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CBRE, Altus Power merger sign of times in clean energy sector

The recent announcement that clean electrification company Altus Power will merge with CBRE Acqui...

Eric Bloom, Managing Director, Altus Energy Intelligence

Eric Bloom, Managing Director of Montreal-based Atlas Energy Intelligence (Courtesy Atlas Energy Intelligence)

The recent announcement that clean electrification company Altus Power will merge with CBRE Acquisition Holdings (CBAH) to go public on the New York Stock Exchange in a $1.6-billion US deal is a significant indicator of growing interest in the sector.

One expert says we can expect more of these financial arrangements in the future as demand for clean energy continues to rise.

Eric Bloom, managing director of Montreal-based Atlas Energy Intelligence, a research and consulting firm, said many people have not realized how quickly things are changing.

“We’ve been sort of watching solar and storage grow as sectors. 2020 was going to be the big breakout year and in a lot of ways it was, but I think it got overshadowed by COVID. But then emerging from that 2021, 2022, some of these markets have 50 per cent, 100 per cent growth year on year,” said Bloom. “For a lot of people who aren’t really focused on the clean energy space, it’s just something they haven’t realized.”

“This (merger) is a sign of the times. We’re going to see a lot of big deals like this going forward.”

CBAH is a a special purpose acquisition company (SPAC) formed by CBRE. Bloom said the SPAC sector has also really exploded in the last year. “It’s a different and quicker way to take companies public.”

Simply put, a special purpose acquisition company is formed to raise money through an initial public offering to buy another company.

SPACs targeting clean energy companies

“What you have is a lot of SPAC out there right now that are looking for a clean energy company to buy. So in a way, they’re putting the cart before the horse. They’re putting together large amounts of capital and then trying to find the right-size peg within the right-size hole,” said Bloom.

“As a result, you’re getting this sort of aggressive acquisition activity. There are a lot of SPACs that are blank cheques looking for a clean energy company.”

That is being fuelled by the demand in the marketplace. Companies are being pressured by customers, shareholders and investors to improve their environmental footprints.

The bottom line is the clean energy companies are attractive to buyers right now because the industry will continue to grow as the demand for clean energy builds.

“It’s the desire for green solutions and also the price for solar and storage has dropped dramatically in the last couple of years,” said Bloom.

Advanced energy revenue topped $1.4 trillion worldwide in 2020, growing by 2.5 per cent over 2019, following seven per cent growth the year prior, according to the Advanced Energy Now Market Report by Guidehouse Insights and prepared for Advanced Energy Economy (a national association of businesses making energy more secure, clean and affordable).

“Advanced energy revenue is now greater than pharmaceutical manufacturing globally, and double that of coal mining. Since Guidehouse Insights started tracking for Advanced Energy Economy in 2011, global advanced energy revenue has risen at a compound annual growth rate (CAGR) of six per cent,” the report says.

Altus Power offers solar energy storage

Altus Power is headquartered in Greenwich, Connecticut and wholly owned by its management team and Blackstone Credit. It delivers savings and sustainability benefits to its rapidly growing pool of commercial, public sector, and community solar customers.

Altus Power serves its customers by offering locally-sited solar generation, energy storage, and EV-charging stations across the U.S. Since its founding in 2009, Altus Power has constructed or acquired more than 200 distributed generation solar facilities totalling more than 265 megawatts from Vermont to Hawaii. The company expects to end 2021 with a solar asset portfolio of more than 400 megawatts.

Lars Norell, co-chief executive officer and director of Altus Power, said in a statement the merger “will allow Altus Power to leverage the strength and reach of the world’s largest real estate services company, along with Blackstone’s exceptional, long-standing sponsorship, further enhancing our ability to serve corporate and public clients with onsite clean energy generation and storage.

CBAH clients to reduce carbon footprint

“We are very excited about the opportunity to supply real estate investors and occupiers – many of whom will come to us through our relationship with CBRE — with clean energy savings and sustainability benefits using a data-driven approach to design and build onsite solar generation facilities, energy storage and EV-charging for vehicles and fleets – while preparing for a networked future that will have these systems work in tandem and across multiple buildings to produce value for commercial, industrial, municipal and community solar customers,” he said.

Bill Concannon, chief executive officer of CBAH, said in a statement the transaction “will deliver the financial and strategic resources to accelerate Altus Power’s growth plan and drive long-term shareholder value creation.

“CBRE is excited to help Altus Power bring its clean energy solutions and expertise to support our clients in reducing their carbon footprint and meeting their other sustainability goals. This is an increasingly urgent imperative for real estate occupiers and investors alike.”

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