Deutsche Bank is currently in talks to finance additional distributed generation projects following the close of a USD 150m revolving loan with Dimension Energy, an executive told Infralogic.

Following the close of a three-year revolving credit facility with Partners Group-backed Dimension Energy, Deutsche Bank is seeking to ink up to four additional financing deals in the distributed generation (DG) space by the end of spring 2025, Jeremy Eisman, head of infrastructure and energy financing at Deutsche Bank told Infralogic.

The USD 150m credit facility signed with community solar developer Dimension last week is Deutsche Bank’s first financing deal for distributed generation assets that have not yet reached the notice to proceed stage.

In recent months, though, Deutsche Bank has held talks with developers for around 10 potential financing deals in the DG space, Eisman said. The bank will likely move forward on a handful of those, which is consistent with the conversion rate the bank has seen in other areas of the energy and infrastructure space, he added.

“We expect to do another three of four of these deals within the next six months or so,” Eisman said.

Tight margins but a widening opportunity 

As a sector, Eisman said, distributed generation is an attractive area for Deutsche Bank to increase its exposure. But the type of deals most commonly available in the space don’t always align with the bank’s focus on deals that provide wider margins and require detailed underwriting.

“It’s an area where we’ve been envious of other people who are active, because we haven’t been able to participate in the senior market on such a tight basis. I think it’s a logical place to expand into. DG developers are usually a lot more diversified. Usually, there’s a stronger regulatory underpinning to their revenues, and there’s a lot to like about them. So, we see it as a great opportunity to expand our utility-scale development financing practice,” Eisman said.

Tight margins, and a tendency toward “commoditized” lending in the senior DG space has limited the number of entry points to the space for Deutsche Bank, which focuses more on developing situation-specific financing deals, Eisman said.

“Our model is based on doing a really strong fundamental underwrite,” he said.

Dimension, which will lean on DB’s lending facility to advance an ambitious expansion strategy, is a good example of the type of developer that fits well with DB’s skill set.

“We’re often helping a client get from one stage to another. That may be a three- or four-year period, but we focus on helping clients make a step in their development. That’s what we’re hoping to do with dimension here: giving them the capital to be able to scale and develop their business far more quickly,” Eisman said.

Dimension was also an attractive partner for Deutsche Bank to work with because of their strong leadership team, and their support from sponsors like Partners Group, with whom the bank has a strong relationship, Eisman said.

“The fact that they’re sponsored by Partners Group is a great endorsement for us,” he said.

In addition to seeking out deals where the financing matches the bank’s focus on accretive deals with strong underwriting, partners on these deals must have a significant portfolio of DG assets to make the scale of the deal work for Deutsche Bank, Eisman said.

“I think USD 100m financing is where we want to be, at a minimum, for these types of transactions,” he said.

Infralogic has tracked Deutsche Bank lending on 12 transactions, totaling USD 12.77bn in loan debt to the energy, power and renewables sectors in 2024 across North America. That’s in line with a steady upward trend in its activity in the sectors since 2020, when it closed on six debt transactions totaling USD 2.29bn.