Ex-Goldman Sachs banker Peggy Flannery ditched Wall Street for sustainable investing. Since making the shift, she's corralled billion-dollar investments into renewable-energy projects at Generate Capital.
Generate Capital
- Insider's Banker of the Week series appears in our weekday newsletter, 10 Things on Wall Street.
- This week we're highlighting Peggy Flannery, who has just been promoted to managing director with sustainable-infrastructure investor Generate Capital.
- Flannery ditched a career in sales and trading at Goldman Sachs to focus on renewable energy, and has worked on roughly $3 billion in capital raising, and helped craft a unique solar-energy initiative with Starbucks.
Peggy Flannery's smile grows from end-to-end when discussing the potential of renewable energy.
She believes President Biden's recent Inflation Reduction Act — which provides modified federal tax credits for renewable-power projects — could stoke more long-term thinking, and investment, into alternate-energy efforts.
Flannery also has more cause to smile. She has just been promoted to managing director at Generate Capital, a sustainable infrastructure company she joined in 2017 to lead investments in solar power.
She was the 18th employee to join Generate, leaving behind a career in sales and trading at Goldman Sachs. Today, the firm employs more than 300 people, Flannery told Insider. Generate has deployed more than $500 million in investments into renewable-energy initiatives, and it covers the gamut of project management, from construction and ownership of an asset to operation and maintenance.
Unlike most investment firms, Generate is not a fund in the classic sense. It invests through its own balance sheet, and strikes unique partnerships with companies to facilitate the development of renewable-energy projects.
"The reason I joined was because I wanted to partner with the developers that are making the projects happen," Flannery said. "We're not just an investment firm, we're an operating company, too."
For Flannery, one of the more memorable deals she helped concoct was a partnership with Starbucks. The coffee-shop chain invested almost $100 million through a tax-equity partnership with Generate for a portfolio of solar projects in New York.
In May last year, Generate said it had put up the first six of up to 23 solar projects in the state. Once all the projects are up and running, they will provide solar energy for Starbucks stores and up to 24,000 households and small businesses.
"This was exciting because it's a multi-year commitment and the partnership with Starbucks allowed us to go out and know what our financing plan was going to be," Flannery said.
Another point of pride for Flannery came a month later when she helped Generate raise $2 billion for sustainable-infrastructure investments. The new capital injection followed a $1 billion fundraise in February 2020. Both capital raises, primarily from long-term investors like pension funds, have given the firm ample ammunition to push forward with a raft of project investments.
An unforgiving, taxing exercise
Despite success in fundraising, dealing with the long-term nature of renewable energy can be a taxing exercise.
Proponents of renewable-energy solutions often have to persuade stakeholders of its benefits, and that can be met with a healthy dose of skepticism, be it around "woke capitalism" or climate-change denial.
Flannery is also under no illusion over how challenging it can be to convince investors to invest in long-term, renewable-power projects. These are often multi-decade efforts that involve construction, operations, maintenance, and then eventually, maybe, a return.
"When there are short-term cliffs that can be challenging because development takes time," she said. "But having a long-term policy can deliver a financial benefit. Maybe I'm in a bubble, but the partners I work with have been doing this a long time, before ESG was a buzzword."
ESG, or environmental, social, and governance, has become a contentious issue across Wall Street, Corporate America, and throughout the halls of Congress.
Money managers like BlackRock champion ESG efforts, and it has recently felt the wrath of criticism from Republican politicians over so-called 'woke' positions on environmentally-friendly power sources.
But Flannery is unperturbed by the noise.
She studied environmental science and mathematics at Columbia, and relishes the fact that topics like climate change and alternative energy are talked about more broadly today.
"I remember the first time hearing solar energy being discussed during the State of the Union. We all cheered as it was so exciting to hear it on that stage," Flannery said.
The Banker of the Week series is featured in Insider's 10 Things on Wall Street — sign up here to get the newsletter each weekday morning.
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