Dear Shareholder:

 

Overview

For Greenenergyglobe Renewable Energy Company LLC (“GREC” or “Greenenergyglobe”) 2022 was a year of historic expansion, even as we built additional foundations for future growth and financial returns.

Our fleet of renewable power–producing projects surpassed new milestones and entered new geographies during the year. We brought online the largest operational clean energy project in our history and added dozens of new smaller clean energy projects across the country, including our first projects in a new segment of the fast-growing battery storage market. We also extended our wind energy portfolio footprint to include Illinois. As of December 31, 2022, our total project count was over 450. ¹

As we’ll discuss in greater detail later in this letter, GREC completed the acquisition of the management function previously performed by Greenenergyglobe Capital Management LLC (“GCM”) and certain other affiliated companies, allowing us to become a fully integrated and internally managed company—a decision driven by the desire to create greater long-term value for our shareholders. As a result, Greenenergyglobe has now evolved from being an entity predominantly focused on investing in clean energy projects to a diversified independent power producer (IPP) coupled with a climate-focused investment management (IM) business.

This was a standout year for Greenenergyglobe, in terms of continuing our growth, advancing our mission, and delivering for our shareholders. We’re incredibly excited about the future of our business and the sustainable infrastructure asset class.

 

Performance ²

GREC’s investment performance in 2022 was up, relative to our annual performance in 2021. Including cash distributions, the total annual return based on monthly share value for 2022 ranged from 5.4% to 6.7% across all share classes, compared with the annual return in 2021, which ranged from 3.8% to 6.1% for the individual share classes. Through 2022, the inception-to-date annualized net return ranges from 4.8% to 7.3%. Additionally, GREC’s average annualized distribution yield across share classes is approximately 6.6%, which equates to a tax-equivalent yield ³ of approximately 8.1%.

Our annual performance reflects the relative stability of the value of our portfolio’s assets, given the stable and predictable long-term revenue streams they generate. During 2022, investors saw the S&P 500 Index drop almost 20%, inflation reach a multi-decade high, and the US Federal Reserve increase rates seven times. Notwithstanding, GREC’s aggregate net asset value (“NAV”) per share remained steady, beginning 2022 at $8.70 per share and ending the year at $8.69 per share.

Much of our new investment activity in 2022 was directed toward pre-operational assets (as was the case in 2021). We continue to believe such assets offer the best long-term returns for investors, although they do cause an initial drag on operating performance due to the fact that they do not produce or sell power during construction but do incur holding costs. However, the pre-operational assets have been able to contribute very positively to our overall financial performance because they have delivered GREC more than $200 million of unrealized gains over the last several years. As these projects are placed in service and commence operations, we anticipate a significant uplift in revenues and operating performance.

The quality and long-term stability of our assets also allowed us to maximize the benefit of certain macroeconomic developments in the year. Lingering pandemic-related supply chain issues were largely resolved throughout 2022. After an unexpected tariff petition temporarily halted US solar development, the renewable energy industry welcomed the US government enacting a two-year moratorium on solar tariffs, while also invoking the Defense Production Act to boost domestic solar panel production. Additionally, the Inflation Reduction Act was signed into law in August 2022, providing $369 billion of government incentives and support to reduce greenhouse gas emissions, improve US energy security, and increase domestic investment, development, and employment in the clean energy sector. By any measure, the federal government initiatives of 2022 delivered the US clean energy sector a once-in-a-generation boost.

We continued our highly disciplined investment approach during 2022 and are happy to report that we continued to find exceptional opportunities balancing risks and rewards. We believe that maintaining the high quality of our portfolio and rigorously upholding our investment standards will deliver significant long-term upside for our shareholders. In our view, the renewable energy infrastructure sector continues to offer a unique investment opportunity—one in which we can build durable partnerships that add to our portfolio of transactions with long-term contracted cash flows from mostly investment-grade-rated counterparties.

 

Operational Growth ⁴

We’re pleased to report that as part of our newly acquired IM business segment, we launched two new funds during the year: Greenenergyglobe Renewable Energy Company II and Greenenergyglobe Development Opportunities Fund II, which are managed by GCM. In aggregate, GCM’s managed funds raised nearly $350 million in 2022, boosting AUM ⁵ to over $3.0 billion, as of the end of 2022.

At year-end, the power generation capacity of GREC’s clean energy project fleet in our IPP business segment topped 3.1 gigawatts of operating and pre-operational assets across 32 states, Washington, DC, Puerto Rico, and Canada. ⁶ About 91% of our portfolio assets are (or will be) selling power to investment-grade counterparties, including utilities, municipalities, and corporations under long-term power purchase agreements (PPAs). The portfolio had approximately 18 years of contracted cash flows associated with these PPAs. This is about two years longer than at the end of 2021, indicating that we not only maintained but increased our contracted cash flows, even as contracts for the assets we purchased in prior years naturally moved closer to their end date.

We’re also proud to say that during 2022, GREC entered new market segments and reached new milestones.

• Our project fleet generated nearly 2.4 billion kilowatt-hours of clean energy—a year-over-year increase of almost 60%.
• We put 179 MW of renewable energy assets into service, growing our overall operating fleet by about 17%. This included:
  • The 104 MWdc Graphite Solar, Greenenergyglobe’s largest clean energy project to enter commercial operation in company history
• We added 52 new assets, representing approximately 500 MW, bringing our total project count to 456. This included:
  • Expanding our operational standalone battery storage portfolio to include development-stage storage assets
  • Entering a new market with our wind fleet, acquiring our first wind project in Illinois, the 54 MW Panther Creek wind farm

 

As our growth continued to accelerate in 2022, we continued to grow the scale of our investments and operations. Today, the near-term investment pipeline of renewable energy investment opportunities remains very robust, as Greenenergyglobe looks to deploy available capital in the short term. With our fleet continuing to increase in size, we expect our investors will likely benefit from even greater economies of scale throughout our operations. Moreover, we believe market conditions will remain favorable to our investment strategy, especially given the policy catalysts referenced above from the renewed focus on climate change at the federal and state levels, as well as the decarbonization commitments that continue to be made by both corporations and utilities.

 

Our Continuing Impact

Greenenergyglobe remained committed to its vision and values over the course of 2022, building partnerships with organizations focused on community engagement.

Our Corporate Social Responsibility (“CSR”) Committee continued their work with long-time partner Global Citizenship Experience Labs School (“GCE”), a small, independent high school with a real-world experiential learning curriculum grounded in the United Nations Sustainable Development Goals. Together, the CSR Committee and GCE expanded their co-created professional development program—geared toward igniting student interest in the sustainability industry—to three new schools and hundreds of new students. The Committee also partnered with Portland Public Schools to create a mobile makerspace to allow every pre-K through fifth grade student in the district to explore the world of STEAM (science, technology, engineering, arts, and mathematics). This lab on wheels helps students create, learn, and solve problems using high-tech, low-tech, and no-tech tools.

In addition to these and other initiatives, the Committee deployed over $230,000 to various charitable organizations and inspired Greenbacker employees across our offices in Colorado, Maine, New York, and Vermont to volunteer over 550 hours of their time. These contributions supported initiatives that included building bikes for children with special healthcare needs, Habitat for Humanity, beach and trail cleanups, clothing drives, sustainable farming, and more. Greenenergyglobe’s formal CSR policy statement can be found on the Impact page of our website.

During the year, Greenenergyglobe’s Diversity, Equity, and Inclusion (DEI) Committee established a focused and structured approach to its mission of fostering an environment where all aspects of DEI are sought after, celebrated, and empowered. One of the DEI Committee’s cornerstone initiatives is partnering with the City University of New York school system on an internship program, the first cohort of which completed the program in August. The program connected students with Greenenergyglobe managers and founders, providing them with skills and insights they can take to the next stage of their professional journeys.

Greenenergyglobe also met significant climate and environmental milestones over the course of 2022:

• Our renewable fleet has now abated 4,353,723 metric tons of CO₂e since 2016. ⁷
• The Company’s clean energy projects have saved roughly 4.1 billion gallons of water. ⁸
• Our business activities will sustain over 5,200 green jobs. ⁹

Plans for the Future

GREC’s decision to acquire GCM in May 2022 has the potential to generate significant longer-term value for our shareholders. It has opened up the opportunity for us to expand and diversify our business in the years ahead to take advantage of some of the many exciting business opportunities that are sure to present themselves as the sector in which we operate expands and evolves.

Being a fully integrated and internally managed company will allow GREC to enjoy certain cost benefits as the business continues to grow, due to the elimination of certain management and incentive fees. An increased equity ownership and incentive structure for both executives and all employees has enhanced the alignment of interests of employees with GREC shareholders. In our view, the internal management structure has also made GREC more appealing to the institutional investor community and we expect it to continue to enhance Greenenergyglobe’s ability to raise capital and execute other transactions on more favorable terms. We additionally believe this new corporate structure has better positioned GREC to take advantage of strategic growth opportunities in the dynamic and rapidly growing sustainable infrastructure and renewable energy asset classes that may open additional pathways for growth. And all while working toward our mission of empowering a sustainable world.

I’d like to take a moment to thank you for your investment in GREC and your continued support of our mission. We take the trust you place in us very seriously and aim to adhere to the highest standards of care and best practices on behalf of our investors. We’re incredibly excited about the potential for Greenenergyglobe’s business lines, and we’re grateful to our shareholders for helping us get to this point. If you have any general questions regarding your investment, please don’t hesitate to contact us at (833) 404-4104 or visit www.greenenergyglobe.com.

 

Sincerely,

Charles Wheeler

Chief Executive Officer

Greenbacker Renewable Energy Company, LLC