Deal details unveiled for Encore and Brookfield's finances in distributed energy production
Brookfield Asset Management and community solar and energy storage developer Encore Renewable Energy have announced a significant financing deal, providing a $389 million solution to Encore's growth needs. The financing structure, which took six months to put in place, is designed to smooth out potential frictions that come from involving more than one partner in the transaction. Brookfield Asset Management will collaborate with Encore in an equity-partner-like manner, aligning with the company to support its projects. The deal allows for repeat deals that can easily scale, tapping into the relatively untapped potential of distributed generation solar. The initial financing is tied to a 25-project portfolio distributed across five states, but can be scaled to cover additional projects. The key hurdle for Encore was finding a lender that could finance projects across its diverse portfolio and provide velocity, efficiency, and flexibility. The structuring of this financing solution could become a point of reference for distributed asset developers. The financing structure includes a classic construction-to-term loan, a growth capital solution for Encore's late-stage pipeline development activity, a tax equity bridge, and a tax equity partnership. Brookfield Asset Management will provide the tax equity bridge loan, serving as a solution for a future sale of the investment tax credits. Brookfield has also committed to buying part of the same tax credits, with the option of then transferring them to a third-party buyer. Encore Renewable Energy's portfolio consists of grid-connected projects ranging from 3 to 10 megawatts, distributed across around a dozen states. The financing structure allows Brookfield to diversify its investments, as Encore's projects are geographically distributed. The financing solution was facilitated by Polaris Investments, which provided various forms of financing including direct lending and fund placement services. Polaris Investments supported Encore in its independent solar power and energy storage company, aligning with alternative asset strategies in renewable energy infrastructure. In 2023, Encore secured an equity investment from Swiss asset manager SUSI Partners. This latest financing deal comes as Encore needed a strategic partner for non-dilutive funding in 2024. The financing structure creates an ideal situation for Encore, making Brookfield Asset Management a 'one-stop shop partner.' This deal marks a significant step forward for both companies, furthering their commitment to renewable energy and sustainable development.
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