Greenbacker Capital Management LLC has made a strategic investment in Dichotomy Power LLC. The amount of the investment was not disclosed.
Dichotomy Power is an owner and operator of hydroelectric power generation stations across the Northeastern U.S. Greenbacker Capital Management said the investment is a signal of the importance of hydropower as an alternative to fossil fuel generation and of the promise of hydro assets as attractive long-term investments.
The investment was made through an affiliated fund. The transaction marks the third investment for the fund, established in 2020 to provide flexible capital to small and medium-sized renewable energy infrastructure companies that are focused on developing distributed power facilities serving high-value markets across the U.S.
“We are proud to support the further development and progress of hydroelectric power generation through our investment in Dichotomy Power,” said the Fund’s Managing Director and Principal Benjamin Baker. “We believe the company is uniquely positioned, with its existing facilities across the Northeast as well as the steady and experienced leadership of Ian Clark and his team, to drive long-term growth and value creation. Going forward, Greenbacker stands ready to offer our financial and technical expertise to help Dichotomy Power reach its full potential.”
Dichotomy Power Chief Executive Officer Ian Clark said, “I am thrilled to welcome Greenbacker as a strategic partner that shares our passion for the potential of renewable energy. With its help, we will strengthen our ability to identify attractive hydroelectric assets and optimize their performance through a unique combination of regulatory, technical and financial knowhow. We look forward to accelerating our growth trajectory and working tirelessly toward our mutual success.”
Hydroelectric power generates about 80 GW of electricity across the country, or about 7% of total U.S. generating capacity. Ownership of small hydro facilities (less than 10 MW in capacity) is highly fragmented. Clark started Dichotomy Power’s predecessor firm in 2016 as a vehicle to consolidate small hydroelectric generating assets.
After the transaction, which closed in November, Dichotomy Power is owned by Clark; the fund, which is gaining a seat on the company’s board; and other investors through a fund managed by Grand Avenue Advisors. Grand Avenue Advisors is a group of fund management professionals that, with Clark, launched in 2019 to acquire a portfolio of hydroelectric assets, the first three of which were purchased from Dichotomy Power’s predecessor firm. Since then, Dichotomy Power has acquired five additional hydro facilities. The names of the facilities were not released.
Alongside the fund’s investment in Dichotomy Power, Grand Avenue is raising an additional round of capital from its investor base. This process is expected to conclude before the end of 2020. “Greenbacker’s investment provides Dichotomy Power with powerful validation, which we are certain will unlock additional streams of capital and further support the company’s growth in the hydroelectric space. We look forward to working with Ben and the entire Greenbacker team,” said Joshua B. Parker, co-founder and principal of Grand Avenue.