KKR partners with Google on solar deal

KKR financed its first renewable energy investment in the US through a new $95m vehicle known as SunTap Energy, with plans to invest in similar projects.

Kohlberg Kravis Roberts has teamed up with Google for an investment in a portfolio of solar photovoltaic facilities that service the Sacramento Municipal Utility District. KKR’s investment will draw a portion of its equity from a new, $95 million vehicle called SunTap Energy, the firm announced in a statement.

The remainder of the vehicle will be used to make similar investments, according to the statement.

Google committed $94 million for the facilities, which are being built by Recurrent Energy, according to the Google’s Green Blog. It is unclear how much KKR contributed to the deal. The projects are being financed through a combination of debt and equity.

The facilities will be completed in 2012, and are expected to produce enough power to offset the electricity consumption of 13,000 average homes in the US, according to a statement.

Google has become a serious investor in renewable energy projects, with this investment bringing its total to $915 million for the sector. In May, Google invested $55 million in the development of wind energy resource being developed by Terra-Gen Power, an affiliate of ArcLight Capital Partners and Global Infrastructure Partners.

The investment is KKR’s first renewable investment in the US. Earlier this year, the firm partnered with Munich Re to take a 49 percent stake in assets operated by Grupo T-Solar, Europe’s largest solar photovoltaic power generator. KKR and Partners Group purchased French wind park operator Sorgenia for €236 million in June.

“In our infrastructure strategy, we’re looking for stable, long-term predictable assets – and solar is perfect from that perspective,” said Raj Agrawal, head of KKR’s North American Infrastructure team. “We have a 20-year power sale contract with the utility, and that’s a fixed price contract. When you combine that with the predictability of solar production, you have incredible visibility of revenue over a long period of time.”

KKR co-founder George Roberts called the implementation of sustainable investment practices “more important than ever” at Private Equity International’s Responsible Investment Forum earlier this year. He added that limited partners have become more demanding when it comes to private equity firms’ establishment of environmental and social governance criteria.

“Our investors want us to do this, it’s the right thing to do, it’s good for business, it’s profitable and your investors should like this,” he said.