Why We Invested in Perfect Power

By Chris Wu

The electric grid is transitioning from a centralized system, to one that is more distributed, renewable and accessible. New regulations, renewable energy mandates, tighter environmental regulations, the electrical grid’s evolving load profile, as well as the increased intermittency of our energy supply as more renewable energy comes online all serve to usher in a paradigm shift in the 100 year old energy grid. 

The US Inflation Reduction Act (IRA) will dramatically reshape the makeup of electricity production in the US in the coming decades. The new law is a game changer for renewable energy development and energy storage installations; it is estimated that the IRA will more than triple US clean energy production and result in 40% of the country’s energy coming from renewable sources. In order to achieve this rapid transformation an additional 550 GW of electricity must be generated via renewable sources in less than 10 years time. In other words, meeting the emissions reduction goals of the IRA will hinge on the US’ ability to at least double the rate of renewable installations over the record levels observed in 2020 and 2021. 

Perfect Power strives to be a next-generation, clean-focused project developer, and is well positioned to serve the electric grid during this critical point in the clean energy transition. Perfect Power’s mission is to acquire, develop, and opportunistically own and operate, a differentiated portfolio of dispatchable low-carbon generating assets which accelerate the transition of the power grid to a faster, safer, more reliable, and lower carbon future.

Solution

Perfect Power acquires, develops or redevelops, owns, and operates electric power generation assets. The company is focused solely on assets that enable the decarbonization of the electrical grid, specifically renewable energy generation and battery energy storage. Perfect Power finds attractive locations to build large solar or battery projects, takes control of those sites, and performs all the development work needed in order to get that project to a point where it has achieved its full “Notice to Proceed” (NTP) milestone and has the green light to proceed with construction/installation. At that point, Perfect Power has the option to either sell that project at a markup to a strategic or larger developer who would then proceed to invest the money necessary to build and operate the solar or energy storage project, or they have the option to build and operate the asset themselves. The buyer would be acquiring an asset that has had the development risk removed and is ready to immediately begin construction or installation.

The company looks to develop a geographically diverse portfolio in markets that are accessible, liquid, tradeable and compensatory such as ERCOT (in Texas) and CAISO (in California). Perfect Power develops utility scale front of the meter assets that have transmission or distribution system interconnection points. It can also opportunistically pursue commercial and industrial (C&I) projects in select markets that require dispatch to obtain payments, as well as distributed front of the meter assets interconnected to participate in the wholesale electric generation market. Perfect Power is able to aggregate and build a portfolio of energy storage projects at a significantly lower entry price and with relatively low overhead expenses given its business model and personnel’s expertise. Perfect Power currently owns, or has exclusivity, on a wide variety of development-stage projects including a pipeline of up to 200 MW of distributed energy storage projects, 300 MW of utility-scale solar projects & 250 MW of utility-scale energy storage projects in ERCOT, as well as a pipeline of up to 325 MW distributed energy storage projects in CAISO.

Why We Invested

Perfect Power has a proven team with deep expertise in power generation, renewable energy and energy storage in key markets, as well as a proven track record of asset development and management. Perfect Power was formed and is wholly owned by SER Capital, who handpicked the company’s leadership team. In addition, the SER Capital team has over 100 years of private equity experience in this space as well as senior executive level operating experience at both private and public companies in the energy industry that will be invaluable as they partner with management to help the company scale and grow. 

We were impressed by Perfect Power’s ability to aggregate and build a sizable portfolio of energy storage and solar projects at a significantly lower entry price and with much lower overhead expenses than it would cost to acquire an established platform. We see an opportunity for Perfect Power’s platform to develop a differentiated portfolio of dispatchable low carbon generating assets which accelerate the transition of the power grid to a faster, safer, more reliable, and lower carbon future. As the electric grid is transitioning from high carbon intensity (e.g. coal-fired power plants) to a low carbon intensity; batteries will enable the integration of renewable energy and other resources based on demand instead of simply dispatching when the resources are available. We also were attracted to the flexibility of Perfect Power’s platform to either sell or build its projects, which gives it a distinct advantage. 

Impact

In order to achieve the greenhouse gas reductions (GHG) needed to limit global warming to 1.5 degrees Celsius above pre-industrial levels and avoid the worst effects of climate change, we must scale up renewable energy capacity at a rapid pace. Today electricity production makes up about 25% of the United State’s total GHG emissions given that approximately 60% of our electricity still comes from burning fossil fuels - primarily coal and natural gas. Perfect Power’s platform will enable more than 1 GW of renewable energy generation, energy storage, and efficiency improvements to be built and come online, which will help decarbonize the grid by displacing GHG intensive forms of energy generation such as combined cycle gas or coal plants. The environmental impacts of solar generation are immediate and material as a true zero-carbon source of energy. Energy storage plays a critical role in integrating intermittent renewable energy into the grid. Together battery energy storage paired with solar generation forms a strong combination that provides reliable and clean power at scale for the energy grid.

Why We Invested in Watershed Health

By Sophia Friedman

Hospital readmissions place a large burden on the healthcare system. Each year, hospital readmissions cost payors ~$40B in disbursements and hospitals ~$560M in penalties alone. Many hospital readmissions are avoidable, and there has been an increased focus on reducing hospital readmissions to improve patient outcomes and reduce costs.

For example, the Hospital Readmissions Reduction Program (HRRP) is a Medicare value-based purchasing program that “encourages hospitals to improve communication and care coordination to better engage patients and caregivers in discharge plans and, in turn, reduce avoidable readmissions.”  As can be seen in the HRRP’s mission, care coordination is a key consideration in improving outcomes and reducing readmissions. The care coordination market, which seeks to minimize the number of avoidable hospital readmissions, is large and growing.

Solution

Watershed Health is a community-wide care collaboration platform which connects clinical and non-clinical care teams to facilitate communication, streamline the exchange of data and improve care management.  For this reason, Watershed is an optimal tool in the post-acute environment where it is used to manage the hand-offs between acute and post-acute care providers, enabling better continuity of care and sharing of data (including around the social determinants of health) to reduce readmissions and improve outcomes for patients. Specific stakeholders include hospitals, medical transportation providers, home health, in-patient rehab, and skilled-nursing facilities. Watershed interfaces with any electronic health record (EHR) through a simple, universal connector to create real-time data exchange between the various involved stakeholders (acute and post-acute care providers).  The platform improves care coordination and reduces readmissions, thereby improving health outcomes, enables transparency and optimizes post-acute care networks.

Why We Invested

Whereas existing solutions simply collect health data, Watershed takes into consideration the needs of various stakeholders to continuously measure provider collaboration and patient outcomes. As a next generation platform, Watershed is designed for all providers in both acute care settings (hospitals and health systems) and post-acute care settings (including home health, in-patient rehab, skilled-nursing facilities) to drive improved outcomes for patients and cost reductions for health plans. Watershed is directly driving impact by supporting the transition to value based care.  The platform aggregates member data and gives providers real time insights to manage care transitions in order to transition patients from acute care centers back into their communities. Watershed gives  providers actionable insights needed to act in real time and the tools to collaborate across care settings to improve patient outcomes.

Watershed’s leadership team consists of healthcare experts with longstanding experience in their respective fields and strong industry networks that will prove useful in Watershed’s growth. The team has specific expertise on the transition to value based care, sales executives with experience scaling similar models and physicians with first hand knowledge of the patient journey and the unmet needs in this space. The team complements one another and each brings a unique set of skills and experiences that will help the company through its next phase of growth. 

Impact

Watershed’s referral management and data & analytics platform drives better patient outcomes.

• As an example, Watershed’s platform helped one hospice agency reduce the time between hospital discharge and hospice intake from 36 hours to 5 hours, resulting in a drastic reduction in 30-day readmission rate from 10.6% to 2.8%.

• One of Watershed’s initial clients experienced a sustained decline in the 30-day hospital readmission rate: before Watershed, the hospital readmission rate in the region was approximately 18%. After a two-year rollout and expansion period, hospital readmission has dropped to between 9% and 11%.

Watershed has a unique ability to directly impact patient outcomes by improving care transitions and therefore reducing readmissions rates. Watershed has a significant amount of data and metrics that it aggregates on a regular basis which will prove helpful in better understanding how Watershed drives improved outcomes and lowers the cost of care. 

Why We Invested in Acelero

By Rahul Bhide

Early childhood education (ECE) is critical for educational outcomes; 90% of brain development happens before the age of 5. Studies have shown that high-quality ECE interventions result in improved academic achievement, cognitive development, emotional development, and self-regulation. Furthermore, ECE benefits accrued over children’s lifetime include improved earning potential and economic opportunity, as well as reductions in public and private healthcare expenditure. The absence of ECE is also strongly felt; a child without ECE is 25% more likely to drop out of school, 40% more likely to become a teenage parent, 60% more likely to never attend college, and 70% more likely to be arrested for violent crime.

The supply of ECE in the US is severely hampered, with existing providers lacking adequate capacity, further exacerbated by the COVID-19 pandemic. 51% of Americans live in a child care desert, largely low-income and minority communities.

Solution

Acelero is an ECE platform serving low income communities, as a direct operator of Head Start (HS) centers (Acelero Learning) and via tech-enabled services to other HS operators (Shine Early Learning) and states and municipalities (Shine Advance).

Acelero started operating HS centers in 2005, focusing on closing the Achievement Gap by delivering high-quality educational outcomes, and have been nationally recognized for their results. 

Building on their years of direct teaching and operating experience, they launched Shine Early Learning in 2011, sharing best practices and providing critical infrastructure to other Head Start operators nationwide. Small-scale studies of educational outcomes with Shine Early Learning partners results have been extremely positive. Looking to make a deeper impact on the early childhood education system at scale, in 2019, they launched Shine Advance to support state and municipal governments to improve the quality of early education providers under their jurisdiction, through IP and tech-enabled services.

Acelero operates 54 centers in 4 states, directly serving 5,000 children annually; and through their work with state agencies, child care centers, home-based providers, private and public pre-K and Head Start and Early Head Start programs, they impact more than 150,000 children and their families across 28 states and territories.

Why We Invested

Acelero’s CEO, Henry Wilde, was a co-founder of the organization 20 years ago. He is extremely mission-aligned, knows the early childhood space very well, and is backed by a veteran management team of 28 comprised of recognized and diverse leaders in the field committed to the outcomes-based business model, leading curriculum development and comprehensive support for teachers, families and students, with 1500+ other employees.

Acelero has a strong and proven direct center business model built over their 20 year history, along with a unique solution set. They have developed a strong, four-pronged early learning framework, comprised of educational content, teaching, family engagement, and data-driven management. Acelero operates in a large, but heavily fragmented early childhood education and childcare market, where both quality and technology adoption levels are highly variable. This positions an established, technology-forward player like Acelero well to succeed in this market.

Beyond directly operating Head Start centers, the organization is uniquely positioned to serve Shine clients from other Head Start providers to a diverse set of state and municipal governments, and the strong traction they have achieved to date speaks to that. 

Impact

We believe that high-quality early childhood education imparted directly (via Acelero directly-operated centers) and indirectly (via Shine Early Learning/Advance) will be critical in closing the achievement gap for low-income children, and contributing to increased economic mobility. We have confidence that they will be able to do this because they are one of the only players in the space with best-in-class externally validated outcomes, with Acelero students outperforming the Head Start standards by 2.9 - 4.7x on the Peabody Picture Vocabulary Test. The impact of the Acelero/Shine model has also been demonstrated at scale. They have been repeatedly recognized as a Head Start exemplar by the Office of Head Start, and studies performed by the Annenberg Institute at Brown University have regularly measured the improvement in outcomes delivered by Acelero since 2015, including some of the highest ever outcomes gains ever recorded in a Head Start program.  

Furthermore, we believe that Acelero, through its rigorous professional development model and upskilling program for Acelero employees, enables increased economic opportunity for employees in low-income areas. At a systems change level, we also believe that proving that a high quality, for-profit, PE-backed model can work in early-childhood education will catalyze the space and education investing in the US.