Stubborn inflation and high interest rates, policy uncertainty and a lack of exits are conspiring to slow capital raising for funds investing in the energy transition. Such funds raised $18.8 billion last year, down from a record high of $51.3 billion in 2023, according to PitchBook.
Blackstone, the $352 billion private equity firm, is bucking the downturn. “We believe there is immense opportunity to deliver attractive returns to our limited partners through investments that benefit from the growing demand for electricity, grid reliability and energy efficiency,” said Blackstone’s David Foley.
The fourth Blackstone Energy Transition Partners fund closed at $5.6 billion, with commitments from state and city pension funds in Texas, Arizona, Michigan, Hawaii, Minnesota and San Francisco. The Teacher Retirement System of Texas, the state’s largest public pension manager, committed $200 million to the fund in 2023. Blackstone’s fourth energy transition fund is a third larger than its predecessor, which raised $4.4 billion in 2020.
Renewables portfolio
Companies in the energy transition fund’s portfolio include Westwood Professional Services, a Texas and New York-based firm that provides engineering design for the development of wind, solar and energy storage projects; Australia’s Energy Exemplar, which builds stimulation software for utilities and energy regulators to manage complex energy projects; and Houston-based Lancium, which is developing some five gigawatts of data centers in West Texas that will supply clean energy to power AI applications.
Blackstone has said it sees an opportunity to invest $100 billion over a decade in the energy transition and climate change. The private equity investor raised $7.1 billion in 2023 for its third green private credit fund, the largest transition-focused private credit fund, which finances large-scale energy projects globally.
Green infrastructure
Toronto-based Brookfield Asset Management is looking to raise at least $7 billion for its fourth infrastructure debt fund, focused on renewable energy, Bloomberg reported. The fund would be the largest in Brookfield’s series of infrastructure debt funds; its third fund raised $6 billion in November 2023.
Brookfield last week signed an agreement to acquire the US onshore renewable business of UK-based National Grid for $1.7 billion. Brookfield will take over the electricity and gas utility’s portfolio of utility-scale solar, onshore wind and battery storage facilities, some of which are still under construction.
Last month, Brookfield said it would invest €20 billion (close to $21 billion) in data centers and AI infrastructure development in France over the next five years.
