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September 30, 2024

Silvestrini made millions on his first CT solar company; his latest clean energy venture manages more than $120M in assets

HBJ PHOTO | STEVE LASCHEVER Michael Silvestrini is the co-founder of Chester-based Energea, a clean energy company that allows retail and accredited investors to invest in solar projects around the globe.
By Andrew Larson
  Energea at a glance
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Four years ago, Chester-based Energea Global LLC had no income, no investors and no projects.

The alternative energy company, co-founded by Michael Silvestrini and his childhood friend and fellow energy entrepreneur Christopher Sattler, launched a platform in 2020 that allows customers to invest in solar projects.

Now, Energea manages more than $120 million in assets, owns nearly five dozen solar projects and has thousands of investors.

The company, which employs 50 people and has a new headquarters in Chester, is generating a profit and plans to grow its investor base. It will enter a new market before the end of the year.

“We’ve gotten through the startup phase, we’re entering the second phase of corporate development, which is our growth phase,” said Silvestrini, who is Energea’s managing partner. “For us, that means spending money on marketing and communicating to individuals throughout the United States about our product.”

Silvestrini is known for building the Connecticut-based startup Greenskies Renewable Energy into one of the largest commercial and industrial solar installers in the country. In 2017, he and his partners sold the company to a California energy investor in a deal valued at $165 million.

Silvestrini used proceeds from the sale to start Energea, which acquires and develops solar projects across the globe.

Through its online platform, ordinary investors can purchase shares of solar projects through three portfolios, in two countries and on one continent: the United States, Brazil and Africa.

“You’re not buying a company, you’re buying a real asset,” Silvestrini said in a recent interview with the Hartford Business Journal. “It’s steel in the ground somewhere that makes energy and sells it under contract.”

The solar projects are backed by long-term energy contracts with utilities and businesses in each location. For that reason, the projects generate predictable and consistent returns for investors, he said.

Over the last four years, Energea has delivered an average return of about 13% to investors. The U.S. portfolio’s realized internal return rate is 6.9%, compared to 9.9% for the Africa portfolio and 14% for Brazil, Silvestrini said.

In total, Energea owns 57 solar projects generating a total of 80 MW of electricity.

“We know how much revenue we anticipate generating, and our office is filled with experts in solar energy who can help us predict the amount of sunlight that should be produced, and we’re pretty darn good at it,” Silvestrini said.

Silvestrini said Energea expects to launch its fourth portfolio in Colombia before the end of the year.

“It’s not a quest to bring money into exotic-sounding places,” he explained. “It’s really a belief that some of the best opportunities in solar are in markets where there is not a lot of competition for money, where money is a rare and valuable thing. But it’s also where an asset class with our expertise is still just as relevant.”

There tends to be a comfort in “investing in the U.S. inventory,” he added, but investors are more eagerly chasing the higher returns of the overseas portfolios.

Silvestrini described Brazil as a “golden opportunity” because of its relatively high energy prices, low building costs and favorable energy policies.

“That’s not to say that Brazil is the riskiest by any stretch,” Silvestrini said. “It’s just simply that the features of that market result in a high return.”

In addition to annual returns, investors receive monthly dividends, adjusted for inflation, which they can reinvest back into their portfolios.

Environmental impact

What differentiates Energea from other investment platforms is it allows investors to directly contribute to “a beneficial environmental outcome.”

“We believe in the importance of a gradual transition to renewable energy in our energy systems, but also in productive investments,” Silvestrini said.

In Africa, electricity remains scarce. Some communities only have access to electricity for a few hours per day. By funding solar power development, investors are helping to provide electricity to markets that desperately need it.

Silvestrini said Energea is an early mover in the African market, allowing it to choose the best projects, including schools, hospitals and retirement homes with excellent financial credit.

Energea currently has 12,000 active investors and $128 million in assets under management — up from zero at the beginning of 2020.

As of Sept. 16, Energea had raised about $30 million from its retail investment portfolios.

Energea sells shares of its solar projects directly to consumers under the U.S. Securities and Exchange Commission’s Regulation A, which allows each of Energea’s portfolios to raise as much as $75 million per year. Recent regulatory changes allow companies to sell Regulation A securities to everyday retail investors — basically, anyone with $100 to bet on a Giants game, Silvestrini said, noting that Energea’s clients include NASA scientists, professors and professional investors.

Marketing ‘war chest’

The business has no debt and didn’t have to borrow money during its startup phase, Silvestrini said. But now that it has entered its growth phase, it is raising capital for its business operations, through a Regulation D offering.

Energea recently closed a $2 million campaign and issued a new $5 million offering under Regulation D, which typically restricts investing to accredited investors.

“In order to build a war chest for the business, we called upon some of our investor friends and raised a few million dollars in order to pump up the velocity of our marketing spend,” Silvestrini said.

And while most of Energea’s clients are retail investors, it has done business with some of the biggest investors in renewable energy.

Energea recently partnered with Brookfield, the largest private equity owner in the world, on a joint venture in Brazil.

The business also has investments from BTG, the largest private equity firm in Latin America, and Victory Hill, a listed trust on the London Stock Exchange.

Silvestrini said the company’s marketing includes video advertisements at the beginning, middle and end of TED Talks videos, targeting audiences focused on climate change and other relevant content. Also, Energea has a partnership with NPR to run messages at the beginning of podcasts.

The goal is to make more people aware of the business and its renewable energy investment products in order to attract more investors in its solar portfolios.

The company targets environmentally conscious investors who aren’t just looking for a return, but are also interested in impact-driven investing.

Energea’s returns have been lower than the stock market’s in recent years. In 2023, the average S&P return was 26.3%, compared to Energea’s average of 13%.

But Energea’s investments are unique in that they are not tied to stock market fluctuations, including downturns.

“Our investments are not correlated in any way to the stock market,” Silvestrini said. “If the stock market should have a hiccup — which people have been waiting for, but hasn’t happened for many years — your investments in Energea would be unaffected.”

Industry growth

The renewable energy industry is expected to continue to grow, as more countries adopt emissions standards amid the increasing threats posed by climate change.

According to the International Energy Agency, the amount of renewable energy capacity added to energy systems around the world grew by 50% in 2023.

Last year, increases in renewable capacity in Europe, the United States and Brazil hit all-time highs, according to the organization.

Solar energy alone represented three-quarters of renewable capacity additions worldwide in 2023, according to the group.

Based on current trends, global solar capacity is expected to increase to 2.5 times its current level by 2030, the organization’s research found.

Silvestrini declined to provide revenue or profit figures for Energea, but said he’s enthused by its performance and long-term prospects. He said the company began generating a profit in 2022.

Energea has grown from about five employees in 2020 to 50 today, he said.

Last year, Energea moved its headquarters from Old Saybrook to the lively small town of Chester, which sits along the Connecticut River.

The company also has offices in Cartagena, a port city in Colombia, and Rio de Janeiro, a city of 6.2 million people in Brazil. It plans to open an office in Cape Town, South Africa, soon.

The offices are known as “clubhouses” and have spaces for employees to work and collaborate, along with rooms for them to sleep overnight when traveling.

At-A-Glance

Energea Global LLC

Industry: Solar

Top Executive: Michael Silvestrini, Co-Founder & Managing Partner

HQ: 52 Main St., Chester

Website: www.energea.com

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