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Market Review Energy Finanical Services - Q&A with AlphaStruxure

​Aurex Group has released its latest edition of Energy Insights - Energy Financial Services! In this issue, Aurex Group had the pleasure of speaking with AlphaStruxure on the fast-growing energy infrastructure and EaaS microgrid sector. Read the full Q&A with Juan Macias, AlphaStruxure CEO, to find out about the latest market trends, sector investment, and the industry's future.

At a Glance

Welcome to the latest edition of our Energy Insights – Energy Financial Services quarterly update. For this issue, Aurex Group had the pleasure of having a virtual discussion with AlphaStruxure, a Carlyle Group and Schneider Electric joint-venture, on the fast-growing energy infrastructure and Energy as a Service (EaaS) microgrid sector.

Juan Macias, CEO of AlphaStruxure, discusses a series of topics related to market trends, sector investment, and the future of the industry. As usual, we will also be highlighting notable market moves from the last quarter.

We hope you enjoy the latest review. For a discussion around recent mandates, compensation, or other hiring trends, please do not hesitate to get in touch.

Q&A with Juan Macias

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What is the EaaS microgrid business model, and why is it important?

Energy-intensive and energy-sensitive organizations are facing growing pressures to enhance sustainability, improve resilience, manage energy costs; and often prefer to keep resources and mindshare focused on their core mission.

In the past, there have been limited options available to meet long-term energy and sustainability goals. These have included the local utilities, off-site PPAs, a traditional Energy Services Company, or taking on complex, capital-intensive and often piecemeal deployment of distributed energy resources. By contrast, EaaS brings together energy and  financial offerings into an integrated solution, delivering specified outcomes for energy cost optimization, sustainability, reliability and resilience.

To make that happen, the EaaS partner designs, builds, finances, owns, and operates on-site energy infrastructure – usually in the form of a microgrid – with the client signing a long-term o take agreement. That way, a client avoids the large upfront capital outlay required for the energy infrastructure and eliminates the complexity and risk of building and managing the system. Instead, the client leverages the capabilities of the EaaS partner, continues to pay OpEx for energy services as they have in the past, and also receives guaranteed outcomes for cost optimization, resilience, sustainability, and other priorities

The sector is seeing significant investment as well as the emergence of innovative, newly created ventures. Why was AlphaStruxture formed and why now?

The Carlyle Group and Schneider Electric created AlphaStruxure to be the trusted partner in energy transformation. To do EaaS successfully requires major energy and financial capabilities, and AlphaStruxure aligns those elements within one organization. Schneider is a global leader in sustainability, energy management, automation and microgrids, and Carlyle is one of the largest and most diversified investors with a major emphasis on infrastructure and energy. There is no one company in the market today that has both the in-house energy capabilities and the in-house financial capabilities – that’s why a joint venture makes sense in this space. We are at an infection point in the global energy transition. The pressures of energy cost, sustainability and climate resilience are coming to a head. At the same time, the cost declines for distributed energy solutions are dramatic – the cost of solar PV and batteries have dropped 90 percent in the past decade. These drivers are spurring dramatic growth in the adoption of EaaS and make the timing right to expand the EaaS solution set by bringing Carlyle and Schneider together.

What are the strategic advantages of The Carlyle Group and Schneider Electric’s combined capabilities?​

​As a global leader in behind-the-meter energy hardware and software, Schneider Electric has been deploying microgrids long before the term came into vogue. However, as an industrial manufacturer, Schneider is not built to deploy capital into infrastructure projects directly. That is where Carlyle comes in. Globally, Carlyle has over US$230 billion in assets managed by a team of 3,500 investment professionals, and Carlyle’s Real Assets segment has over US$40 billion in assets under management, with a diversity of investments across real estate, infrastructure and energy. AlphaStruxure augments these global strengths with dedicated teams for development, design, finance, execution and operation.

​How is the industry adapting to anticipated challenges? For example, the regulatory uncertainty, educating stakeholders and disarming concerns over risk, COVID/power consumption, and cybersecurity risks around critical infrastructure such as power and distribution.

Regulatory uncertainty: At the state level, the past few years have seen a dramatic proliferation of clean energy standards, economy-wide greenhouse gas reduction targets, ‘clean peak’ standards, and a broad range of other sustainability policies. As more policies emerge, they are uniformly pulling toward sustainability, accelerating timelines, and enhancing ambition. More and more states are also making climate resilience a priority. While there are uncertainties and complexities in meeting these targets, the overall trajectory is sound – and though the pace has arguably slowed by COVID, the tide is not being turned back.

Educating stakeholders and disarming concerns over risk: The EaaS model only works when the EaaS solution provider is trusted, credible, and has the staying power to stand behind the system for the long-term. AlphaStruxure was formed to deliver the trust and staying power of Schneider Electric and The Carlyle Group to back its EaaS projects. AlphaStruxure uses a technology-agnostic “Art of the Possible” approach to map out the best method to achieve stakeholder goals of cost optimization, sustainability and resilience.

COVID/power consumption: There’s no question that the effects of COVID have been felt unequally. While there has been an aggregate reduction in power consumption in many geographies and segments, there has also been an acceleration of digital infrastructure, a focus on securing food supply chains, a dramatic acceleration of eCommerce and intra logistics. Other key aspects of the energy transition have been resilient to the effects of COVID – including the march toward vehicle electrification.

Cybersecurity risks around critical infrastructure such as power and distribution: Despite the steady news of major ongoing cyber attacks, many organizations still lack basic visibility and protection of their energy infrastructure and operational integrity. That means a holistic cybersecurity strategy is not just a technology issue, but rather an urgent business imperative. Leveraging Schneider Electric’s capabilities, AlphaStruxure applies rigorous cybersecurity mindset, policies and methodologies in the development of our EaaS solutions, identifying threats and protecting the end-to-end ecosystem.​

What opportunities do you see over the next few years for EaaS and microgrids?

We are currently seeing a confluence of massive long-term trends: decarbonization, climate resilience, an increasingly digitized economy, and a sea change toward electrification of vehicles and other end uses. The breadth of opportunity is dramatic: data centers, electric vehicle fleets, food production, commercial buildings, healthcare, municipalities, advanced industry and manufacturing, and infrastructure projects all have growing energy and sustainability pressures that can be addressed with EaaS. In terms of technologies, there are a lot of exciting developments in long-duration storage and increasingly sophisticated Distributed Energy Resources Management Systems (DERMS) controls. Deployment, however, will always be driven by solving for those tangible pain points of energy cost, sustainability and resilience for clients.​

Recently Completed Mandates​

  • Managing Director, Turnaround & Restructuring

  • Associate, Battery Storage Development

  • Director, M&A Transactions Services

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Notable Market Moves

  • ​Alexander Burpee left Jefferies and joined Citi, in Houston, TX, as Director.

  • Andrew Sawyer left Venture Capital Fund and joined Stonepeak Infrastructure Partners, in Falmouth, MA, as Senior Advisor.

  • Bob Maginn left Jenzabar and joined Energy Impact Partners, in New York, NY, as Operating Partner.

  • Caleb Powers left The Carlyle Group and joined Ember Infrastructure, in Washington, DC, as Principal.

  • Daniel Barbosa left The Carlyle Group and joined Global Infrastructure Partners, in New York, NY, as Vice President.

  • Eva Paul left EDP Renewables and joined Goldman Sachs, in Houston, TX, as Investment Professional.

  • Gaurav Khanna left BAML and joined Marathon Capital, in New York, NY as Senior Vice President.

  • James Amine left Credit Suisse and joined Global Infrastructure Partners, in New York, NY, as Partner.

  • Keila Hand left Crown Holdings and joined Quantum Energy Partners, in Houston, TX, as Head of ESG.

  • Kenneth Labeja left Avangrid Renewables and joined Triple Oak Power, in Portland, OR, as Chief Financial Officer.

  • Macky Tall left CDPQ and joined Carlyle Group, in New York, NY as Co-Chair.

  • Matt Miller left Recurrent Energy and joined ArcLight Capital Partners, in San Francisco, CA, as Director.

  • Morgan Cramer left Duke Energy Corporation and joined GreenStruxure, in Charlotte, NC, as Director of Modeling & Project Finance.

  • Noah Keys left AlpInvest Partners and joined Global Infrastructure Partners, in New York, NY, as Managing Director.

  • Paul Barry left Alvarez & Marsal and joined AlixPartners, in New York, NY, as Managing Director, Turnaround & Restructuring Services.

  • Prashant Mupparapu left Owl Rock Capital Partners and joined Citadel, in New York, NY.

  • Rob Scheuermann left Kinetrex Energy and joined Vesper Energy, in Chicago, IL as CFO.

  • Scott Sheehan left Massif Oil & Gas and joined Accelerate Resources, in Dallas, TX, as Chief Financial Officer.

  • Taylor Hart left Jefferies and joined Citi, in Houston, TX, as Vice President Investment Banking.

  • Tuan Tran left Intervale Capital and joined Ara Partners, in Houston, TX, as Managing Director.

  • Tufan Erginbilgic left BP and joined Global Infrastructure Partners, in New York, NY as Partner.

  • William Whitlock left Calpine and joined 547 Energy, in Houston, TX, as Operating Partner.

  • Amit Vasani left Citi and joined CIBC, in New York, NY, as Managing Director, Head US Power & Utilities.

  • Anja Franke left Primetals Technologies and joined AlphaStruxure, in Boston, MA, as Chief Financial Officer.

  • Bryce Ciambella left Barclays and joined I Squared Capital, in Miami, FL, as Investment Professional.

  • Catherine Helleux left Allianz Global Investors and joined MycoWorks, in New York, NY as Vice President.

  • David Zimmer left Growth Infrastructure Partners and joined I Squared Capital, in New York, NY, as Senior Advisor.

  • Faisel Hussein left Alvarez & Marsal and joined AlixPartners, in New York, NY, as Managing Director, Turnaround & Restructuring Services.

  • Greg Silverberg left McKinsey & Company and joined LS Power, in New York, NY, as Vice President, Renewables.

  • Jeff Muir left Macquarie Group and joined 547 Energy, in Houston, TX, as Vice President, M&A and Business Development.

  • Luke Liu left Kindle Energy and joined Copenhagen Infrastructure Partners, in New York, NY, as Vice President.

  • Mark Liu left Deutsche Bank and joined Icon Infrastructure, in New York, NY as Principal.

  • Michael Obhof left Goldman Sachs and joined Ardian, in New York, NY as Managing Director.

  • Nicholas Lincon left Green Investment Group and joined Savion, in New York, NY, as President.

  • Nikola Simic left BlackRock and joined The Carlyle Group, in New York, NY, as Principal.

  • Omar Karar left NextGen Angels and joined Apex Clean Energy, in New York, NY, as Vice President of Finance.

  • Penn Cox joined Apex Clean Energy, in Waxhaw, NC, as Vice President, Finance.

  • Rob Morgan left Agile Energy and joined Quinbrook Infrastructure Partners, in Los Angeles, CA, as Senior Advisor.

  • Samuel Malone left Moody's Analytics and joined HPS Investment Partners, in New York, NY, as Senior Vice President.

  • Scott Taylor left Moxie Energy and joined Empower Energies, in Bethesda, MD as CFO.

  • Trent Kososki left Energy Capital Partners and joined Stonepeak Infrastructure Partners, in Houston, TX, as Managing Director.

  • William Demas left Copenhagen Infrastructure Partners and joined Stonepeak Infrastructure Partners, in New York, NY, as Managing Director.​