From Selling A Renewable Energy Company For $319 Million to Raising Over $1.44 Billion To Offer Renewable Energy to Customers

Priit Lepasepp’s story is one of navigating the currents of history and reshaping the future of energy. Born in 1986 in Soviet-occupied Estonia, Priit experienced a world that was vastly different from the one he would come to build.

“I was five years old when I started to see capitalism,” Priit recalls, reflecting on how those early years shaped his entrepreneurial journey. His path has taken him from studying law to pioneering renewable energy ventures, raising over €1.3B ($1.44B) in equity and debt

In this interview, Priit talks about overcoming hurdles and successfully scaling companies that fundamentally transformed the energy landscape of Eastern Europe.

Listen to the full podcast episode and review the transcript here.

Early Life and the Soviet Union’s Influence

Growing up during the final years of the Soviet Union, Priit was exposed to a stark contrast between East and West. The Soviet system emphasized collective ownership, but Priit had glimpses of a world beyond it through his relatives in the West.

“I saw how different things were in the West,” he says, noting that this awakening opened his eyes to possibilities beyond what was being taught in Soviet Estonia.

The collapse of the Soviet Union and Estonia’s subsequent independence in the 1990s ushered in a period of “cowboy capitalism” in Eastern Europe, as public assets were privatized. Priit absorbed the lessons of this rapid transformation, setting the stage for his future career.

A Shift into Law and Environmental Advocacy

Despite his eventual turn toward entrepreneurship, Priit’s initial path led him into law. Inspired by his brother and a desire to work with people rather than machines, he chose to study law, specializing in environmental issues.

“Our parents were engineers,” Priit explains, “and I saw how complicated engineering could be. I wanted to deal with people.” This early focus on environmental law would later play a key role in his transition to the renewable energy sector.

Priit’s legal education gave him a unique perspective on navigating the heavily regulated energy and finance markets. “Both are very regulated sectors, and to succeed, you must understand not just the technical but also the social and psychological aspects,” Priit notes.

For instance, when establishing a bank, you must understand why and how to execute an asset management company. Similarly, when talking about electricity, you need to know exactly how it will work on paper because money, value, and energy are all very important.

This insight into the intersection of policy, law, and energy would prove invaluable in Priit’s later ventures. As he points out, since the time society or humankind invented fire, it has been very important for us and has been constantly around.

There are a lot of backlogs of standards, laws, and regulations that need not only to be understood but also changed. Priit has been doing business in these fields, and lobbying has been one of the main hurdles he had to overcome in certain countries.

Priit details his journey and the shift from being on the drafting to the execution side of things. He decided he didn’t want to be in the advisory business early on because that meant he focused only on one aspect.

Priit wanted to go into a business and see for himself how renewable energy works internally. Only by understanding it could he do business in that sector.

Pioneering Renewable Energy: The Birth of Nelja Energia

Priit’s entrepreneurial breakthrough came with joining Nelja Energia, a renewable energy company that would become a major player in Eastern Europe. He joined the company as general counsel and served from 2011 to 2018, eventually assisting in its sale to a state-owned energy company.

The backdrop for this was the growing global awareness of climate change and the signing of the Kyoto Protocols.

These protocols created a market for renewable energy by introducing CO2 quotas and subsidies. Countries were considering renewables and the energy sector’s impact on the climate and environment.

The wind energy sector, in particular, was beginning to take off, but it was still very much in its infancy. The conventional renewable energy business was just about creating a developer project, building it, and leveraging subsidies and controlled pricing to take it to market for a great profit.

The pioneering part was relevant because the technology was still in the development stages. “When Nelja Energia started, turbine sizes were just one or two megawatt,” Priit remembers. “Now, we’re talking about capacities of 6.5 to 7 megawatts on land.”

Additionally, state-owned incumbent traditional energy companies were resistant to change, dismissing wind turbines as “toys” compared to their larger, steam-driven power plants.

They wanted to retain the old assets and were not open to growth as it looked small and less important than conventional energy.

Nelja Energia’s Acquisition by a State-Owned Company

Nelja Energia thrived, and by 2018, the company was poised for a major exit. At a time when renewable energy had become a crucial part of energy companies’ portfolios, state-owned entities were eager to acquire established renewable players and energy pipelines.

“The acquisition was driven by the fact that investors always want to exit eventually,” Priit explains, likening it to a marriage: “You should always think about how to get out of a deal.”

As Priit recalls, a huge list of companies wanted to acquire the business. The acquisition by a state-owned company valued Nelja Energia at nearly €287M (more than $319M), with the shareholders receiving €287M (almost $319M) in cash, which was an excellent deal.

At the time, the company’s size was 287 megawatts. There was also a pipeline of projects, close to one gigawatt, that new buyers could buy.

Although the three founders of Sunly had to sell Nelja Energia to an acquirer smaller than Nelja Energia, they walked away with experience and new ideas and started a new one.

Eventually, Priit and other founders would build a new company with more capacity under operation and development.

Building Tuleva: Democratizing Pension Funds

Priit’s entrepreneurial drive didn’t slow down. One of his subsequent ventures was Tuleva, a company that brought a new model to Estonia’s pension fund market.

In Estonia, the second pillar of the pension system is mandatory, meaning citizens must contribute a portion of their income to a pension fund. However, they can choose from state-run programs, asset managers, and funds where they want to invest.

However, in 2016, banks that owned asset managers controlled the market and offered products. However, they charged exorbitant fees, with total management costs exceeding 2% for engineers. Typically, they offered Estonians index funds, which cost around 1.5%.

A long instrument carrying a 2% cost over 30 years would result in investors investing a lot of funds without returns. Priit saw an opportunity to disrupt this model. Tuleva gathered 3,000 investors, many of whom were regular Estonian citizens.

Priit, together with other founders, created a cooperative fund management company with members, giving them money to manage a fund manager’s financial and legal requirements in Estonia. Next, they reached out to BlackRock and asked them to have different funds.

Tuleva’s innovation was simple but powerful: it significantly reduced the cost of fund management by partnering with BlackRock and offering index funds with fees as low as 0.35%, including regulatory costs.

Today, Tuleva manages nearly €925M (over $1.03B) in assets, demonstrating that long-term, low-cost investments can outperform more expensive, actively managed funds.

Priit looks back at the entire experience of getting investors on board and educating them about the market. Tuleva has over 95,000 fund investors today.

Sunly: Scaling Renewable Energy for the Future

Priit’s latest venture, Sunly, represents the culmination of his expertise in the renewable energy sector. In 2019, the European Union and its member states had new goals for renewable energy by 2030.

Priit recalls the core challenges they faced. In 2019, the renewable energy field had almost non-developed projects to buy. Further, they were expensive or just bad.

This challenge can be compared to a city with an inflow of people in the same amount it already has with existing old building regulations. You need to develop new projects to do anything, but it will take time.

You must comply with old zoning regulations and acquire building permits, which will also take time! Building new projects was almost impossible since it would take at least four to five years to develop new projects capable of producing gigawatts worth of energy.

Priit and his team started developing new projects internally at Sunly. They were one of the pioneers who understood that renewables are like an industrial revolution and that new production units will have to be built in new locations.

They also started hiring new people who were experts in that field. Next, Priit approached landowners to develop assets on their sites and started building pipelines

Launched in 2019, Sunly is at the forefront of a new wave of renewable energy projects, with a pipeline of 18 gigawatts in land developments for wind, battery storage, and solar energy.

Priit puts down their success to the right decisions they made in 2019. Back then, he and his team were ready to start a renewable energy company, owning assets and selling the electricity to end consumers. They have also been consistently investing in hardware startups in their fields.

Unlike Nelja Energia, Sunly’s focus is not just on generating megawatts but also on ensuring that renewable energy directly benefits end customers. “Renewables today are different,” Priit explains. “We need to focus on end customers, not just on building more megawatts.”

This shift in strategy recognizes that while renewable energy is critical to addressing climate change, simply producing more energy is not enough if it doesn’t meet the needs of consumers efficiently and cost-effectively.

Financing the Future of Energy

Building a company like Sunly requires significant capital, and Priit has proven adept at raising the funds needed to scale. To date, the company has raised over €1.3B ($1.44B) in equity and debt, including a recent bond deal with Copenhagen Infrastructure Partners and Rivage and KLP.

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This capital has allowed Sunly to continue expanding its renewable energy projects, even in the face of global challenges like the war in Ukraine. Interestingly, Priit notes that the most recent conflict in Ukraine has not scared off investors as previous geopolitical crises did.

“In 2008, during the Georgian conflict, investors faded away. The same happened with Crimea in 2014,” he says. “But this time, investors stayed. Eastern Europe is seen differently now. Yes, the risks are higher, but the returns are also better.”

Priit recalls they did their last equity raise on the same day the conflict started, and the situation wasn’t as grim as before. He also points to how Eastern European countries have developed their energy systems and transitioned from Russian natural gas to new facilities.

Investors understand that Eastern Europe, at this time, offers better returns than Western Europe despite the higher risks. Eastern Europe still participates in the OECD, NATO, and European Union. Sunly offered to build new assets and help communities move to expensive Russian natural gas.

A Vision for the Future

Priit’s vision for the future of renewable energy is expansive and extends to the Baltics, Poland, and, soon, Scandivinia. He believes that the energy sector is undergoing a transformation akin to the Industrial Revolution and that companies like Sunlyare are leading the charge.

As Priit sees it, the world is not only about climate change. As of now, Europe has old power plants, and the price maker on the electricity market is natural gas sourced from different regions, in the past primarily from Russia. The formulas they use to build out renewables can prove to be great alternatives.

While PV plants, turbines, and natural gas power plant technology can be purchased from the manufacturer, the latter fuel comes from outside Europe. The opportunities are exceptional for wind farms, PV parks, pump hydro storage facilities, and battery energy storage facilities.

Consumers will also want to switch from old markets to more cost-effective options. “It’s not just about building more capacity,” he emphasizes. “It’s about changing how we think about energy, about making sure that the benefits of renewable energy reach the people who need it most.”

Priit estimates that by 2030, Estonia or the Baltics will be statistically, on an annual average, 100% renewable. Poland is also likely to catch up soon. He foresees a huge opportunity for investors for at least the next ten years.

In Retrospect!

Looking back at his journey, Priit would have liked to accelerate his learning. He would have taken more risks. He advises entrepreneurs, “If you start to build a new business and really believe that it will work, then stop doing everything else and concentrate on this one topic.”

If you don’t, someone else will take the idea and run with it, resulting in missed opportunities. However, good things also happen, and there is value to be earned from quickly learning, adapting, and taking risks–professional and personal.

Entrepreneurs should move quickly, not hesitate, try it out, see how it goes, and adapt to that, even if it doesn’t work out. Ambition is also crucial, as is commitment to the ideas that can be great and viable or entirely stupid.

In Conclusion

As Priit continues to build, innovate, and pioneer in the renewable energy space, his journey from Soviet Estonia to leading multi-billion euro energy ventures is an inspiring example of resilience, vision, and the power of entrepreneurship to change the world.

Listen to the full podcast episode to know more, including:

• Priit Lepasepp’s early exposure to Soviet and Western systems shaped his entrepreneurial vision and adaptability in a global market.
• His legal background in environmental law provided valuable insights for navigating the highly regulated renewable energy industry.
• Priit transitioned from advisory roles to working in the renewable field and, after that, founding a renewable energy company, seeking hands-on experience in driving real-world impact.
• Nelja Energia pioneered renewable energy in a skeptical market, eventually leading to a highly successful acquisition.
• Priit’s venture, Tuleva, disrupted Estonia’s pension fund market by offering low-cost, long-term investment solutions, showcasing his ability to innovate in finance.
• With Sunly, Priit shifted focus to end-user needs in the renewable energy sector, building an impressive 18-gigawatt pipeline of projects.
• Despite geopolitical challenges, Priit successfully raised over $1.3 billion in capital, demonstrating the growing investor confidence in Eastern Europe’s renewable energy landscape.

 

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