“More of our clients are figuring out a new model for investing in renewables. As they do, I expect our practice to continue to grow.”
For anyone focused on the future of energy and the environment, April 2019 marked a critical turning point.
For the first time, the electricity generated from renewable sources in the U.S. surpassed electricity generated by coal, with renewables providing 22% of electricity vs. 20% provided by coal, according to the U.S. Energy Information Administration.
The fact that clean energy sources – hydropower, wind, solar, geothermal, and biomass – are on the ascent and are increasingly seen as economical alternatives to fossil fuel, comes as no surprise to the lawyers in V&E’s fast-rising Renewables practice.
In recent years, V&E’s Renewables practice has witnessed explosive growth as an active group of blue-chip private equity and investment fund clients, including Goldman Sachs, TPG Sixth Street Partners, Global Atlantic Financial Group, and Riverstone Holdings, have turned to the firm to advise on transactions involving renewable energy infrastructure projects.
In 2018 alone, V&E attorneys worked on approximately $3 billion in renewables transactions. This year, V&E’s Renewables practice was ranked “Band 1” by Chambers USA in the publication’s newly created Power & Renewables (Transactional) category.
“There has been tremendous growth in the wind and solar markets in particular and we have worked very hard to develop our skills and our practice,” said Energy Transactions & Projects partner Kaam Sahely, one of the leaders of V&E’s Renewables team. “V&E, which has a strong legacy advising clients involved with traditional energy sources, is proving it can successfully pivot as the marketplace evolves.”
V&E+ recently caught up with Sahely, and with another leader of the firm’s Renewables practice, Energy Transactions & Projects partner Danielle Patterson, to learn how the firm became dominant in the sector and what lies ahead for renewables. Here’s what they had to say.
How would you describe V&E’s Renewables practice?
The practice is focused on investor clients that are active in financing, acquiring, or disposing interests in renewable energy projects. A typical transaction would involve an investor with a renewable energy portfolio buying, selling and/or financing multiple projects in a complex transaction.
When did V&E start its Renewables practice and how did it grow from there?
Back in the early 2000s V&E advised Goldman Sachs, an early and significant investor in the renewables space, on a series of highly profitable transactions. The relationship grew and Goldman entrusted more of its renewables work to the firm, while at the same time introducing V&E to other funds focused on clean energy.
Over time, V&E created a dedicated Renewables practice. As the firm’s clout grew, it has been able to capitalize on booming investor interest. In 2018 alone, global clean energy investment totaled $332.1 billion, marking the fifth year in a row in which it surpassed the $300 billion mark, according to BloombergNEF.
“Our strategy has been to become the dominant player representing sophisticated investors in renewables,” Sahely said. “We have been fortunate in that our clients have been tremendously successful, and they have entrusted us with a lot of work.”
What does V&E bring to the table?
To successfully navigate renewables transactions, it’s important for clients to work with a law firm that has a comprehensive grasp of clean energy projects, M&A, project finance, and the tax benefits associated with renewables.
V&E can deploy lawyers across practices who have the knowledge base and the experience to manage the unique complexities of renewables deals.
That was evident from the firm’s recent representation of Goldman Sachs Renewable Power Fund in connection with its acquisition of a portfolio of solar power generation assets from a subsidiary of Macquarie Infrastructure Corp.
The deal, led by Patterson, involved the acquisition of interests in seven solar farm projects located in five different jurisdictions across the country. The transaction required significant due diligence as well as negotiations with multiple joint venture partners. In the face of a highly competitive bidding process, the V&E team moved swiftly toward a successful outcome.
“We were able to cut to the chase and say, ‘These are the things that are going to impact your return. These are the things that are going to be problematic for you operationally. These are the things that are going to affect getting you to closing,’” Patterson said.
What is V&E doing to maintain its competitive edge?
V&E is continuously working to strengthen its Renewables practice. The firm recently added a team of project finance lawyers in New York capable of advising on the financing of clean energy projects.
While V&E has historically focused on representing investment funds, the firm intends to leverage its strengths to advise developers of clean energy projects as well.
V&E is also “investing” in projects, alongside some of its larger clients. Under certain circumstances, V&E will assume some of the risk of a transaction, whereby a portion of its fees are dependent upon the success of a project.
“We’ll have skin in the game,” Sahely said.
What trends are you seeing in the renewables space and how will those trends affect your practice?
Historically the availability of tax credits and other tax benefits have been the key drivers of renewables investments. While those tax breaks are set to expire over time, enthusiasm for renewables transactions shows no signs of slowing down.
Fund managers are increasingly motivated to invest in clean energy because it makes economic sense to do so whether or not there is a tax benefit. At the same time growing public support for responsible investing is pressuring funds to focus on sustainable energy.
“This is no longer a niche area,” Patterson said. “More of our clients are figuring out a new model for investing in renewables. As they do, I expect our practice to continue to grow.”