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About the Episode:
Rob Sternthal, Managing Director at Piper Sandler and a veteran in investment banking for the renewable and ESG sector discusses the financial complexities of renewable energy projects and the headwinds faced by developers in 2024. Sternthal addresses the current challenges faced by project developers, including rising capital costs, rising interest rates, plateauing electricity prices, and the pivotal shift from traditional equity to credit funds demanding higher, short-term returns. These factors are compressing margins, especially for mid-sized and smaller developers, posing threats to the growth of renewable energy and global sustainability goals.
Sternthal offers pragmatic advice, highlighting the importance of clear exit strategies and exploring emerging technologies like battery storage. This conversation is essential for anyone involved in renewable energy, offering insights into overcoming financial hurdles and strategies for long-term success in this dynamic sector.
Key Takeaways:
Capital Cost Pressures: Rising costs of capital, inflation/interest rates, and plateauing electricity prices are squeezing developer margins and reducing returns.
Equity Market Shifts: Traditional equity markets have evolved, moving from pure equity funds to credit funds requiring higher, shorter-term returns, reshaping project financing.
Company Setup: Developers should consider setting up their companies with an end goal in mind, or exit strategy considering elements like vertical integration, advanced technology strategies, and future financing or sale structures.
NOTEWORTHY QUOTE:
“If I’m a developer, or I’m a business owner, and I’m building something, I don’t want to wait till I go to the market to know what my exits are. I want to know what I need to be building to.”
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ABOUT THE HOST OF SUNCAST:
Nico Johnson is the creator and host of SunCast, consistently rated a top solar podcast in the clean energy sector. The content of the show is geared towards listeners looking for insights on where the markets are headed, how to position themselves or their companies, and what today's market leaders do to stay ahead of the pack.
Nico is an Investor, Executive Coach, and 16-year veteran of the solar industry, having led development in the US and Latin America for global companies like Trina Solar and Conergy.
You can connect with Nico Johnson on Twitter, LinkedIn or email.
If you’ve been second-guessing your work decisions or maybe trying to reconsider how you "fit" in the renewable energy industry -> grab 20 minutes on Nico's calendar and discuss whether having him as Your personal coach might be the right next step.