Clean energy attracts nearly $3 trillion in investment annually, but most of that capital flows to massive utility-scale projects through the world's biggest banks and large-scale asset managers. Meanwhile, smaller distributed projects — rooftop solar, batteries, microgrids — face a structural financing challenge that Amanda Li calls "death by a thousand cuts."

As co-founder and COO of Banyan Infrastructure, Li sees this dynamic constantly. Distributed infrastructure developers are trying to secure deals for $500,000 or $1 million, but face the same transaction costs as billion-dollar projects.

"You might have a thousand times the amount of data at every single one of those stages, a thousand models, a thousand PDF documents or contracts, a thousand counterparties," Li explains. "So that's where the overhead really becomes crushing."

Rachel Halfaker, who leads the community infrastructure program at the Milken Institute, sees the same fragmentation from a different angle. Unlike utility-scale projects with a single counterparty, distributed energy involves "a hundred business owners, a hundred nonprofits, a hundred YMCAs or churches" who aren't accustomed to thinking about term sheets and risk profiles.

The solution they are pursuing? Standardization. But previous attempts have failed for specific reasons that go beyond market immaturity.

"Everyone intellectually understands and believes in the benefits of coordination and standardization," said Li. But past efforts lacked dedicated coordinators and sufficient critical mass.

The complexity of distributed energy finance makes standardization uniquely challenging. These projects often require blended capital stacks where three or more financing sources must align simultaneously. "All three things have to be in coordination in order for that deal to pencil,” said Halfaker.

This orchestration typically falls to local developers with small teams, rather than the armies of investment bankers and lawyers that structure utility-scale deals. The result is frequent near-misses where viable projects nearly fall apart due to financing complexity.

In this episode, recorded live as part of Latitude Media's Frontier Forum series, Stephen Lacey talks with Li and Halfaker about why standardization is critical for scaling distributed energy into a trillion-dollar asset class.

They explore how standardization could eventually enable securitization — the "holy grail" that would create secondary markets for distributed energy assets.

This episode was recorded live as part of Latitude Media's Frontier Forum with Banyan Infrastructure. Watch the full video here and download Banyan’s white paper on standardization here.

Scat Cat (Rebroadcast) - 7 May 2018