Renewable Energy Finance: EnCap expands utility-scale renewables portfolio, makes a significant investment in US-based Linea Energy

Linea Energy is an independent power producer (IPP) and renewables developer focused on onshore wind, solar, and energy storage projects. The company will build its portfolio through greenfield development and strategic acquisitions with an initial focus on the MISO, PJM, and ERCOT power markets. The company is planning to mature nearly 1 GW of capacity annually. Linea is led by former executives from Cypress Creek Renewables, Brookfield, bp, DTE Energy, Ørsted, and Invenergy, and plans to continue expanding its team throughout the year. As per Enerdatics research, Linea marks EnCap’s seventh renewables portfolio company and its first utility-scale investment since Triple Oak Power in 2020. 

Linea plans to hit the ground running with a three-pronged strategy that is unique to the renewable energy landscape in the US. The company seeks to streamline the project development process and will adopt an ‘interconnection-first’ approach, implying that assets will only be located in areas where the interconnection queues are the shortest. Further, Linea will mature the projects irrespective of the finalization of power purchase agreements (PPAs) or financing and is even open to tapping the merchant power market to support its portfolio. 

EnCap will invest in Linea through its Energy Transition division, which closed its first fund in May 2021 at $1.2bn. Broad Reach Power and Jupiter were two of the firm’s first investments from its debut fund; Jupiter was sold to BlackRock in Nov’22, while a 50% stake in Broad Reach was farmed-out to Apollo Global Management in Nov’21. EnCap launched its renewable energy arm in 2019 and views the segment as the fastest-growing source of electricity generation in North America. Going forward, Enerdatics expects EnCap to capitalize on additional development platforms through its Energy Transition Fund II, which has secured $50mn from the Illinois Municipal Retirement Fund in Dec’22.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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