The first offshore wind facility, the Block Island Wind Project off Rhode Island, achieved commercial operation in 2016. Since then, development efforts have stalled, with developers abandoning[i] early stage projects unable to overcome permitting challenges. But a recent spate of record-breaking sales of offshore wind leases appears to indicate renewed optimism for the future

Introduction

The emerging trend of energy private equity (“EPE”) funds is revolutionizing the renewable energy field, as renewable energy joins leveraged buyouts, venture capital and hedge funds as asset classes that institutional investors and high net worth investors are using to deploy their capital in a diversified manner, with the added “social good” of investing in a sustainable energy future. Sophisticated energy sponsors are increasingly eschewing the traditional project finance structure, in which capital stacks are created for each deal, in favor of a private equity fund structure in which committed capital is deployed by the sponsor in accordance with a specified investment strategy.  From the sponsors’ perspective, the goal is the “holy grail” of all private equity sponsors – permanent capital.  This trend can be seen as further evidence of renewable energy maturing as an asset class within the larger investment world.  Since this trend is so new, the terms of EPE funds vary tremendously.  However, some common terms are summarized below.
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