PGGM invests over €200m into a distributed solar portfolio with Elon Musk’s SolarCity

Dutch investment giant in major solar infrastructure move

Dutch pension asset manager PGGM has invested what’s believed to be more than €200m into a distributed solar portfolio with Elon Musk’s SolarCity.

PGGM, whose clients include the Dutch healthcare-sector pension fund Pensioenfonds Zorg en Welzijn, has committed an undisclosed amount of equity to “a large portfolio of solar energy systems”. Returns will be generated over 20 years by regular repayments by 38,000 US homeowners who lease the solar systems.

The investment is PGGM’s first into decentralized or distributed renewable energy, and has been made by PGGM’s infrastructure arm. A spokesperson for PGGM said that its infrastructure investments range from between €200m and €500m, and that the SolarCity investment “is at the lower end”. He declined to comment on whether other investors participated in the deal.

SolarCity installs rooftop solar in American residential and commercial properties. Tenants then repay the upfront costs through installments over the lifetime of the system.

PGGM’s Head of Infrastructure Erik van de Brake said the deal “is a new link in a chain of investments in sustainable energy”, allowing PGGM to “now cover almost the entire spectrum of current sustainable energy production and consumption”. Other investments include equity stakes in centralized offshore wind and solar projects, finance for energy efficiency initiatives at heating companies, smart meter investments.“PGGM Infrastructure’s direct investment strategy has been to invest in individual projects, each of which can be seen as a separate piece of the puzzle to improve the sustainability of the energy mix,” said van de Brake. “As government policy develops, multiple opportunities will open up for direct infrastructure investors such as PGGM.”

SolarCity has been in the limelight recently following criticism of the governance structures and debt management processes in place around it and another firm founded by Musk – electric vehicle heavyweight Tesla.

Last year, Tesla acquired SolarCity in a $2bn deal. A group of investors, including CalSTRS and Hermes Equity Ownership Services, reportedly called for stronger boardroom controls.

Other investors to have completed deals with SolarCity over the past 18 months include Wells Fargo, Quantum Strategic Partners and John Hancock, as well as a series of undisclosed investors that have participated on numerous fundraising transactions including loans, equity deals and bonds.

Meanwhile, Canada’s Caisse de dépôt et placement du Québec has announced it will provide C$107m (€71.7m) of debt financing to Potentia Renewables, the largest independent rooftop solar power producer in the country.