SolarBank Corporation is excited to announce that its subsidiary has secured a $3 million loan from RE Royalties Ltd. (the “Lender”). This financing will support SolarBank’s first ventures into the battery energy storage market. According to Fortune Business Insights, the battery storage sector is expected to grow at a rate of 16.3% annually, reaching a market value of US$31.2 billion by 2029.
The loan will fund three battery energy storage system (BESS) projects in Ontario, each with a capacity of 4.99 MW. These projects are owned by 1000234763 Ontario Inc. and 1000234813 Ontario Inc. (collectively, the “ProjectCos”). SolarBank acquired an interest in these projects through its $45 million purchase of Solar Flow-Through Funds Ltd., which was finalized in July 2024. The borrower for the loan is Solar High Yield Projects #1 Ltd. (“the Borrower”).
Matthew Wayrynen, Chair of SolarBank, said in a statement, “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.”
Bernard Tan, CEO of RE Royalties, added further, “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 loan, which will be provided in one lump sum, is due for repayment by November 26, 2025. It carries an interest rate of 11% per year. As part of the loan agreement, the lender will receive a 0.40% royalty on the gross revenue generated by the projects. If the loan is repaid within the first six months, the royalty rate will drop to 0.25%. The loan is secured by a first-ranking claim on all assets of the borrower, except its shares in the ProjectCos. The borrower is a wholly-owned subsidiary of SolarBank, holding a 50% indirect stake in the ProjectCos, with the other 50% owned by a partnership of First Nations communities in Ontario.
The loan is intended to cover costs related to the development and construction of the projects. The company is also working on securing additional financing for the full construction costs. However, the development of these projects comes with risks, such as the need for permits, the availability of third-party financing, and the challenges of constructing a battery energy storage system. Additionally, changes in government policies or incentives could impact the financial viability of future projects.
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