• Sponsor continues to lean into renewable energy despite US policy uncertainty
• Stonepeak is currently in the market for fifth flagship infrastructure fund
• Boom in artificial intelligence anchors commitments to key sectors

After years of policy-driven momentum, dealmaking in the North American renewable energy sector contracted sharply last years as regulatory headwinds under US President Donald Trump’s second administration weighed on activity.

At the corporate level, there were just 16 M&A deals last year, down nearly 50% from the 30 transactions completed in 2024, and far below the 69 recorded in 2020, Mergermarket data show. Asset-level deal flow was more resilient but still declined nearly 14% year-on-year, according to Infralogic data.

Yet for Stonepeak, which has been investing in renewables since 2012, it was largely business as usual. The market downturn has done little to diminish the infrastructure and real assets-focused asset manager’s appetite for the sector, co-president Luke Taylor from Stonepeak told this publication.

“In times of volatility, we often see more opportunities to invest into those types of assets at a good price, so the current environment is a compelling one for us across the board,” he said.

The firm’s conviction in renewables stems from what it sees as sustained global demand, as the data centers needed to power the artificial intelligence (AI) boom to drive consumption higher. Goldman Sachs projects that global data center power demand will increase by 175% by 2030.

“There’s a tremendous need for energy around the globe, and renewables will continue to play a big role,” Taylor said. “The current volatility in the US is creating a pretty interesting investment climate for renewables, so we will absolutely continue investing behind the sector.

Renewables footprint

Overall, Stonepeak has a significant footprint in renewables. It is currently raising its second vehicle dedicated to renewables, according to a regulatory filing. In 2021, the sponsor closed its inaugural Global Renewables Fund at USD 2.75bn, well above its USD 1.5bn target.

From this fund, Stonepeak has invested in a mix of renewable assets, including a 2022 deal for bio-gas maker Maas Energy Works and Madison Energy Investments, which it backed in 2019 and sold to EQT in 2022.

Solar has been an area of particular interest. Last April Stonepeak took a 46.3% stake in Repsol’s 777 megawatt (MW) solar and battery energy storage portfolio across New Mexico and Texas for USD 340m. It followed that up by acquiring a 43.8% stake in the Spanish company’s 629MW Texas-based Outpost solar project in December.

Across the wider solar landscape, Taylor said that Stonepeak will look at “almost everything” in the US, provided projects meet its criteria. However, he cautioned that some assets lack adequate contractual protections depending on their stage of development and construction risk.

Wind has also been an area of focus. In March 2024, Stonepeak bought an undisclosed stake in four US onshore wind farms from Ørsted for USD 300m. In February 2024, it agreed to purchase a 50% non-controlling interest in the Coastal Virginia Offshore Wind (CVOW) project from Dominion Energy for USD 3bn.

Meanwhile, amid the current US administration’s rollback of tax subsidies to many renewable projects, Taylor said the firm’s recent investments have avoided the worst impact.

Many of the projects it invested in were ongoing at the time of purchase, qualifying for tax credits under the Inflation Reduction Act’s safe harbor provision, which locks in incentives once development kicks off within a set timeframe.

More broadly, Stonepeak’s interest in power and energy extends well beyond renewables. In the power space, Stonepeak was the runner-up bidder for TXNM Energy, which was purchased by Blackstone Infrastructure Partners last May and was among the final bidders for a stake in Italy’s Eni that ultimately went to Ares.

Natural gas still plays a part in Stonepeak’s strategy, with Taylor describing it as a “very important bridge fuel” going forward. Late last year, Stonpeak agreed to acquire Allgas, an Australia-based gas distribution network. It followed this with the USD 10.1bn carve-out of Castrol, an industrials lubricants maker, from BP.

Essential infrastructure

Stonepeak is also currently deploying capital from its fifth flagship fund. The firm declined to comment on fundraising, but a source familiar said it is targeting 15bn in commitments. Outside of energy, Stonepeak’s other core strategies focus on digital infrastructure and transportation and logistics.

Since its founding in 2011, Stonepeak’s flagship funds have grown consistently from the USD 1.6bn raised for Fund I to the USD 14bn secured for Fund IV, which closed in 2020. Across vintages, LP composition has remained relatively stable, with roughly half of all capital raised coming from US-based investors, the source said.

Taylor, who has two decades of infrastructure investing experience, emphasizes Stonepeak’s track record of identifying “new themes and subsectors” that do not fit neatly into the traditional definition of an infrastructure asset.

Traits Stonepeak looks for include strong downside protection, predictable cashflows, and high barriers to entry, Taylor said, adding that it maintains flexibility on size.

“We are always looking around the corner to consider what the next piece of essential infrastructure that fits these criteria will be,” he explained.

Within digital infrastructure, data centers are a case in point. They sit at the crux of two megatrends: the AI boom and surging demand for infrastructure and power, including from renewable energy. Stonepeak entered the data center space in 2017 through its acquisition of Cologix, and since then has remained an active investor.

In April last year, the firm launched Montera Infrastructure, a data center operator, with a USD 1.5bn equity check. It followed up with a USD 1.3bn investment into Singapore-based Princeton Digital Group over the summer. In November, alongside digital infrastructure investor Columbia Capital, Stonepeak announced the acquisition of IPB Internet Provider, a Germany-based data center operator that services more than 200 customers.

Despite the flood of capital into data centers, Stonepeak is focused on maintaining valuation discipline, avoiding the steep premiums being paid for hyperscale assets.

“Investors should be cautious about paying big platform premiums to get entry into the sector,” Taylor noted. “It’s a valuation risk more than anything.”

Exit paths

As a relatively young firm, Stonepeak has completed only a few exits from either its renewables or digital infrastructure portfolios since its founding in 2011. Its most recent exit in the renewables space was the sale of Madison Energy Investments to EQT.  

The Vienna, Virginia-based company develops and operates distributed solar and energy storage products for corporate and community customers in the US. At the time of Stonepeak’s investment, the MEI portfolio totaled about 11 megawatts, which had grown by around 250% by the time of its sale, according to a sustainability report from 2022.

Selling to a strategic tends to be the preferred exit route. In 2024, Stonepeak sold WTG Midstream Holdings to Energy Transfer for USD 3.25bn. Three years earlier, it exited Hygo Energy, a downstream LNG distributor, to New Fortress Energy for USD 3.1bn.

Exits to other financial sponsors are also pursued. In 2023, Stonepeak sold its interest in the Whistler Pipeline, a natural gas conduit based in the Permian Basin, to iSquared Capital.

Stonepeak also considers continuation vehicles (CV) where appropriate, notably turning to the secondary market for its most recent digital infrastructure monetization. The firm’s USD 3bn CV for Cologix, which closed in 2022, was at that time the largest single-asset CV in the digital infrastructure sector. The deal provided additional growth capital, with the company recently purchasing CIM Group’s interest in TOR4 and TOR5, a pair of data centers in Canada.