Opportunity

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The Capital Gap. Distributed generation has graduated from an alternative energy technology to mainstream. Over $300 billion is invested in clean energy on an annual basis, and according to the World Economic Forum, only 0.5% of institutional capital is invested in ‘low carbon investments.’ A $2.5 - $4.8 trillion gap exists from where we are today and where we need to be to stay under the 2° Celsius global temperature rise that is part of the Paris Agreement. And the scariest part is that we have to move fast. The Intergovernmental Panel on Climate Change (IPCC) concluded that we have until 2030 to mitigate the risks of climate change.

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High demand. The distributed energy generation market is projected to reach to over $570 billion by 2025 according to Grand View Research Inc. Solar in the U.S. alone will grow from less than 10 GW at the end of 2017 to over 60 GW by 2030. PwC, the Carbon Disclosure Project and the Climate Group reported that over 120 states and regions across 32 countries representing over 20% of the global economy have climate targets. Dozens of the world’s largest companies have joined the RE100, pledging to eventually use 100% renewable energy to power their operations.


Investment Focus

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The Sweet Spot. The middle market, known as Commercial and Industrial (“C&I”) or Distributed Generation (“DG”), lacks the standardization of the residential sector and the check size of utility scale market. The residential market is able to standardize financing thanks to lessons learned from other industry sectors. The utility scale renewable energy sector is large enough to warrant the resources, structuring and time required by institutional investors. At Madison Energy Investments, we have experience originating, structuring and managing C&I assets to the point where a portfolio looks like a utility scale project, but is more diversified.

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Flexible and Diversified. The C&I sector necessitates flexibility. At Madison Energy Investments, we are able to add value to a transaction as early as greenfield development and as late as post-operation. The portfolio will span multiple states to allow for diversification of customers, utilities, revenue streams and market structures. From an engineering perspective, the team at Madison Energy Investments has experience with rooftop installations, parking canopies and ground mount systems.


Long-term Strategy

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Battery Storage

The annual energy storage market is projected to be 3.9 GW per year by 2023 according to Wood Mackenzie. This represents 10x of the 2018 market. The majority of technology used will be lithium ion batteries. The growing portfolio of customers and assets at MEI will serve as an excellent entry point into the battery storage market. Many state markets like California, Massachusetts, Hawaii, New York and several others have incentives or mandates in place. This number is expected to grow as technology improves and costs decline.

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EV Charging Networks

The Global EV Charging Infrastructure market is expected to grow over 47% annually during the period of 2017 - 2025 according to HTF Market Intelligence. The high growth prospects have introduced an influx of capital from the world’s leading oil companies and large electric utilities. Shell, BP, Total and Equinor have all invested in charging companies. The policy landscape for EV charging is favorable in the U.S. and globally. The EV Charging Carbon Coalition (EVCCC) recently developed a set of standards to develop carbon credits associated with EV charging.

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Digitilization

An opportunity exists to efficiently securitize distributed generation assets in the range of $1 - $50M. Madison Energy Investments' portfolio offers a testing ground to roll out this product in parallel to existing operating assets. Tokenization at the individual asset level allows for reduced operating costs, and provides liquidation to institutional investors that otherwise struggle to invest in distributed generation assets. As Madison Energy Investments incorporates other distributed generation assets like battery storage and EV charging, we expect utility pricing regimes and wholesale markets to adapt and eventually require smart contracts.

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Global Expansion

The Madison Energy Investments platform is designed to allow for expansion across a multitude of markets. This will require developing trusted local partners to originate and construct projects. Madison Energy Investments offers our global network of partners early access to institutional capital, knowledge of financial structuring across a variety of asset types and construction and asset management. The primary markets of interest outside of the U.S. are Latin America and Korea.