Private credit is in the middle of a historic boom. We are observing trillions of dollars flowing into new lending strategies, but only a fraction is finding its way into the energy transition. Today, Galvanize announced its Credit and Capital Solutions strategy, designed to close that gap and meet a growing need for flexible non-bank capital across power, manufacturing, efficiency, and resilience.
Leading the effort are:
- Strategy Chair & Managing Partner John Delaney, a former Member of Congress and founder of several large-scale specialty lending companies
- Strategy Co-Head & Managing Partner Chris Creed, who spent 20 years at Goldman Sachs and most recently served as the Chief Investment Officer of the U.S. Department of Energy’s Loan Programs Office.
We sat down with them to explore the opportunity, the hype cycle around private credit, and why they believe the real action—and durability—will be found in the energy sector.
Let’s zoom out to the private credit industry for a moment. Depending on who you ask, it’s either in the middle of a historic boom—or on the verge of a bubble. Nearly every investor seems to want a private credit strategy these days. So why launch this one now?
Is it simply part of the broader expansion of private markets, or is there something unique about energy that makes it especially suited to credit?
John: Yeah, the market right now reminds me of that old line—sometimes attributed to JP Morgan or Joseph Kennedy—probably apocryphal—about how if shoeshine boys are giving stock tips, it’s time to leave the market. That’s the feeling. But what makes this different is we’re in a different part of the market.
Traditional private credit is mostly about funding buyouts or trying to compete with banks: private equity firms borrow to acquire a company, and private credit shops step in alongside, or instead of, banks. That’s most of it—think Blackstone, Apollo, the big players. What we’re doing aims to flip that: we’re financing growth.
Our capital goes toward financing important events in a company’s lifecycle: growth, new projects, re-structuring, acquisitions.
Let’s say you’re building a new wind farm. You may already have two forms of capital: bank loans, which get paid back first, and common equity, which carries the most risk—and the most upside.
But often there’s a gap between what banks will lend and what sponsors want to put in. That’s where preferred capital comes in. It sits in the middle—less risky than equity, more flexible than debt. By providing that layer, we aim to bridge the shortfall and keep owners from giving away too much of their long-term stake.
And because it comes in earlier or substitutes for common equity through preferred or mezzanine structures, we believe the returns can be higher—we’re targeting unlevered returns of 15 to 20 percent, versus the 8 percent or so you’d see in a typical middle-market loan.
Chris: This strategy may not work for most industries. Most early-stage companies aren’t suitable for debt because they’re not profitable, which makes lending too risky. That’s why, as John noted, when people talk about private credit, they usually mean syndicated or middle-market loans to established, profitable companies—because those companies can borrow against their cash flow.
But we believe there are a few exceptions: sectors where credit can make sense even for pre-EBITDA positive businesses. One of those sectors is energy.
Growth-stage firms here have the potential to be strong borrowers if they have two things: Projected Cash Flow Available for Debt Service (CFADS), preferably contracted cash flows; and a collateral package with observable valuations so you can calculate a Loan-to-Value (LTV). Energy infrastructure usually has both.
When you say “collateral packages,” you mean steel, turbines, land rights?
Chris: Exactly. And the second component is the contracted cash flows.
Take that hypothetical wind farm John mentioned: you might already have an offtake agreement with Google to buy the power—even before the project is completed. Those kinds of agreements are quite common now.
Paint me the picture. I’m the guy building this wind farm—you know, hard hat on, turbines not even spinning yet. What does the deal actually look like at that stage? How do I get from a patch of dirt and a contract with Google to a fully financed project?
Chris: Okay, if it’s a new project, we roll up our sleeves and work with the sponsor using a bottom-up approach.
Let’s say we do due diligence, and we find the turbines, concrete, and land are worth $100 million. We might lend $70 million against that—that’s a 70% loan-to-value ratio.
Once the farm is running, it generates $25 million a year in contracted cash flow. If I structure the loan so the farm pays us $20 million a year for five years, the debt service coverage ratio is 25-to-20. That’s healthy: the project reliably throws off more than enough cash to repay the loan, and we can earn a 25% return.
That’s very different from how most private credit works. Traditional lenders focus on EBITDA—profits. They want companies whose debt is no more than about seven times their earnings and for projects that are already stabilized.
That’s because they often plan to sell those loans into the CLO market, which only wants clean, profitable borrowers. But growth-stage energy companies don’t fit that mold—their EBITDA is negative while they’re still building. So we use different metrics: loan-to-value, based on hard assets, and cash flow available for debt service, based on contracted revenues.
John: It’s also worth pointing out that this strategy aims to go beyond credit. That’s why it’s called the Credit and Capital Solutions Strategy—not just a “credit strategy.”
We have the potential to move up and down the capital structure—senior and mezzanine debt, subordinated capital, preferred equity, all of it. We designed our strategy this way to position ourselves to creatively solve problems for our clients.
Many clients ask fundamental questions: Should we raise equity? Should we use debt? Or some mix of both? They know there’s a big value-creation opportunity but aren’t sure how to structure it. Our role is to help them figure that out—while at the same time generating compelling risk-adjusted returns for our investors.
Play devil’s advocate for me—what’s the best argument against this strategy?
John: The first thing people usually point out is that our capital is expensive. And it’s true—our cost of borrowing is higher than the MM/BSL bank loan market. We’re not going to be the lowest-cost lender.
Most private credit firms compete in auctions where banks and lenders bid against each other, and the winner is whoever offers the lowest rate and the loosest covenants. That’s not what we do. We’re not providing a commodity service. Our strategy is closer to non-dilutive private equity—and it’s priced accordingly.
The second criticism, if you’re playing devil’s advocate, is that our approach is resource intensive. It takes real expertise to underwrite these highly technical energy projects. You’ve got to do your diligence on the IP, negotiate agreements, analyze complex cash flows.
Fortunately, Galvanize is taking the long view—investing in the infrastructure needed to handle the intensity of this work. We believe that foundation will allow the strategy to scale for years to come.
Galvanize is projecting that between now and 2030, we’ll see around $5.6 trillion a year invested in infrastructure—renewables, transmission, manufacturing, electrification. And about 60% of that will come through credit, with 40% coming from equity. What’s driving those numbers?
Chris: Well, let’s tackle the 60/40 split first. Why is credit the bigger share? Because we believe you can’t do big things without debt. Major infrastructure projects have always relied on borrowed capital—no one has trillions in cash lying around—and debt spreads those costs over time, the same way a mortgage makes a home affordable.
Now, as for that $5.6 trillion a year—which is a staggering number—I believe there are four themes driving it:
First, we don’t have enough electrons. We’ll need to build new generation—wind, solar, and beyond.
Second, the electrons we do have aren’t being used efficiently. We need a stronger grid: bi‑directional systems, demand response, load shifting.
Third, manufacturing is coming back onshore, and if we pair it with abundant green energy, the U.S. may become one of the cheapest places in the world to build things.
And fourth, climate resiliency. Try insuring a warehouse on the Florida coast—no seawall, no policy. That’s resilience, baked into the balance sheet.
What about the policy changes, though? The “Big Beautiful Bill” rolled back a lot of renewable tax credits. What does this do to the market for financing?
John: So, OB3—“one big, beautiful bill”—did roll back a lot of renewable tax credits, and that has created real dislocation in the market.
What does that mean in practice? In the short term, it has accelerated developers’ and investors’ timelines. They’re rushing to get projects operational so they can vest in the credits before they expire. Projects that might have been spread out over the next five years are being pulled forward to capture those incentives. Smaller projects need to spend a certain percentage quickly, while larger ones need to show continuous progress.
Chris: We’re likely to see an acceleration of renewables into late 2025 and 2026, because everyone is trying to capture those IRA credits.
Over the longer term? Chris: In the long run, the loss of subsidies means fewer renewables get built than in a world where OB3 didn’t pass. But demand doesn’t evaporate. What I think happens is prices go up and people build more anyway. The demand is there.
John: That’s right. When the tax credits expire, there will be a cliff.
Some projects—especially those on the margin—will be harder to finance. That creates uncertainty in the sector, but also opportunity. Capital providers without deep domain expertise will pull back, creating openings for focused players like us who understand the industry.
Our strategy is built to participate in this distressed cycle—helping to stabilize, and in some cases take ownership of, companies and projects critical to the energy transition. Why? Because we’re not investing on the basis of government policy. Projects have to pencil out with or without tax credits.
That makes the underwriting harder, but that’s where our advantage lies. It requires resources, deep energy knowledge, and a clear view of how renewables compete with fossil fuel assets. We believe we know how to price and underwrite that risk.
What’s next? What kind of deals are you looking for right now?
Chris: Modular investments.
What do we mean by that? Instead of one huge solar project, you aggregate a bunch of smaller ones, one to three megawatts each, into a larger package—anywhere from 50 to 100 megawatts. And you can do the same with battery storage, thermal storage, or other systems.
The reason we like modular deals is they’re positioned to be defensive against idiosyncratic risks—things like sudden changes in policy, tariffs, tax rules, or even wage inflation. If I’m building 50 small solar projects and halfway through tariffs change, I’ve likely already imported my equipment and locked in labor contracts. I can hit pause and still preserve maybe 40–45% of the revenue.
Contrast that with a transmission line or a single power plant: if you stop halfway, you get zero. That’s why modularity is a theme across our pipeline—it’s a relatively cheap way to hedge against volatility, even the Rumsfeldian “unknown unknowns.”
Of course, it’s not a free lunch. We pay for it with delayed draws, which investors don’t love. Instead of one lump sum, you’re pulling $5 million at a time—20 draws in total. In some cases, we’ll own the assets ourselves and give investors the option to buy them back. It can feel slow at first, but once investors see it as a credit risk-management tool, their reaction is usually: ‘Oh, that’s actually really thoughtful.’
John: And I think it’s worth putting this in a broader frame: the deals we’re pursuing don’t just stand up financially—they represent investments in systems the country and the world genuinely need. And our capital—whether structured credit, preferred equity, or outright ownership—may play a central role in the capital markets ecosystem.
If you believe in private credit as an asset class, the real question is: why wouldn’t you want those dollars funding projects that could deliver both compelling yields and real public purpose?