SolarBank Corporation, a pioneer in clean and renewable energy in Canada and the U.S., is entering the battery energy storage market by securing $3 million in project financing. The loan, provided by RE Royalties Ltd., marks a significant milestone in SolarBank’s growth strategy, which includes battery energy storage system (BESS) projects.
A Milestone for SolarBank’s Battery Energy Storage Goals
The company aims to capitalize on the market forecast by Fortune Business Insights that predicts project growth at a 16.3% annual rate and reaching $31.2 billion by 2029.
SolarBank is developing three 4.99 MW Battery Energy Storage System (BESS) projects in Ontario. These projects are owned by 1000234763 Ontario Inc. and 1000234813 Ontario Inc. (“ProjectCos”). The loan agreement is under Solar High Yield Projects #1 Ltd. (“the Borrower”).
The company got involved in the projects through its $45 million acquisition of Solar Flow-Through Funds Ltd., which was completed in July 2024. This acquisition expanded the company’s renewable energy assets and opportunities in energy storage. Subsequently, the newly secured financing will help SolarBank leverage this acquisition and refresh its storage project plans. This is also one way to diversify its portfolio for renewable energy solutions.
Matthew Wayrynen, Chair of SolarBank commented,
“We are thrilled to continue our partnership with RE Royalties to secure this financing for our BESS projects in Ontario. Having worked with RE Royalties on previous projects, we value their expertise and shared commitment to sustainability. This financing is a key step toward a cleaner future and the further diversification of SolarBank’s growing project portfolio.”
Mergers & Acquisitions Opportunistic Expansion
Source: SolarBank
Unlocking the BES Project Loan Agreement
RE Royalties Ltd. will issue the entire $3 million loan to SolarBank’s in a single installment and the company has to repay by November 26, 2025. The loan carries an annual interest rate of 11%. To secure the financing, SolarBank agreed to a 0.40% royalty on the gross revenue from the projects. Notably, if they can repay the within six months, the royalty will drop to 0.25%.
Bernard Tan, CEO of RE Royalties, stated
“We are excited to be working with the SolarBank management team again on this transaction. The SolarBank team has a long proven track record in developing, building and operating renewable energy assets in North America. These BESS projects will help the province of Ontario support renewable electricity generation, build resiliency in the grid, and help lower emissions compared to conventional sources.”
The press release further revealed some critical details of the loan, illustrated below:
- The loan is backed by a first-ranking security interest on all assets of the borrower, excluding shares in the ProjectCos.
- The borrower, a fully-owned subsidiary of SolarBank, holds a 50% indirect interest in the ProjectCos. The remaining 50% is owned by a partnership with First Nations communities in Ontario.
This financing will cover development and construction costs for the projects. Additionally, SolarBank is also working on securing a larger financing package to fully fund the construction of their projects.
SolarBank’s Achievements
Source: SolarBank
Factors Driving Market Growth
Although Asia Pacific is the key player in the BESS market, U.S., the market is also booming. One main reason is the adoption of renewable energy sources like solar and wind. Fortune Business Insights says:
- The global market size was USD 18.20 billion in 2023 and is projected to reach USD 114.05 billion by 2032. Essentially, the U.S. battery energy storage market is projected to reach $31.36 billion in the same forecast period.
Efforts to improve grid stability and resilience through clean energy solutions will further fuel demand for battery energy storage systems (BESS). This includes merging lower carbon emissions options like BESS with renewable energy sources like solar and wind. Together they can become the prime alternatives to fossil fuels.
Additionally, a surge in investments and supportive government policies is driving significant growth in the industry. These factors are creating a strong foundation for the expansion of battery energy storage systems worldwide.
Another reason behind renewable energy companies turning to battery energy storage is the cost advantages. In today’s energy transition, solar and wind are abundant and often more affordable than coal and other fossil fuels. Additionally, the cost of solar and battery energy storage has dropped by 85% over the past decade, making these solutions even more feasible and demanding.
SolarBank noted,
- The North American solar PV market was valued at US $25.02 billion in 2019 and is projected to reach US $120.74 billion by 2027; it is expected to grow at a CAGR of 21.7% from 2020 to 2027.
Assessing Potential Project Risks
While the BES project presents growth opportunities, it also has certain risks. Development depends on securing necessary permits and maintaining access to third-party financing. Construction risks and potential delays could also impact progress.
Additionally, changes in government policies and reductions in incentives for battery energy storage could make such projects less viable in the future. Despite these challenges, SolarBank is determined to advance its renewable energy goals.
SolarBank Corporation: Powering the Future with Solar Energy
SolarBank Corporation is a full-service solar energy developer driving innovation and sustainability across North America. With over 250 MW of development opportunities in New York and Maryland since 2017, the company is a leader in commercial, industrial, and community solar solutions in the U.S.
In Canada, the company made huge progress by participating in the Ontario Independent Electricity System Operator (IESO) Feed-in-Tariff (FIT) program under the Green Energy Act. Most importantly, their success came from small FIT solar projects, including rooftop and ground-mounted installations.
Strong Visibility to Continued Growth
Source: SolarBank
Expanding Renewable Horizons
SolarBank is now part of IESO’s first Long-Term Request for Proposals (E-LT1 RFP and LT1 RFP). This initiative targets 4,000 MW of new, year-round dispatchable electricity capacity from cutting-edge technologies like BESS.
The company has already entered the electric vehicle (EV) charging market as a service provider to business and residential customers. Thus, with years of expertise, they have become a trusted partner for ESG-focused businesses, driving advancements in energy storage, EV charging, and solar solutions to support their Net-Zero goals.
A Decade of Strong Revenue Growth
Source: SolarBank
In conclusion, the financial backup and a clear growth trajectory SolarBank can make a remarkable impact on the battery energy storage sector.