Innovative Financing Model Supports Sustainable Technologies

(3BL Media/Justmeans) – Large, centralized utility companies continue to dominate the U.S. market, but they are no longer the sole players in the business. The market is gradually shifting towards a more decentralized infrastructure. Over 500,000 American homes have gone solar, and the movement is not restricted to energy alone. Many American households are buying food produced by local, sustainable farms rather than large agribusinesses. Some businesses are beginning to generate their own clean water.

However, the challenge is to find capital investment for hundreds and thousands of small sustainability projects. Large banks and financial institutions are not ready to back small projects, or they simply do not understand this new emerging market. This is where an innovative financing company such as Generate Capital comes in. This San Francisco start-up is co-founded by Scott Jacobs, who earlier helped found McKinsey’s clean tech practice and EFW, a resource-focused investment firm.

Generate Capital will finance small- and medium-sized projects in energy, storage, clean water, efficiency, combined heat and power, among other things. General Capital has been able to raise funds from prominent investors such as Jason Fish, co-founder of Alliance Partners, a Chevy Chase asset management firm, and Liesel Pritzker Simmons, an heiress of Chicago’s Pritzer family.

Generate Capital was co-founded by Jigar Shah, who previously started SunEdison, a financer of solar projects with a market cap today of $5.6 billion. SunEdison would purchase the equipment, and “lease” out to customers, so that they did not have to pay large sums of cash up front for the solar panels. Shah says that the success of the solar industry lies in helping the customers buy with no money down.

Now Shah plans to apply that same finance model to all the other resource efficiency technologies. He believes the company can produce healthy returns from financing these sectors with hundreds of investments as small as $1 million each. The company is already underwriting projects in energy storage and solar hot water for businesses, municipalities and utilities.

Source: Fortune

Image Credit: Flickr via NASA Goddard