Bluestar eyes global growth amid US challenges

• Challenges grow for developers as bitter presidential race looms
• Bluestar Energy Capital says it has focused on US growth since IRA
• However, the firm is seeking to diversify in Australia and Europe

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The next 12 months will be pivotal for US climate policy.

The Biden administration has put renewable energy at the heart of its policy agenda since Joe Biden beat Donald Trump to the presidency in November 2020. This led to flagship legislation such as the Infrastructure Investment & Jobs Act of 2021 and the Inflation Reduction Act of 2022. Both acts have boosted developer activity in the US.

However, in 2024, voters will pass judgement on whether they like what they’ve seen as Biden and Trump look set to battle for the presidency once more. If Biden and the Democrats lose, they may have to watch helplessly as their ‘green’ policies are reversed. The differences between the parties are stark where renewable energy is concerned.

For developers, the challenge before the election is to prepare themselves in case of seismic policy shifts. The US has been the priority for many developers in the last 12 because of the sheer scale of the IRA, but we expect more to diversify over the next year as they see opportunities in other parts of the world.

A Word About Wind spoke to Neil O’Donovan, president and chief commercial officer at Bluestar Energy Capital, to get his views on the opportunities and challenges for US developers. He joined Bluestar in October to reunite with its founder, Declan Flanagan. The pair have worked together since O’Donovan joined Flanagan’s previous business Lincoln Clean Energy, which was acquired by Danish utility Ørsted in 2018. O’Donovan led Ørsted’s onshore renewables business in the US, and now focuses on growing and building Bluestar’s 4GW of wind, solar and storage projects in the US and Australia.

Difficult conditions

O’Donovan says the economic situation facing developers is “as difficult as it’s ever been”, even though the IRA means “there’s never been a better time to be providing green electrons”. Bluestar launched in September 2022, and O’Donovan says 1GW of its developments are poised to reach financial close in the next 12-18 months. The firms develops in the US via its subsidiary Nova Clean Energy, and has subsidiaries in Australia and Europe too. It is looking to conclude its first deals in Europe in 2025.

He explains that the IRA was a “huge opportunity” for developers, and so scaling its US business has been Bluestar’s priority. But he says there are “huge ambitions and huge requirements” in Europe too, so the continent features in its near-term plans.

“You have to be quite specific about whether you want to be in northern or southern Europe, because they are very different, but they are big enough so they will be very enticing. And then obviously Australia: it isn’t as big as those other two regions, but there are definitely opportunities in Australia for where we want to go,” he says.

O’Donovan says Bluestar is focused on utility-scale onshore projects, including wind, solar and storage, but said it would consider power-to-X too: “We’re looking at that very closely. I think most people in the renewable energy space are,” he says. “For now, though, it’s definitely the focus on projects that will provide electrons to those markets but, as green hydrogen of power-to-X matures, that will be enticing.”

He says the biggest challenges for developers are similar across renewable energy markets: inadequate transmission infrastructure, slow permitting processes, and the challenges facing the supply chain. But he adds that there are further challenges for companies that want to grow by acquiring projects, including whether projects are being priced correctly and whether projects billed as ‘ready to build’ really are.

“There is an active M&A market, but how many of those opportunities are executable is more of the challenge,” he says. 

O’Donovan says asset prices have come down in the last 12-24 months because of the difficult conditions in the world economy, which have affected buyers’ appetite for risk in their deals. He adds that a good way to make progress on difficult projects is where developers can co-develop with partners that align with them on strategy.

The IRA has led to great opportunities for developers in the US, but this must be set against the stronger economic headwinds that companies are facing. Diversification should help US developers if there is another political earthquake in 2024.