Disseminated on behalf of SolarBank Corporation.
SolarBank Corporation (NASDAQ: SUUN; Cboe CA: SUNN, FSE: GY2) develops renewable energy projects in Canada and the USA. It recently announced the commencement of construction of its first Battery Energy Storage System (BESS) project in Ontario. Construction of the SFF-06 project in Cramahe will start the week of February 10, 2025. This project is a key step for SolarBank as it enters the growing battery storage market.
SolarBank Locks in Lucrative Deals for Its BESS Project
The press release highlights that the Royal Bank of Canada (RBC) is supporting the SFF-06 project and another, Project 903, with a $25.8 million loan. RBC acts as the lender, administrative agent, collateral agent, and agent for green loan structuring. Its involvement is critical for advancing these renewable energy efforts.
SolarBank is developing the Project through its partially owned subsidiary 1000234763 Ontario Inc. (“ProjectCo”), which owns the projects and borrows under the loan agreement. SolarBank’s link to ProjectCo comes from acquiring Solar Flow-Through Funds Ltd. in July 2024 at a $45 million valuation. This move strengthens SolarBank’s position in the fast-growing BESS market.
Project Execution
For the SFF-06 project, SolarBank has chosen Anvil Crawler Development Corp., a subsidiary of Skyline Group of Companies. Anvil Crawler has a $1.85 million contract for civil and electrical work.
Skyline is a key player in asset management and development. They manage over $5.4 billion in assets and have 20 years of experience. Their focus is on building sustainable communities in Canada.
The IESO Contract
In July 2023, the SFF-06 project won a 22-year contract with the Independent Electricity System Operator (IESO). This is part of the Expedited Long-Term RFP (E-LT1 RFP).
This agreement promises a fixed capacity payment of $1,221 per megawatt (MW) per business day. This rate is much higher than the $876/MW average for other projects in the same program.
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Once operational, the project will provide a daily capacity of 4.74 MW for 251 business days each year.
This setup ensures a steady revenue stream for ProjectCo, making it a strong investment.
Strong Visibility to Continued Growth
Tax Incentives and Strategic Stakes
The project will benefit from Canada’s Clean Technology Investment Tax Credit, introduced in 2024. This refundable credit covers up to 30% of eligible capital costs for new clean tech projects. With this support, SolarBank can boost the project’s finances and move forward with its renewable energy goals. Government backing can enhance returns and speed up efforts for a greener future.
SolarBank also holds an indirect 50% stake in ProjectCo. A partnership of First Nations communities in Ontario owns the other half. This partnership shows SolarBank’s dedication to inclusive growth that would bring economic and social benefits to local communities.
Navigating Risks to Secure Long-Term Success
The SFF-06 project shows promise but faces challenges. It needs to secure permits, maintain third-party financing, and address construction hurdles to stay on schedule. Battery storage systems can degrade over time, which may impact capacity and efficiency.
Government policy changes or cuts to BESS incentives could jeopardize long-term success. So, SolarBank must actively implement maintenance plans and track policy changes to protect the project’s future.
SolarBank’s BESS Vision: Paving the Way for a Low-Carbon Future
SolarBank leads in clean energy, specializing in solar power and EV charging. It serves utilities, businesses, municipalities, and homes throughout North America. Its portfolio includes utility partnerships, community solar projects, and virtual net metering initiatives.
As the global energy market shifts to BESS, this sector is growing rapidly. Organizations and governments want BESS technology to cut carbon emissions. Energy storage is becoming essential. BESS allows renewable energy, such as solar and wind, to be stored for later use, helping meet peak demand and ensuring a steady energy supply.
According to Fortune Business Insights:
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In 2023, the global BESS market was valued at $18.2 billion, projected to reach $114.05 billion by 2032, with a CAGR of 20.88%.
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In the U.S., the market is expected to grow at 16.3%, reaching $31.2 billion by 2029.
SolarBank is entering the BESS market at a crucial time when energy storage is essential for meeting rising electricity demands and reducing emissions. The potential development pipeline exceeds one gigawatt. Additionally, the company has over 100 megawatts of completed renewable projects. The SFF-06 project will be an important step in Ontario’s clean energy transition.
This report contains forward-looking information. Please refer to the SolarBank press release entitled “SolarBank Announces Commencement of Construction of First Battery Energy Storage Project (BESS) in Ontario.”
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