Moving the Energy Transition Forward

November 01, 2020
November 2020

Pooja Goyal, Partner and Head of Renewable and Sustainable Energy at The Carlyle Group, for over 15 years has aided the energy transition by investing capital in teams and projects which are rapidly decarbonizing power. Harnessing the global resources of Carlyle, Pooja is able to utilize her extensive industry relationships and knowledge to back high quality entrepreneurs with the vision and foresight to make the world sustainable.

You joined the Alternative Energy Investing Group at Goldman Sachs in 2005, when the renewable energy industry was nascent. What prompted your interest in the sector and what has kept you engaged during the past 15 years?

I began my Goldman career in the leveraged finance group within the Investment Banking Division and most of the deals I worked on were in energy and power. At the time, commodities financing in the E&P space was quite esoteric, so I was able to develop a strong understanding of corporate finance while building sector expertise. After doing that for a few years I wanted to move to the buyside. At that time, The Special Situations Group was looking for someone with insight into both corporate finance and energy and power to support their renewable energy effort, a role I ended up taking.

Within the sector we had a lot of flexibility as to how we deploy capital, and as market conditions changed – for example when the global financial crisis happened – we were able to adapt. So that kept things intellectually interesting for me, and it was particularly tangible to see how the energy transition was creating interesting commercial opportunities within the ESG framework. Even today, it is incredible to see how the renewables industry has evolved. When I started investing, the industry was heavily dependent on government subsidies and alternative energy was expensive. But now, renewables are cost competitive with fossil fuels even on a subsidy free basis.

When you are part of a sector for so long, it becomes a significant advantage to stay in that industry. It teaches you pattern recognition that is specific to that industry – I have seen business models that do and don’t work. My personal commitment to the sector has also enabled me to create and cultivate enduring relationships across the industry with executives, entrepreneurs, advisors and other market participants. I have been fortunate in my career to have made a commitment to a sector that not only provided for exciting investment opportunities and high quality entrepreneurs with the vision and foresight to make the world sustainable but also reached the scale and potential to grow over the next several decades.

Last year you moved to Carlyle to lead the dedicated Renewable and Sustainable Energy Team. What drew you to the opportunity?

I was drawn to Carlyle’s very specific vision and commitment around the energy transition. I believe the investing opportunity set in renewables and sustainable energy is global, scalable and not only a logical but critical pillar within an asset manager such as Carlyle. Carlyle’s decision making was and continues to be very deliberate; institutionally a lot of background work had been done on deploying capital to advance the energy transition. We believe making private capital available for businesses looking to grow is important. Private capital is patient and flexible; you have the ability to think strategically with senior company executives and board members in terms of how to grow a business over time. Being a part of Carlyle, you have many resources that you wouldn’t necessarily have access to elsewhere. For example, we have the ability to think about take privates, corporate carve outs for development platforms that currently sit within utilities or OEMs, and we have the flexibility to offer multiple capital solutions given our resources. We also have the network and capabilities to provide management teams access to new markets or clients. I now have access to more tools that are accretive to my skill set.

The renewable energy industry has attracted a large and diverse investor universe, resulting in high competitive intensity for many deals. What sets Carlyle’s strategy apart in terms of finding value? How do you differentiate your capital when engaging with potential counterparties?

There is definitely an arms race around raising capital for renewables. Carlyle sets itself apart because of our expert team and credibility. Our renewables team comes from the industry and we all have strong investing backgrounds. Management teams are sophisticated when choosing the right financial partner. Our investment team’s background in development, renewable energy and even conventional power along with the financial reach and reputation of Carlyle, makes for a very compelling value proposition with our partners. You asked how we engage with potential counterparties. Culturally, we don’t use that mindset. We don’t have counterparties and instead we have partners. We want to work with our business partners to see them thrive and with the right alignment, our success is driven by the success of these businesses.

There is definitely an arms race around raising capital for renewables.

Despite the abundance of investors seeking to deploy capital in the space, do you still see unmet funding needs? What is behind the shortfalls in those areas?

Yes, there is an abundance of investors looking to deploy capital in the space. But for platforms such as ours, we continue to see attractive opportunities with proven management teams. The macro fundamentals are driving the need for capital. As the energy transition transpires, we will continue to see a need for capital.

Renewable energy projects are generally becoming more exposed to merchant risk at a time when wholesale power pricing is under pressure in many markets. How does an industry – and an investor base – that is accustomed to having long-term revenue contracts evolve?

We believe it’s only going to get increasingly complex and Carlyle thrives in complexity. Experience and creativity will matter more. Amongst my team, we have experience working on all of the offtake structures out there. At Carlyle, we currently own and operate over 7 GW of thermal capacity in the U.S. As a result, we know power. Our broader capabilities inform our capital allocation decisions around markets and specific geographies that continue to have potential with or without long-term revenue contracts. Candidly, this is an area where we can support our management teams and ensure that high quality projects reach fruition.

Numerous independent developers in the U.S. have been acquired by strategic companies during the past several years. Do you see the industry continuing to consolidate in the hands of balance sheet players? How would that change the opportunity set for private investors like Carlyle?

I agree that consolidation is occurring, but there is still significant fragmentation across the value chain. Look at residential and C&I solar, for example. Although there is some consolidation, we are still seeing many opportunities to partner up with smaller, regional leaders.

Also, wearing my private equity hat, it’s in my nature to pursue larger deals, so we like to see that transactions are getting bigger. We have enough flexibility where we can deploy smaller or larger checks with varying financing structures.

YieldCos had a brief heyday before falling out of favor with public equity investors, and several have been taken private or merged. ESG stocks have since regained momentum, however, and are outperforming during recent market volatility. Do you see the public equity markets reemerging as a prominent source of capital for low carbon infrastructure?

It’s difficult to apply a broad stroke assessment across various public companies because they are all valued differently, so I wouldn’t want to make a general statement. I will say that today, private pools of capital for investment in this space are generally more competitive than public capital. We certainly monitor developments in public markets closely as a potential exit option. Overall, not every business or portfolio should be publicly listed. Executives do have to evaluate the nature of their business, earnings profile and capital needs over time when deciding whether to go public or stay private.

Sitting where we are today, in the middle of a global pandemic, renewables as an asset class continues to be resilient and an important part of the recovery story going forward.

What are the most significant threats to the overall energy transition?

I don’t see much by way of binary factors given how much costs have declined, but there could be factors that lead to a slowdown, for example macroeconomic headwinds. Sitting where we are today, in the middle of a global pandemic, renewables as an asset class continues to be resilient and an important part of the recovery story going forward.

You work at the intersection of finance and renewable energy, two industries in which women are underrepresented. How has that affected you? Are you seeing more women pursuing careers in renewables? What obstacles need to be removed for the industry to become more diverse?

Being in the minority definitely makes your job harder. I have always believed in tenacity, hard work and ultimately the quality of work being the most important determinants of success. Having said that, institutional support is important to enable that success. At Carlyle, over 50% of our assets under management are run by women. That is unique in the private equity industry and was important to me when deciding to join Carlyle.

Regarding the gender gap in renewables or infrastructure, I don’t think change will happen overnight, but hopefully we can contribute to incremental changes and build more diverse and inclusive workplaces moving forward.

Are there any sustainable infrastructure themes in which you have a contrarian view, whether binary or in terms of adoption timeline? What has you most excited as you look ahead to the next several years?

I am skeptical about some of the growth projections relating to decommissioning of conventional power assets – I think people are overestimating the rate of decommissioning of coal and nuclear. I like to take the view that these projections are upside scenarios.

Conversely, I am very excited about batteries and storage – we have spent a lot of time in the space. I personally am very excited about new business models that are challenging the status quo around energy distribution and consumption more broadly. While these deals are typically smaller in nature, there could be a greater upside if you are patient.

About Sustainable Heroes

Join us on a journey into the hearts and minds of some of today’s greatest heroes, who have dedicated themselves to positively impact tomorrow’s world. We invite you to explore with us what makes these heroes tick, what drives them to overcome arduous trials and immense challenges, known and unknown. In this issue, we pay homage to global leaders accelerating the sustainable transformation – all of whom share the goal of fighting climate change and creating a sustainable world that is more resilient and lower carbon intensive. We encourage you on your own quest for ways to innovate, embrace sustainability and do the right thing. Become a heroine or hero to others and help us together solve the problems threatening our very survival. To each of you heroes and heroines, there is a brighter, more sustainable future that we can build together for future generations. We welcome nominations for people you’d like to see featured in future editions. Please send your nominations and other comments to

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