Long-shelved capital-intensive green-energy projects could be dusted off for construction to begin—if everything goes right
3 min
If the Federal Reserve cuts interest rates in the coming weeks, a friendlier borrowing environment could make all the difference for some mothballed renewable-energy projects.
The returns generated by such projects once they are up and running are often predictable and modest, but because they require a large upfront expenditure, frequently funded in part by debt, they are sensitive to interest-rate fluctuations.
With recent economic data suggesting the Fed has plenty of room to cut, some investors say now is the time to get moving on renewable plans.
Thomas Byrne, chief executive at solar investor CleanCapital, said a drop in interest rates would affect a “not inconsequential amount” of solar developments under consideration. “We have had projects on hold that simply don’t make economic sense for us anymore because the borrowing cost was too high. So those projects will immediately unlock,” he said.
Byrne estimates some of these projects could begin construction by the end of the year and start generating energy next summer.
Solar and wind energy in particular stand to gain from lower borrowing costs, said Srinivasan Santhakumar, principal research analyst with the research firm Wood Mackenzie. “Higher interest rates have disproportionately affected the economics of wind and solar projects,” he said.
An interest-rate increase of 2 percentage points could result in a 20% jump in the cost of producing energy for utility-scale solar power over the life cycle of a project, according to a Wood Mackenzie analysis released in April. In comparison, the same increase might boost the cost of producing energy from gas by 10% to 12%.
Some developers may wait to see a steeper drop before making moves. “It’s definitely a phenomenon, particularly for the more sophisticated, more longer-standing developers who’ve had a history of surfing the ups and downs of the interest-rate spectrum and are also aware of the consequences for their own balance sheet of a long-term interest rate rise,” said Katherine Mogg, managing director at the New York Green Bank, a state-sponsored investment fund that focuses on filling gaps in energy transition financing. Mogg said she expects to see a modest uptick in requests for proposals in the coming months.
The Federal Reserve has signalled a rate cut at its next meeting in September, and most futures investors expect a quarter-percentage-point reduction, according to CME FedWatch. More than three quarters of investors expect the Fed to lower its benchmark rate, now in a range between 5.25% and 5.5%, by at least a full percentage point by year-end.
While a cut in interest rates is a positive for renewables financing, a durable boost for green projects may require a Goldilocks economic scenario in which a cut to borrowing costs don’t coincide with rising fears of a global recession, which could in turn drive investors away from the U.S., said Ron Erlichman, partner at the law firm Linklaters.
“There are a lot of different factors, like the old cliché of ‘headwinds,’ that affect transactions,” he said, adding that large-scale projects such as offshore wind, hydrogen and carbon capture frequently rely on foreign investment.
Fears of unchecked inflation and rampant increases in the cost of materials have cooled down somewhat in the past year, he said, but the looming U.S. election brings a fresh element of uncertainty . While many see a low probability of a full rollback of the Inflation Reduction Act, the legislation that provides game-changing tax breaks for renewables, an executive branch hostile to green energy could slow project permitting or otherwise “nibble at the fringes” of the landmark legislation, as Byrne put it.
“Having done this awhile and seen the cycles in the market, I still remain incredibly optimistic about renewables and energy transition in the United States,” Erlichman said.
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With US$40 million already committed, the Global Talent Fund is attracting investor attention with a strategy focused on building globally scalable consumer brands alongside high-profile talent.
2 min
A new investment fund targeting celebrity-founded consumer brands has secured US$40 million in commitments and is rapidly approaching its US$50 million fundraising target, signalling growing investor appetite for alternative opportunities beyond traditional asset classes.
The Global Talent Fund, which has a maximum raise of US$100 million, focuses on building and investing in consumer businesses alongside celebrities, athletes, and influential personalities who play an active role as co-founders rather than simply endorsing products.
The strategy is based on the belief that changes in consumer behaviour, particularly the rise of social media and digital engagement, have fundamentally altered how brands are built and scaled.
GTF founding partner Jeremy Hunt, who is helping lead the fund’s strategy, said consumers increasingly feel connected to personalities they follow online and are more willing to support products developed by those individuals.
“Consumers are searching for content to engage with, and when a celebrity they like or follow takes them on the journey of creating a product or brand, they genuinely feel part of that process,” he said.
The fund is targeting high-growth consumer sectors including wellness, hydration, beauty and recovery, areas Hunt believes continue to benefit from strong global demand and ongoing innovation.
Rather than backing celebrity endorsement deals, the fund is seeking businesses where talent is deeply involved in product development, brand creation and long-term growth.
According to Hunt, authenticity remains one of the biggest differentiators between successful celebrity-backed brands and those that fail.
“The consumer can see clearly if someone is simply being paid to promote a product,” he said. “The winners are typically the brands where the celebrity has genuinely helped build the business from the ground up.”
The model has attracted support from several prominent Australian investors and business families, reflecting broader interest in alternative investments with global growth potential.
Hunt said consumer brands offered a level of tangibility that many investors found appealing.
“Consumer brands are what we touch, feel, smell and taste every day,” he said. “Our investors understand the growth potential in the model, but they also want to be part of the journey.”
The fund’s rapid progress towards its fundraising target comes amid growing recognition that celebrity influence, when combined with strong commercial execution and scalable business models, can create significant enterprise value.
With several high-profile celebrity-founded businesses generating billion-dollar exits in recent years, supporters of the strategy believe the opportunity remains in its early stages.
