German Clean-Energy Fund Expanding Into U.S. Solar Development

(Bloomberg) -- Germany-based clean-energy fund Hep Kapitalverwaltung AG agreed to invest $50 million to $80 million annually in a partnership to develop small solar projects in the U.S.

Hep and ReNew Petra, a North Carolina-based renewable energy company, plan to jointly develop more than 100 megawatts of solar annually, according to a statement Wednesday. Their venture, Emerald Hills Holding, will enable ReNew to expand beyond the Southeast.

The partnership comes as investors see promising growth in the U.S. solar market and mid-sized players like Hep are forsaking big projects for smaller ones. That’s in part because large institutional investors have dominated recent auctions for utility-scale developments. Plus, smaller solar farms offer returns that can be more than 2% higher than big projects, said Paula Zagrecki, chief executive officer of Zorya Energy Advisors, which advised Hep on the deal.

“If we have to choose between investing in two 100-megawatt utility-scale projects in Texas versus a diversified portfolio of small solar across the U.S. -- we’d prefer the portfolio,” said Alexander Zhou, Hep’s head of mergers and acquisitions, in an interview. “It’s less risky.”

Hep has developed about 400 megawatts of solar in Germany, the U.K. and Japan, while ReNew has done up to 200 megawatts of energy projects.

To contact the reporter on this story: Brian Eckhouse in New York at beckhouse@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Joe Ryan, Millie Munshi

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