primarily on brownfields.
The Cherokee Renewables team has developed substantive solar developer relationships, a growing pipeline of significant projects, and core skill sets to scale our business and generate attractive risk-adjusted financial returns. As evidence of the substantial Cherokee presence in the solar PV project industry, one of the Cherokee private equity funds was a key participant in the recent completion of one of the largest solar PV project in the Northeastern United States at roughly 6 MWs of peak power. This project is also located atop a municipal landfill, which makes it one of the largest solar landfill projects in the world.
Growth in the Solar Industry
The U.S. solar industry is in its infancy and is poised to grow faster than any other form of renewable energy. Consider a few statistics from Bloomberg New Energy Finance, Greentech Media and the Solar Energy Industries Association:
- In 2012, approximately 3.2 gigawatts (GW) of solar PV projects will be constructed; this compares to just 1.9 GW and 0.9 GW installed in 2011 and 2010, respectively.
- The average unit cost of a completed solar PV project decreased more than 30 percent between 2011 and 2012.
- The U.S. now supports an $8 billion solar industry and 5,600 businesses at over 6,500 locations in every state, including over 100,000 solar jobs which is double the number in 2009.
The following list of key drivers will continue to bring solar electricity closer to grid parity in more U.S. markets in the next few years:
- The unit price of solar PV panels has fallen 75 percent since 2008; these prices are expected to continue to fall.
- U.S. solar PV capacity is projected to grow more than 20 percent per year and require $62 billion in capital investments between 2012 and 2020.
- Solar panel efficiency and warranties have improved significantly in the last decade and are expected to continue to do so.
- Federal and state governmental incentives can reduce capital costs by 30 to 60 percent and/or provide significant additional sources of revenue.
Why Solar on Brownfields?
Cherokee’s internal research indicates that there are over 1 million brownfield sites in the U.S. totaling more than 15 million acres. The unique advantages to solar project development on brownfields can include: faster permitting, reduced community opposition, easier interconnection, fewer endangered species issues, limited competition from the use of land for farming or forests, and greater municipal support because non-tax producing liabilities can be turned into assets again.
Why Cherokee?
Cherokee and its affiliates bring two decades of organizational experience across multiple private equity funds totaling over $2 billion of equity commitments, more than 100 seed capital investments and three allocations of New Market Tax Credits exceeding $200 million in aggregate. As the world’s only private equity fund with an ISO 14001-certified Environmental Management System, Cherokee has purchased over 540 environmentally impaired sites. For recognition of our leadership in environmental sustainability, Cherokee received the 2010 World Presidents’ Organization (WPO) Sustainable Business Practices Award, and in 2011 Cherokee’s CEO became a nominee for the Zayed Future Energy Prize, which is known as the Nobel Prize for energy.
For More Information
If you would like to learn more, please contact Chris Wedding (919-743-2029, cwedding@cherokeefund.com).
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