Joint Venture Gets Set to Connect Disadvantaged Communities With Solar

WSJ Pro Private Equity

Jan. 12, 2022

Joint Venture Gets Set to Connect Disadvantaged Communities With Solar
Impact investor Lafayette Square is joining with renewable-energy developer Invenergy to invest as much as $550 million through Reactivate LLC

By Luis Garcia

Impact investor Lafayette Square Holding Co. and project developer Invenergy Renewables Holdings LLC have started a joint venture to build solar-power installations in communities left behind by the shift to clean energy.

The new business, Reactivate LLC, aims to acquire, develop and finance projects across the U.S., with a focus on low- to moderate-income communities and areas with relatively less access to renewable resources, according to a news release. Reactivate will also develop energy-storage, electrification and vehicle-charging infrastructure.

Miami-based Reactivate plans to invest $450 million to $550 million across roughly 60 community solar projects through 2024, according to Lafayette. These projects, which make renewable energy available to nearby communities, will have a total capacity of as much as 400 megawatts, enough to power about 25,000 average U.S. homes.

In addition to its development work, Reactivate also plans to offer job training for local workers so they can be employed in solar-panel installations and other aspects of renewable projects, said Damien Dwin, founder and chief executive of Lafayette. He added that the company particularly sees opportunities to train Black people and Latin-Americans.

“It goes beyond just reducing carbon footprint,” Mr. Dwin said of the joint venture’s objectives. “It is about place-based capitalism and identifying communities in need, and serving them.”

He added that low- and moderate-income communities historically haven’t benefited as much as affluent ones from the economic gains generated by the shift to clean energy.

Mr. Dwin started Lafayette in late 2020 with the help of a $100 million commitment from Morgan Stanley. Impact fund manager Capricorn Investment Group and Schusterman Family Investments also backed the new firm. Lafayette invests across three strategies—credit, real estate and renewable energy—with the aim of expanding economic opportunities for businesses and communities.

“We think there is a path to make market-rate returns and help local communities. The question for us became how to do that at scale,” Mr. Dwin said. “We think community solar is exactly the right place to move.”

To reduce costs and boost returns, Reactivate plans to take advantage of Invenergy’s purchasing power and operational experience, said Invenergy founder and CEO Michael Polsky.

“We can buy solar panels cheaper. We understand how to put it together perhaps in a more efficient way. We understand how to operate these projects efficiently,” Mr. Polsky said. “I think we could bring a lot of know-how that smaller developers potentially do not have.”

Founded in 2001, Invenergy is one of North America’s largest privately held renewable-energy companies, having built 190 projects with a total capacity of 29,912 megawatts, according to its website. Blackstone Inc. last week unveiled plans to invest about $3 billion in the company, joining Canadian pension asset manager Caisse de dépôt et placement du Québec as an Invenergy backer.

Blackstone’s investment will help Invenergy expand its development of the large, utility-scale projects the company is more known for, just as it makes its first incursion into the smaller community-solar market with Lafayette, Mr. Polsky said.

“Obviously, you can’t compare community solar with other things that we do, but within this space we want to be at scale, too,” he said.