Business Units or Product Lines

Hannon Armstrong Sustainable Infrastructure Capital, Inc. primarily focuses on three business units: Behind-the-Meter (BTM), Grid Connected, and Sustainable Infrastructure. The BTM segment involves investments in commercial and industrial energy efficiency, solar power, and storage projects. The Grid Connected segment focuses on utility-scale wind, solar power, and storage projects. The Sustainable Infrastructure segment is dedicated to water or communications infrastructure projects.

Business Models for Each Product Line

The company generates revenue through a mix of equity investment, debt investment, real estate structures, and other innovative financial structures tailored to the specific sustainable infrastructure asset. In the BTM segment, it earns from the returns on investments in energy-saving and renewable installations at customer sites. Grid Connected projects generate income via long-term power purchase agreements or other cash flow arrangements from project owners or operators. The Sustainable Infrastructure segment sees revenue from long-term contracts related to the infrastructure serviced. Major expenses include operations and maintenance of these assets, financing costs, and general and administrative expenses.

Future Opportunities for Growth

HASI is poised to benefit from the growing demand for renewable energy and energy efficiency solutions particularly as governments and businesses seek to meet sustainability and decarbonization targets. Increased federal and state incentives for clean energy projects, expansion into emerging markets, and technological advancements in energy storage solutions present growth opportunities. Additionally, the global focus on infrastructure development, including water and broadband, could open up new areas for sustainable investment.

Potential Major Risks

Hannon Armstrong faces several risks which include regulatory risks due to changing energy policies at federal and state levels, interest rate risks since higher rates could impact financing costs and investment yields, and competitive risks as more companies enter the renewable energy space. The company also faces project execution risks and technology risks, as advancements could potentially disrupt current investment strategies. Climate change-related physical risks could also impact infrastructure projects.