[Editor's note: A version of this story appears in the March 2021 issue of Oil and Gas Investor magazine.]

Energy-focused private equity funds always scout around for the next way to hit a home run. Beyond shale plays, digitalization or M&A, today many private equity scouts are chasing alternative energy opportunities, and that means a lot more than backing gas producers to feed a power plant.

Several factors are driving their march toward a greener portfolio. Last year, as a Biden presidency came into view and the energy transition became the talk of the town, public and private investors increasingly turned to renewable energy (solar, wind, biogas) or energy transition ideas (electric vehicles [EVs], battery storage, distributed power generation).

Whether valuations are realistic or not in today’s heated atmosphere, many of the biggest private equity firms for energy believe in an “all of the above” approach and thus have invested in alternatives for several years, usually led by a separate in-house origination team using dedicated capital that is separate from their oil and gas funds.

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