Aligned Climate Capital Raises $200M For Solar Fund

Decarbonization-oriented investment company Aligned Climate Capital has closed its sixth distributed solar fund, Aligned Solar Partners 6 LP (ASP6), with great success, stating that it has raised over $200 million in commitments. The close of the fund, oversubscribed at greater than $240 million, is a great milestone for the company, representing robust investor enthusiasm for clean energy infrastructure as well as Aligned's approach in the distributed solar sector.

ASP6 is now Aligned Climate Capital's biggest infrastructure fund to date. Specifically targeting the distributed solar space, the fund is positioned to buy construction-ready solar projects from development partners throughout the United States. After being acquired, the projects are financed, built, and ultimately sold to institutional infrastructure investors, with returns generated through a mix of tax credit monetization, operating income, and sales of the portfolio.

The approach behind ASP6 underscores Aligned Climate's focus on the "middle market" solar energy segment, which frequently involves underserved and rural communities that are generally ignored by major energy developers. Through such targeting, the company not only speeds up the growth of renewable energy availability but also advances overall decarbonization and energy equity objectives.

Aligned Climate Capital utilizes a multi-layer financing structure for the construction stage of the projects, both equity and construction debt being utilized. This strategy provides the company with flexibility and control over its capital management. After the completion of the project, the company takes advantage of tax credits that can be offered under federal incentives and monetizes them to enhance returns. Lastly, long-term low-cost permanent debt is obtained to provide stability in operation and stable revenue streams.

To date, ASP6 has already had a significant impact, putting over 25 megawatts (MW) of distributed solar projects into operation in states like Maine and Washington, D.C. The fund has also purchased several other projects in multiple states that are either under development or will be starting development in the next two years. These projects reflect an ongoing commitment to growing distributed solar infrastructure across the nation.

Aligned Climate Capital has further delineated a clear fiscal path for ASP6. The company stated that the fund will provide its first cash distribution to investors in 2025, with a plan to provide annual distributions going forward. Finally, the plan involves selling the seasoned, operating portfolio to institutional investors following the tax recapture period, enabling the fund to capture maximum value through tax incentives and provide a clean exit to investors.

CEO Peter W. Davidson emphasized the critical role that solar energy plays in meeting the U.S.’s growing power demands. “The U.S. needs new power generation to meet growing electricity demand, and solar energy is the cheapest, fastest, and cleanest technology in the market,” Davidson said. He further highlighted the firm’s decade-long experience in the solar investment space and its ability to deliver consistent returns to investors year after year.

The successful close of ASP6 highlights an increasing investor demand for renewable energy infrastructure, specifically distributed solar—a space viewed as central to meeting climate objectives while decentralizing power generation. With the need for clean electricity continuing to grow, funds such as ASP6 are instrumental in ramping up the deployment of sustainable power solutions.

Aligned Climate Capital's middle market focus also represents a strategic positioning within the renewable energy landscape. Distributed solar installations are not as large-scale as utility projects that demand significant land and regulatory hurdles, allowing them to be more nimble and attuned to local energy requirements. Such nimbleness is particularly useful as communities throughout the U.S. pursue resilient, local, and clean energy options amid climate change and deteriorating grid infrastructure.

ASP6's success not only solidifies Aligned Climate Capital's position as a leader in the clean energy investment arena but also adds significantly to Australia's national transition to renewable energy. With ongoing project deployments, distributions of capital on the cards, and an acquisition pipeline in progress, ASP6 demonstrates the potential for targeted, innovative investment approaches to deliver real climate and financial outcomes.