A $100-million fund launched by three partners to invest in distributed energy resource (DER) projects across Canada will aim to supply more low-carbon power at a moment of great demand.

AltCrest Energy, Development Engine Partners (DevEngine) and Spring Lane Capital announced the fund last week. It will concentrate on developing rooftop solar, microgrid, energy storage and geothermal energy projects for large companies and institutional real estate owners such as pension funds and REITs.

The investments will operate under an energy-as-a-service (EaaS) model, with the expectation of deploying between $2 million and $50 million in capital per project, AltCrest’s founder and CEO Ben Gilbank said in an interview with Sustainable Biz Canada.

“The world is changing. Energy is no longer a foregone conclusion,” Gilbank said about the reason for the fund. Demand for energy is rising from electrification, data centres and onshoring of manufacturing at a time when supply is struggling to keep up, putting the real estate sector in a bind.

DER projects, which are on-site energy-generation infrastructure, can help overcome such a limitation by reducing reliance on the grid, Gilbank explained.

“The story for our clients is the economic value we’re providing,” Marc Reimer, managing director of DevEngine, told Sustainable Biz Canada. “Chapter 2 might be the renewable aspect of it,” he said, but the raw economics are the lead paragraph of the fund.

AltCrest is a Toronto-based energy developer that services the Canadian commercial real estate sector. DevEngine is a New York-based development capital provider focused on sustainable infrastructure. Spring Lane is a Montreal- and Boston-based climate solutions investment firm.

Fund to go beyond sustainability

Under the EaaS model, the fund will design, build, operate and own the DER infrastructure in a building, while the property will remain in the owner’s hands. A return will be generated from the sale of energy to the tenants.

The building’s tenants and owner will benefit from an investment by not needing to invest any capital for the energy equipment and generating operational savings over the lifetime of the contract, Gilbank said.

He is optimistic about the prospects of the fund. It is widely acknowledged the demand for electricity is surging, Gilbank said, and his view is that DERs are a “key part that bridges that gap . . . and provides energy security.”

If an entity needs 10 megawatts (MW) for a building but is only getting five MW from the grid, the AltCrest-DevEngine-Spring Lane partnership can develop five MW of generation for the asset to cover the remainder, Gilbank gave as an example of a fund deployment.

Buildings that have access to abundant energy will be the most attractive on the market, he said, attracting rent-paying tenants and driving up real estate values.

“So our story goes way beyond sustainability . . . Where there is power, there is rent revenue.”

A perfect storm for investment in Canada

The fund has active investments in Ontario, Quebec and Alberta across the four DER technologies, Gilbank said, and is eyeing other provinces for capital deployment. One of the clients is a large, well-known company, he disclosed.

The fund’s project pipeline is active and large, Reimer said. Project completions and the expected economic value of the installations are expected to be announced in 2026, Gilbank said.

Canada has become an attractive place for infrastructure investment, he observed. The Canadian government has maintained or enhanced its incentives for clean energy, while the U.S. government has phased out much of its support by comparison.

For that reason, DevEngine is focused on Canada despite being a U.S.-based company. There is a perfect storm of incentives in Canada, Reimer said, on top of the favourable supply and demand economics for the price of electricity.

“So it’s a perfect time to be making these investments in Canada,” he said, “and we think this is going to be a market that’s going to benefit greatly from these policy decisions.”