Energy Investing with Eric Scheyer of Elda River

INTEROFFICE MEMORANDUM

TO: Eric Scheyer, Elda River

FROM: John McCarthy

SUBJECT: Twenty Good Questions

DATE: August 21, 2026

1.You recently formed Elda River after many years at a larger, multi-strategy firm Magnetar.  Any lessons to share from that experience?

 It was a privilege to be part of Magnetar since inception. I was fortunate to collaborate with colleagues who taught me about the importance of thinking big and thinking critically about a wide range of outcomes when making investments. I saw firsthand how institutionalized processes, strong risk management systems, and multiple uncorrelated investing strategies can compound value through different market regimes. When we started Elda River, I was intentional about keeping the things that worked well for us-some of which included disciplined underwriting, robust controls and a culture that encourages rigorous debate with a strong focus on delivering value for our investors.

 2. Investing has been described before as an “apprentice business”. Is how you see it?

I do think investing is fundamentally an “apprentice” business but with a few caveats. You learn the craft by collaborating closely with people of have made good and bad decisions, watching closely how they weigh incomplete information, manage risk, and navigate tough decisions with colleagues, management teams and LPs. Making mistakes and learning from them is essential to learning how to be a successful investor.

 3. In investing, what are the major benefits, and any problems, with specialization?

 The major benefit is that you can build a strong competitive advantage vs. a generalist firm. Industry specialists have stronger capabilities to directly source investment opportunities. Specialists can also go much deeper into the diligence process including the underwriting of a business… evaluating assets, construction risk, technology risk, counterparty risk, regulatory risks, and sensitizing long-term cash flow forecasts.

 4. You invest in energy infrastructure, power and renewables, and energy efficiency.  Why these areas?

We invest in these sectors because they sit at the intersection of three big themes: Energy Security and Resilience, Power Load Growth and Reindustrialization of Supply Chains. These are all long-term durable investment themes with strong tailwinds.

 The assets in these areas are typically hard to replicate, strategically important and often supported by long-term contracts that can produce stable cash flows.

 5. You invest in credit, equity, and “hybrid”.  What unique mindsets, if any, are needed for each?

Our mindset is to invest across the capital structure with the goal of generating attractive risk adjusted returns with asymmetric outcomes. For example, by being in preferred equity, we can structure an investment that targets an equity return with more of a credit risk profile. The flexibility to invest across the capital structure (equity, preferred equity, or credit) allows us to also work with companies and talented management teams to provide an optimal capital solution and be a one stop shop.

 6. How do you and your team make decisions?

Our investment team meets two times per week (Monday and Thursday). We review our pipeline of investment opportunities, the status of each investment and next steps on diligence. We are quick to walk away from opportunities to not waste time. Our entire team participates in making a final investment decision but the decision ultimately resides with our Investment Committee.

 7. Per capita residential electricity demand growth was relatively flat 2000-2020. What does this look like in recent years and where do you see it going for the next five years?

Focusing solely on residential, my view is that over the next five years per-capita residential demand will likely shift from flat to modest growth as heat pumps, EV charging at home, data-center driven grid upgrades and continued electrification being to outweigh further efficiency gains.

 8.  If current American electricity is fueled by 40% natural gas, 20% renewables, 20% nuclear, 20% coal, where will that be in 2045?

Most credible long-term pathways point to a mix that is dramatically more renewable heavy by the 2040’s with natural gas playing a key role, nuclear being stable to up and coal continuing to tail off.

 9.  Do you compete with utilities, serve utilities, or neither?

 No, we do not compete with them but can partner with them.

 10. Is electricity being “de-centralized” or produced and consumed off the main grids?

Electricity is becoming more “distributed,” but it is not replacing the main grid so much as layering on top of it. We have seen growth in rooftop and community solar, behind-the-meter-batteries, and microgrids that generate and store power close to where it is used and these “distributed energy resources” now provide a small but fast-growing share of U.S. generation.

 11. “The Grid” seems an amorphous phrase to many.  What is the grid, who maintains it, and is it as reliable as it used to be?

The grid is just the giant machine that moves electricity from where it is generated to the outlet in your wall: power plants, high-voltage transmission lines, substations, and the lower-voltage lines in your neighborhood all tied together. It is maintained by thousands of utilities and transmission owners, coordinated by regional grid operators (ISO’s and RTO’s) and overseen by federal regulators like FERC and NERC. I would say the “Grid” is reliable for most people, most days but we are moving into an era where the power needs driven by AI and Data centers will make is less dependable if we do not modernize and expand it.

 12. What is the growth outlook for Liquid Natural Gas (LNG)?

The IEA medium-term natural gas outlook implies global gas demand growth of about 1.5% per year through 2030, with LNG taking a rising share as new export capacity pushes prices down and pulls in emerging market-buyers. Global LNG volumes could be up something like 30%-50% from today over the next 10 years.

 13. What areas of energy could benefit from less regulation and what areas could use some regulatory attention?

 We need faster, more predictable permitting for long-lived energy infrastructure such as natural gas pipelines and large-scale renewable projects. We probably need more regulation around areas like methane-leak detection, repair for oil and gas infrastructure and resource adequacy rules for the grid as weather and load get more extreme.

 14. Any areas of technology in energy infrastructure that you find particularly promising and/or exciting?

 We avoid investing in innovative technologies with binary risk. I think the growth in power needs driven by AI (which is certainly a new technology) is creating exciting opportunities to invest in power related infrastructure.

 15. You are often investing side-by-side with partners at other firms.  How do you build alignment?

 We partner with other firms frequently and the terms around governance are essential to creating the right alignment. For example, there are typically minority protections in equity investments where one party is smaller than the other. In credit investments, there are typically “sacred rights” that require the consent of all parties to be change items in a loan agreement such as the interest rate or maturity date.

 16. You often partner with existing management teams at companies. What do you seek when assessing them?

 We are looking for experienced management teams that are frequently investing significant capital, have a clear strategy to create value and have high integrity and strong work ethic. Strong alignment of interests is essential and we try to structure our deals so we all win or lose together.

 17. Sometimes it takes years to pursue an opportunity with a market, a company, or a person. Any rules of thumb when “chasing deals” takes years?

 We generally do not chase deals for years. However, we have walked away from an opportunity in the past because the risks were too great only to find a year or two later that the company made sufficient progress and was ready for our capital.

 18. Sometimes one needs to drop other things to focus on a particular time sensitive investment opportunity.  Any rules of thumb on when to do this and/or how to get it done?

 One of the keys in the investment business is not to chase every shiny object and get distracted because new deals are always coming up every week. It is important to stay focused and execute on a well-defined strategy.

 19. If EQ is emotional intelligence, the ability to recognize, understand, manage emotions in yourself and in others, how does one grow these skills?

EQ is exceptionally important and people tend to do business with people that they like. I think you grow EQ the same way you grow any other skill: by practicing a few specific behaviors repeatedly. Some examples include practicing empathy- listen to others, put yourself in their position, how would you like to be spoken to? Seek honest feedback and be open to it. Pause before you react…

 20.  Ken Griffin feels that selling is fundamental to business success and that every CEO is a salesperson.  How do you see this? 

I could not agree more. Selling is a core leadership function. The CEO is always selling to all stake holders-clients and beneficiaries, partners, employees and prospective employees, regulators and oversight bodies and key external partners and vendors.