Q&A with HASI CFO Chuck Melko in High Yield Landlord
Interview with Chuck Melko, CFO and Treasurer of HA Sustainable Infrastructure Capital (HASI). Originally published December 5, 2025, by Jussi Askola in High Yield Landlord.
1) Could you start with a short pitch for your stock? Why should investors buy your company today?
HASI is an investment firm focused on sustainable infrastructure projects with over $15 billion of Managed Assets. HASI provides investors with what we believe to be low-risk exposure to two major themes—power demand growth and the energy transition—through what has historically been steady, predictable earnings growth of 8-10% per year, a dividend yield of 5-6%, and an attractive valuation with an 11-12x forward P/E multiple currently.
We serve a unique role, providing a long-term capital solution to support the growth of the U.S. power supply driven by data centers and the expanding applications of electrification. We are rated investment grade by all three major credit rating agencies and have built a diversified funding platform. In addition, we utilize a co-investment vehicle with KKR that provides additional funding capacity. Our top non-index investors include leading mutual funds, such as Fidelity, Wellington, T. Rowe, and AllianceBernstein.
2) You guided for 8–10% annual Adjusted EPS growth through 2027. What happens beyond that?
Our stated long-term goal is for EPS growth of 10% per annum. Combined with our current dividend yield, this would translate into total shareholder returns of approximately 15% per annum before reflecting any upside from an improvement in our valuation multiple.
At the recent price of over $30/share, our stock is trading at a price-to-earnings multiple of 11-12x current consensus estimates for 2026EPS. This compares to a five-year average of closer to 15x, so if we were to trade back in line with that historical P/E multiple, total shareholder returns could be even higher.
3) Your average annual realized credit losses are only 0.07% of managed assets. We have not seen any BDC or mREIT with credit losses this low. What makes you different?
It is a testament to the strength of our business model, the success of our underwriting, and the quality of the underlying assets. Your comparison to the BDCs is interesting, as we are often grouped with them. But our business models differ, and we invest in very different types of assets. BDCs generally invest in companies, and for that matter, smaller middle-market ones. In contrast, HASI’s investment strategy is focused on infrastructure assets, such as solar/wind/battery projects that are not only what we view as low-risk projects generating predictable, recurring cash flows underpinned by long-term power purchase agreements, but are typically contracted with high-quality off-takers purchasing energy at an attractive price. By investing at the project level in infrastructure assets generating steady cash flows, not only do we think our returns are more reliable and lower risk, but we incur far fewer losses than BDCs, which are exposed to greater risks related to the performance of individual companies and the broader macroeconomic cycle.
4) Some peers like Brookfield Renewable invest in the equity of renewable assets. Why is your lending model better?
There are a couple of layers to that question, so I will answer each of them separately. First, in terms of how we compare to peers, I would emphasize that we don’t directly compete with Brookfield Renewable Partners; we operate different business models altogether. Companies like Brookfield Renewable and Clearway Energy, which is actually a client of ours, are developers, owners, and operators of projects. HASI is not a developer; we are an investor that provides long-term, “permanent” capital for these projects, enabling developers to recycle capital into their next project. We compete with infrastructure funds, private equity, and private credit. And when we win, it’s generally because we approach our investments as partners, not merely investors, and we never compete with our clients. In addition, we provide specialized expertise in the types of projects, technologies, and tax structures in which we invest that large, diversified funds typically don’t offer.
Regarding the second part of your question about our investment strategy, I would say Brookfield Renewable and its peers typically invest in the common equity of renewable infrastructure assets. In contrast, we are typically focused more on investing in a part of the capital structure that is senior to common equity, including structures in which we receive priority cash flows.
5) Last year, you announced a $2 billion JV with KKR for 2024–2025. How does this partnership benefit HASI? Why do they partner with you instead of doing it themselves?
In May of last year, we established a joint venture with KKR called CarbonCount Holdings1, or CCH1 for short, in which we and KKR each agreed to contribute $1 billion in equity. Essentially, KKR is investing $1 billion side-by-side with HASI in our core sustainable infrastructure assets. The partnership with KKR has had a transformational impact on our business. First and foremost, it creates a new income stream from origination and management fees. It also reduces our reliance on new equity issuances by 50%. As a slide in our Q3 earnings deck highlights, our Adjusted ROE was 12% in 2024, but our incremental ROE 2025 year-to-date is closer to 20%, which is driven in part by CCH1.
Beyond that, it has been a validation of the unique value we bring to the table. We believe KKR appreciates HASI’s specialized expertise in this type of project finance, our programmatic client relationships, as well as our capacity to handle high volumes of lower transaction sizes that require a high-touch post-close. They have been an outstanding partner to date, we really enjoy working with them, and we look forward to continuing this partnership in the years ahead.
6) Given your track record and strong returns, it would seem that you would be in an excellent position to grow your asset-light management business to earn even greater fee income. Do you expect this to become a bigger part of HASI over time?
Yes. CCH1 is part of a larger evolution of the business towards an asset management model. We expect this evolution will create more fee income and higher ROE.
7) With “Sustainable Infrastructure” in the name and “Climate Solutions” as a tagline, some investors worry your growth depends too much on subsidies. If Congress cuts them back, how would that affect you?
It is a good question. And notably, the One Big Beautiful Bill Act—the “OBBBA”—that passed in July has already laid out a path for the elimination of tax credits for solar and wind. However, we believe this was designed in a way that is very manageable for the industry.
Third-party reports—whether they be Lazard, Wood Mackenzie, Bloomberg, etc.—all demonstrate that solar and wind power now offer the lowest levelized cost of electricity available today, even before taking into account any tax credits. The issue is less about these technologies’ dependence on subsidies and more about how difficult it is to plan and develop new projects and business models with sudden changes in energy policy. While recognizing there are a lot of nuances, at the end of the day, the OBBBA essentially provides for a glide path for the sunset of the solar/wind tax credit by the end of the decade. So not only can projects continue to benefit from tax credits under the old regime for the next 4-5 years, but project developers and power producers have 4-5 years to adapt project economics and their business models to a post-tax credit world. This will likely result in passing through the loss of tax credits through higher power prices, which we expect will continue to be competitive with traditional sources of power. Meanwhile, the industry will ultimately benefit by reducing its dependence on policy.
8) Much of the future power demand is expected to come from AI and data centers. How will this growth support renewables instead of gas or coal?
The short answer is that the outlook for power demand growth is so strong that it will support growth in both renewables and fossil fuels (and likely nuclear as well). Over the last 25-plus years, U.S. electricity consumption has not grown much at all, as improvements in energy efficiency have helped offset growth in the economy and population, but there has been a significant uptick in the outlook for power demand. Some of this, of course, is being driven by AI and data centers, which tend to command much of the attention, but that is not the only driver, as there is also greater demand from growth in domestic manufacturing, heating electrification, and electric vehicles, to name a few. Altogether, after essentially flatlining since the turn of the century, U.S. power demand is now forecast to grow 3-4% per year through 2040, according to industry reports. There is no realistic way to meet that demand without an “all-of-the-above” strategy that includes not only gas and nuclear but also renewable energy.
9) Do you see a role for nuclear in your long-term strategy?
Yes, technically, nuclear power meets the core attributes of our investment strategy. But the key element of your question is “long-term,” as I wouldn’t expect anything near-term.
Critical to our investment strategy is that we remain focused on a few key common attributes and do not stray far from them. One is that we focus on operating infrastructure assets rather than corporate equity or development capital; in other words, we invest in projects, not companies. Two is that the investments have a positive environmental impact. Three is that the investments are underpinned by recurring, predictable, and typically contracted cash flows. Four is that the projects utilize established, proven technologies.
While nuclear power generally meets the first three criteria, the fourth is a bigger question. The new small modular reactors, or “SMRs” that are driving much of the new interest in nuclear power are still a developing technology, and we would like to see a few of these projects completed and able to demonstrate their real-world performance to give us a better sense of the potential investment outcomes and how to underwrite them, before deploying capital into these projects. Also, though there are a few pilot projects that I believe are expected to be deployed before 2030, the SMRs are ultimately not expected to be deployed at scale until well into the next decade. So we are certainly open to investing in this technology, but we are unlikely to actually deploy capital in the nuclear category for many years.
10) Your stock is historically cheap today. Are you considering buybacks?
Stock buybacks are not currently part of our capital allocation plan. We are focused on our core business of investing in sustainable infrastructure projects where we can generate incremental ROE above 20%. We have historically funded the investments that we retain on our balance sheet through a mix of debt and equity, including new equity that we issue from time to time through at-the-market offerings. It would be incongruent with our capital strategy to issue equity while we are buying back stock.
11) For most of your history as a public company, you were classified as a REIT. You recently declassified to use accrued tax benefits. Would you ever return to REIT status?
I'm glad you asked. It’s an important point that needs clarification, particularly as I know your newsletter is mostly REIT-focused. It is true we went public in 2013 as a REIT. But we revoked our REIT status and have been taxed as a traditional C corporation since the start of 2024.
The REIT structure initially made sense for us when we went public. At the time, our business was centered on energy efficiency investments that we essentially sold to third parties through securitizations. These assets were REIT-qualifying and enabled us to be treated as a pass-through entity for tax purposes.
But our business has evolved dramatically since then. Today, most of our business is providing long-term capital solutions for renewable energy projects and RNG facilities, and the majority of these projects do not qualify as “good” REIT assets. These investments are longer-term, higher-yielding assets we retain on our own balance sheet rather than securitize and sell to third parties. As a result, we achieve higher earnings-per-share growth by reinvesting cash flow from our existing portfolio into new projects rather than paying out almost all of our taxable income in dividends, as REIT regulations require. Moreover, as a result of these investments, we have accumulated more than $800 million in unused net operating loss carryforwards, which will assist in managing our tax obligations.
Nevertheless, we still pay a dividend that yields 5-6%, assuming a share price of approximately $30, and we plan to continue paying one, albeit at a declining payout ratio. Our dividend is an important component of our total shareholder returns, making us an attractive investment for income-focused investors. And as noted at the start of this conversation, in combination with our long-term target of 10% EPS growth, the current dividend supports a total shareholder return of 15% per year, before any potential improvement in our valuation multiple.