- Makes debt and equity investments in clean energy infra
- Has invested across technologies, focused now on solar
- Works with partners in tax equity and senior debt markets
The U.S. solar market is surging, with capacity having grown by 95 percent last year. “I was fortunate enough to participate at the beginning,” said Scott Brown, who in 1987 helped found the company that is now First Solar.
“The markets weren’t very attractive at that time,” Brown recalled. “There were no incentives, costs were high, electricity prices were low, there was not a lot of opportunity for the market to mature. But the technical foundation for the industry was created in those early years.”
Brown took a break in the 1990s, though he served on the advisory board of the National Renewable Energy Laboratory.
“I was on a totally different career path for four years,” he said. “I ran a nonprofit organization, consulting on international negotiations, that was affiliated with Harvard Law School.” Brown worked on South Africa’s transition talks, El Salvador’s civil war, the Ecuador-Peru border dispute, Haiti’s political crisis and the conflict in South Sudan.
Compared with the deals he does now, “those were kind of longer-term, strategic negotiations, but made you think hard about your negotiating strategy and long-term outcomes,” he said.
Deciding it was too much travel, Brown looked for something more domestic. In 2001, clean energy in Europe was starting to grow dramatically, “based in part on technical breakthroughs and in part on incentives in the German market.” Brown saw the opportunity for large-scale infrastructure deployment in the U.S., which led to New Energy Capital Partners.
The firm raised its first fund in 2004, with capital from VantagePoint Venture Partners and California State Teachers’ Retirement System. Since then, Brown said, “the fundamental strategy has been the same”: never to seek high, venture-like returns, but to mitigate downside risk, taking advantage of mature technology and deploying into very controlled contractual structures.
NEC makes debt and equity investments, often working with financial partners to monetize tax benefits and the cash-flow attributes of infrastructure projects. The firm has invested in biofuels, biomass power, wastewater treatment and landfill gas. But over the past five years it has focused primarily on solar, which has seen the sharpest cost reduction and growth.
“Solar electricity-generation deployments were larger than oil, gas and coal-fired generation combined in 2016, and that primarily reflects the fundamental shift in the economics of the industry,” Brown explained. “It’s very much like the semiconductor industry; there are massive economies of scale.”
Utilities recognize the advantages of solar and wind, and several high-profile tech companies have committed to procuring their power from renewable sources.
While President Donald Trump’s lack of enthusiasm for clean energy will have some effect, Brown doesn’t believe the new administration can reverse the momentum. “Most of the energy policy in the U.S. is created at the state level,” and states like renewables because of public support and improving economics, he says.
“We remain very bullish on the industry,” Brown said. “Solar, wind efficiency and storage markets are all growing quickly. We see a lot of opportunity for deploying capital.”
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Scott Brown, CEO and Managing Partner, New Energy Capital Partners. Photo courtesy of the firm.