July 20, 2017 - Funding/Financing

Early Impact of Paris—More Private Sector Motivation

While we can’t predict the full effects of U.S. withdrawal from the Paris Agreement, or whether it will stick, Trump’s announcement has already galvanized cities, states, and institutions to magnify their commitments to mitigate climate change. As noted in our client alert, this creates momentum for subnational actors and private companies to step up and act on climate change.

In late June, Summit Ridge Energy announced that they had obtained funding to build, finance, and acquire solar power plants on the East Coast and in the Midwest of the United States. The company expects its first solar projects to be completed in the first quarter of 2018. Summit Ridge’s success in raising capital is indicative of growing interest in funding early development of solar facilities. This is an area where investment has historically been limited. Our client, Aligned Intermediary, an investor in this project, recently noted that “There are many purchasers of solar facilities once they reach commercial operations…[b]ut there’s little capital available for funding early development.”

This increase in available capital to combat climate change has bolstered the efforts of many others, including these additional MoFo clients. In May, OpenInvest, a social impact investing platform for retail investors, announced that it raised $3.25 million in its latest round of seed funding. OpenInvest allows its clients to screen companies who share their commitment to combatting climate change. Investors included Andreessen Horowitz, Abstract Ventures, and Wireframe Ventures. April marked the launch of the Microgrid Investment Accelerator. This platform seeks to mobilize approximately $50 million in private sector capital into renewable energy microgrid projects in India, Indonesia, and East Africa. The accelerator is supported by MoFo, Facebook, Microsoft, and the California Clean Energy Fund (CalCEF), among many other partners.

Joining the Paris Agreement marked a historical period of convergence across the world, with 194 nations and the European Union committing to the reduction of greenhouse carbon emissions and investment in renewable energy.  In the wake of Trump’s announcement, subnational actors and private institutions have doubled down on their efforts.  This momentum creates a rich environment for impact investors and companies creating innovative ways to combat climate change.