The Fight

Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Q&A

The Renewable Energy Investor Optimistic About the Future

A conversation with Mary King, a vice president handling venture strategy at Aligned Capital

•
The Q&A subject.
Heatmap Illustration

Today’s conversation is with Mary King, a vice president handling venture strategy at Aligned Capital, which has invested in developers like Summit Ridge and Brightnight. I reached out to Mary as a part of the broader range of conversations I’ve had with industry professionals since it has become clear Republicans in Congress will be taking a chainsaw to the Inflation Reduction Act. I wanted to ask her about investment philosophies in this trying time and how the landscape for putting capital into renewable energy has shifted. But Mary’s quite open with her view: these technologies aren’t going anywhere.

The following conversation has been lightly edited and abridged for clarity.

How do you approach working in this field given all the macro uncertainties?

It’s a really fair question. One, macro uncertainties aside, when you look at the levelized cost of energy report Lazard releases it is clear that there are forms of clean energy that are by far the cheapest to deploy. There are all kinds of reasons to do decarbonizing projects that aren’t clean energy generation: storage, resiliency, energy efficiency – this is massively cost saving. Like, a lot of the methane industry [exists] because there’s value in not leaking methane. There’s all sorts of stuff you can do that you don’t need policy incentives for.

That said, the policy questions are unavoidable. You can’t really ignore them and I don’t want to say they don’t matter to the industry – they do. It’s just, my belief in this being an investable asset class and incredibly important from a humanity perspective is unwavering. That’s the perspective I’ve been taking. This maybe isn’t going to be the most fun market, investing in decarbonizing things, but the sense of purpose and the belief in the underlying drivers of the industry outweigh that.

With respect to clean energy development, and the investment class working in development, how have things changed since January and the introduction of these bills that would pare back the IRA?

Both investors and companies are worried. There’s a lot more political and policy engagement. We’re seeing a lot of firms and organizations getting involved. I think companies are really trying to find ways to structure around the incentives. Companies and developers, I think everybody is trying to – for lack of a better term – future-proof themselves against the worst eventuality.

One of the things I’ve been personally thinking about is that the way developers generally make money is, you have a financier that’s going to buy a project from them, and the financier is going to have a certain investment rate of return, or IRR. So ITC [investment tax credit] or no ITC, that IRR is going to be the same. And the developer captures the difference.

My guess – and I’m not incredibly confident yet – but I think the industry just focuses on being less ITC dependent. Finding the projects that are juicier regardless of the ITC.

The other thing is that as drafts come out for what we’re expecting to see, it’s gone from bad to terrible to a little bit better. We’ll see what else happens as we see other iterations.

How are you evaluating companies and projects differently today, compared to how you were maybe before it was clear the IRA would be targeted?

Let’s say that we’re looking at a project developer and they have a series of projects. Right now we’re thinking about a few things. First, what assets are these? It’s not all ITC and PTC. A lot of it is other credits. Going through and asking, how at risk are these credits? And then, once we know how at risk those credits are we apply it at a project level.

This also raises a question of whether you’re going to be able to find as many projects. Is there going to be as much demand if you’re not able to get to an IRR? Is the industry going to pay that?

What gives you optimism in this moment?

I’ll just look at the levelized cost of energy and looking at the unsubsidized tables say these are the projects that make sense and will still get built. Utility-scale solar? Really attractive. Some of these next-gen geothermal projects, I think those are going to be cost effective.

The other thing is that the cost of battery storage is just declining so rapidly and it’s continuing to decline. We are as a country expected to compare the current price of these technologies in perpetuity to the current price of oil and gas, which is challenging and where the technologies have not changed materially. So we’re not going to see the cost decline we’re going to see in renewables.

Yellow

This article is exclusively
for Heatmap Plus subscribers.

Go deeper inside the politics, projects, and personalities
shaping the energy transition.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Hotspots

Meta Data Center Federal Pipeline Review Due Early Next Year

And more of the week’s top fights around development.

•
The United States.
Heatmap Illustration/Getty Images

1. Richland Parish, Louisiana – Gird your loins for the coming fight over the Meta Hyperion data center’s gas pipeline.

  • On Wednesday, the Federal Energy Regulatory Commission laid out plans for an environmental assessment of the Entergy pipeline for the Meta data center under the National Environmental Policy Act and stated it’ll be issued in early January 2027. Federal agencies have been ordered by the panel to complete any remaining decisions on authorizations by April.
  • The decision to do an environmental assessment under NEPA will be controversial. The Sierra Club filed comments to FERC stating they wanted an environmental impact statement instead that took into account the environmental impacts of the data center being fed by the pipeline, as well as a review of the project’s cumulative impacts, as the activist group said they’re explicitly linked to the data center’s operations. “The power stations and data center are not remote or speculative developments unrelated to the proposed action,” their comments read.
  • This is quite similar to what’s playing out with the Green Chile pipeline in New Mexico for Oracle and OpenAI’s Project Jupiter, which we recently explained could turn into litigation with high stakes for future gas pipelines linked to data centers. But to me, this conflict with Meta feels like it has more at stake for this individual project, as it’s playing out while construction on gas power plants for the data center has been underway for almost a year after earlier being blessed by state regulators.
  • I asked Sierra Club what could happen next. Eric Huber, one of their managing attorneys, told me on Thursday, “I heard the EA is expected in January, but we are in wait and see mode and will decide on further steps when it comes out.” Meta and Entergy did not respond to a request for comment.

2. Spartanburg County, South Carolina – I have one last data center race to tell you to watch on Tuesday: South Carolina’s 4th, on the northern rim of the state.

Keep reading...Show less
Yellow
Plus

Is the Election Really About Data Centers?

Talking with Kevin Gundersen, the head of public affairs for Digital Realty.

•
Kevin Gundersen
Heatmap Illustration

This week’s conversation is with Kevin Gundersen, head of public affairs for data center developer Digital Realty. On Wednesday, Digital Realty released a fascinating poll as part of Infrastructure for America, a pro-data center organization that also includes Compass, Vantage Data Centers, and QTS. The poll pushed back on the idea that we’re currently in the middle of a “data center election”; instead, it found most voters are not expected to choose their national elected officials based on a politician’s stance on data centers.

I reached out to folks involved in the poll's release, and they put me in touch with Gundersen, whom I’ve met before and consider to be a straight shooter. He accepted my invitation to do a candid hot-seat chat about the findings, his thoughts on all the data center attack ads, and whether his industry’s actually recovering any ground with the American people.

Keep reading...Show less
Yellow
Spotlight

Trump Hasn’t Been Advancing New Wind Farms During Permitting Talks

Only upgrades for pre-existing wind projects have been approved.

••
Donald Trump.
Heatmap Illustration/Getty Images

In September, the Trump administration told a reporter that the president directed the Pentagon to finally process wind projects through routine airspace approvals as required under a court order. By doing this, it created the appearance of real headway and good faith in talks with Democrats in Congress on energy permitting legislation before the November midterm elections.

But the White House’s assurances are not what they seem.

Keep reading...Show less