KKR backs solar developer offering an ‘impact PPA’

KKR has taken a minority stake in US-based Sol Systems, a solar developer building projects for large corporate clients while also investing in under-resourced communities.

Through what Sol Systems describes as an “impact power purchase agreement”, the Washington, DC-based company partners with large-scale power off-takers to build solar projects while also reserving a portion of capital to support clean energy and efficiency measures in under-invested communities. Earlier this month, Sol Systems said it will build a 500MW solar portfolio for Microsoft, while investing $50 million alongside the tech company in nearby communities.

Sol System’s PPA model allows capital providers “to invest in and procure renewable energy while making a positive community impact”, according to a statement.

KKR, which invested from its $7.4 billion Global Infrastructure Investors III, committed $1 billion to purchase shovel-ready projects from Sol Systems. The New York-based firm, which is among the world’s largest impact investors, is also raising its second impact-focused fund, KKR Global Impact II.

Climate justice has been a growing theme for investors seeking companies with high-growth potential and good social credit. Partners Group, another private markets firm, entered a similar deal in July with a $400 million acquisition of Atlanta-based Dimension Renewable Energy. The company, which Partners Group expects to be worth more than $1.2 billion in the coming years, is targeting communities with “high-growth” need for solar generation.