IMP Matrix Rating: C4
What: the North Sky Sustainable Infrastructure Fund IV invests in renewable power, energy storage, efficiency, water and waste projects where it sees opportunities to create attractive financial gains, demonstrable environmental benefits and high-quality construction jobs. The investment strategy focuses on equity and structured equity investments in the underserved and often inefficient middle market in the US, typically involving the development, construction, and/or operation of projects. The portfolio is expected to comprise 40-50% renewable energy projects (mostly solar), 40-50% waste-to-energy and waste-to-value projects, and 0-30% opportunistic projects such as energy storage, efficiency, and transmission.
Who: The main beneficiary is the environment, via reduced carbon emissions - which can mitigate climate change, resource optimization, and generally the promotion of more sustainable production and consumption.
How Much Impact: The family of funds so far has completed 35 investment projects, creating 3.3 GW of clean electricity generating capacity, over 2 million union green jobs, and treating 40.5 billion gallons of wastewater. Green infrastructure plays a critical role in combating climate change and reducing global atmospheric CO2 and equivalents: this fund increases the amount and viability of green infrastructure across the USA. Additional impacts come in the form of green jobs creation and community development through smaller-scale, local solar and storage projects.
Our Contribution: We invested in the first close of their 4th fund, further adding to the significant amount of impact capital already supporting green infrastructure.
Impact Risk: To limit execution risk, the Fund focuses on projects that meet five key investment criteria: proven technologies; contracted or regulated off-take agreements; contracted or regulated supply or feedstock; experienced development and operating teams; and experienced engineering, procurement, and construction (EPC) firms with credit-worthy warranties. Execution risk is tied to impact risk since the team is not contributing to innovative or frontier technologies, but simply helps proven technologies scale. Therefore, the mitigation criteria above should also limit impact risk. One key impact risk is that the Fund does not have explicit diversity and inclusion criteria, and evidence suggests that 1 in 5 green jobs go to men (and only 1 in 10 to people of color), and therefore this Fund might be falling short on gender and social justice metrics.
Sample Investments: Here is a list of most of the investments of the fund across community solar, utility-scale solar, waste-to-energy (biogas and fuel cells), solar thermal, biofuels, waste water treatment, wind power, etc.