SolarBank Corporation, a leading provider of clean and renewable energy solutions in Canada and the U.S., is making its foray into the battery energy storage market with a $3 million project financing secured from RE Royalties Ltd. This marks a significant milestone in SolarBank’s growth strategy, which includes the development of battery energy storage system (BESS) projects.
The company’s goal is to capitalize on the projected growth of the market, which is expected to reach $31.2 billion by 2029, according to a forecast by Fortune Business Insights. Matthew Wayrynen, Chair of SolarBank, expressed his excitement about the partnership with RE Royalties and the financing secured for their BESS projects in Ontario. He also highlighted the company’s commitment to sustainability and the importance of this financing in achieving a cleaner future and diversifying their project portfolio.
SolarBank’s expansion into the battery energy storage market is part of its opportunistic growth strategy, which includes mergers and acquisitions. The company has a proven track record in developing, building, and operating renewable energy assets in North America, making it well-positioned to take advantage of the growing demand for BESS projects.
The loan agreement with RE Royalties Ltd. will see SolarBank receive the entire $3 million in a single installment, with a repayment deadline of November 26, 2025. The loan carries an annual interest rate of 11%, and to secure the financing, SolarBank has agreed to a 0.40% royalty on the gross revenue from the projects. However, if the loan is repaid within six months, the royalty will drop to 0.25%.
Bernard Tan, CEO of RE Royalties, expressed his excitement about working with SolarBank again and praised the company’s track record in the renewable energy sector. He also highlighted the benefits of the BESS projects, which will help Ontario support renewable electricity generation, build grid resiliency, and reduce emissions compared to conventional sources.
The loan is backed by a first-ranking security interest on all assets of the borrower, except for shares in the ProjectCos. The borrower, a subsidiary of SolarBank, holds a 50% indirect interest in the ProjectCos, with the remaining 50% owned by a partnership with First Nations communities in Ontario. The financing will cover the development and construction costs of the projects, and SolarBank is also working on securing a larger financing package to fully fund the construction.
The BESS market is primarily driven by the adoption of renewable energy sources like solar and wind, with Asia Pacific being the dominant player. However, the U.S. market is also experiencing significant growth, and this can be attributed to the increasing demand for renewable energy solutions. According to Fortune Business Insights, the global BESS market was valued at USD 18.20 billion in 2023 and is projected to continue growing in the coming years.
In conclusion, SolarBank’s entry into the battery energy storage market is a significant achievement for the company, and the secured financing from RE Royalties Ltd. is a crucial step towards achieving their goals. With a strong track record and a commitment to sustainability, SolarBank is well-positioned to capitalize on the growing demand for renewable energy solutions and contribute to a cleaner and more sustainable future.