SMP 35: Development Capital Funding for Early Stage Solar Projects

Episode Summary DG Energy Partners founder Michael DellaGala joins Benoy to talk about his path to being a provider of development capital. They cover a lot of ground including what DGEP does, his partnership with Metropolis Capital, his experience in project development, and how the market is in need of this type of capital.   About our Guest: Mike DellaGala, is the Founder and Managing Partner of DG Energy Partners (DGEP) and leads the firm's Project Finance and Advisory Groups. Mike has been financing and advising on projects in the clean and renewable energy space since 2008. Areas of expertise include solar, wind, biomass and carbon/emission technologies. During his career, Mike has structured, advised on and financed more than 35MW of distributed generation solar, totaling more than $200MM. He has 5 years of experience in fixed income and interest rate derivatives sales,trading and risk management.   Benoy Thanjan Benoy Thanjan is the Founder and CEO of Reneu Energy and he is also an advisor for several solar startup companies. Reneu Energy is a premier international solar energy consulting firm and developer and the company focuses on developing commercial and industrial solar and utility scale solar plus storage projects. The company also sources financing for solar projects and hedges energy and environmental commodities. Reneu Energy has brokered $27 million in environmental commodities transactions. Benoy received his first experience in Finance as an intern at D.E. Shaw & Co., which is a global investment firm with 37 billion dollars in investment capital. Before founding Reneu Energy, he was the SREC Trader in the Project Finance Group for SolarCity which merged with Tesla in 2016. He originated SREC trades with buyers and co-developed their SREC monetization and hedging strategy with the senior management of SolarCity to move into the east coast markets. Benoy also worked at Vanguard Energy Partners, Ridgewood Renewable Power, and Deloitte & Touche.   Insight from this episode: How to make investors comfortable in the early stage with a binary risk and how to protect the project. DGEP’s practical and thoughtful approach to the investment cycle. How Mike vets and builds relationships with developers. The methodology for determining the sharing of the development fee and what goes into that process. How to scale development capital in early stage projects. Mike’s experience and the decisions and conditions that led to him pivoting from being an advisory firm, then to a principal position, and now providing development capital. Reasons why Mike became interested in solar over other renewable energy assets. Current trends in financing in the solar industry.   Quotes from the show: “Not every project will work, especially that early, which creates an opportunity in the marketplace.” Benoy Thanjan, Episode #35 “There’s not a lot of people that are providing development capital that early which gives you an advantage, meaning seeing a lot of projects.” Benoy Thanjan, Episode #35 “Solar is almost like the Wild Wild West. Even as the market gets more sophisticated and mature, there are a lot of players coming into the market and everyone says they are a developer.” Benoy Thanjan, Episode #35 “We’ve talked about the merits of the project but the merits of the developer are probably just as important, if not more so.” Mike DellaGala, Episode #35 “When it comes to development capital the dollar stretches pretty far. So, we feel like we’ll run out of deals before we run out of capital.” Mike DellaGala, Episode #35   “It’s a really good thing that there’s more capital here and that it’s moving early on. It just goes to show that the risk and the macro assumption of this asset within the overall investment community is something meaningful.” Mike DellaGala, Episode #35   Stay Connected:   Benoy Thanjan [email protected] LinkedIn.com/bthanjan www.reneuenergy.com Facebook: Reneu Energy Michael DellaGala [email protected] http://www.dgenergypartners.com/ www.metromezz.com/