US private equity firm EnCap Investments has successfully closed its first energy transition fund, with commitments of about $1.2 billion.
EnCap, which has traditionally specialised in oil and gas, created the fund to invest in companies aimed at advancing the energy transition in the US, with a focus on creating wind, solar and energy storage enterprises.
It confirmed this week the fund had already deployed capital in five platform investments in the energy transition space, involving Broad Reach Power, Catalyze, Jupiter Power, Solar Proponent and Triple Oak Power.
“With the support of our investors, we have been able to establish five enterprises that are supporting the transition of the power grid, and their early progress is exceeding our expectations,” said EnCap energy transition managing partner Jim Hughes.
“We have attracted the best talent in the wind, solar and energy storage markets, and each of our companies is ahead of its value-creation plan. We are very pleased with our decision to partner with EnCap and the future of the EnCap Energy Transition platform.”
Diverse set of investors
EnCap noted it had raised committed capital for the fund from a diverse set of domestic and international investors including corporate and government-sponsored pension funds, sovereign wealth funds, family offices, endowments, foundations and high-net-worth individuals.
“We are truly grateful for the enthusiastic support we received from both long-standing and new investors," EnCap Investments managing partner Jason DeLorenzo said.
“As stewards of their capital, we appreciate the continued support of our investors. Coupling our 33-year investment track record with the power and renewable experience of our energy transition team, we have established a best-in-class platform to support a less carbon-intensive future and look forward to supporting its growth over the next decade.”
Vinson & Elkins served as legal counsel to EnCap on the formation of the new energy transition fund.
Renewables are on the rise in North America, with the US Energy Information Administration (EIA) forecasting their share in the US electricity generation mix to rise from 21% in 2020 to 42% in 2050, with wind and solar to be responsible for most of that growth.
The rise of renewables is anticipated to displace coal and nuclear in the US energy mix, while gas-fired generation is currently expected to remain relatively constant through to 2050, according to the EIA’s most recent outlook.