A financing model for clean energy

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RE Royalties Ltd. prides itself on building climate resiliency by providing funds to renewable energy companies to create, complete and expand their wind farms, solar parks and hydro projects.

Its groundbreaking royalty model is also proving to be financially resilient, giving investors an opportunity to grow the green economy while offering strong returns and protecting their capital in turbulent economic times. “As long as the sun keeps shining and the wind keeps blowing, we will continue to generate revenues through the renewable energy producers we support,” says Bernard Tan, CEO and co-founder of the Vancouver-based public company. “For every electron they sell to the local utility grid, our investors get a percentage.”

Mr. Tan first got the idea for the company and its sustainable business model in 2013 as a new father looking to “build a better future for the next generation,” by giving renewable energy companies access to development capital. With a background as a chief financial officer in the mining industry, he was well aware of the benefits of royalty financing in that sector and others, such as oil and gas, pharmaceuticals, consumer products and restaurant chains. But he was surprised to find that it was non-existent in the burgeoning renewable energy market, where capital costs are high, traditional debt and equity financing options are unavailable, unsuitable or unaffordable, and yet revenues are virtually guaranteed.

“That was the Aha! moment,” says Mr. Tan, who started RE Royalties in 2016 with Peter Leighton, the company’s chief operating officer, who has been named to Canada’s 2020 Clean50. RE Royalties went public in 2018, trading on the TSX Venture Exchange. Today, its shareholders include retail investors and high-net-worth families looking for high-yield investments that have sustainable growth opportunities, robust capital protection and positive environmental impacts.

The specialty financing company currently has a portfolio of 75 royalties on projects in Canada, the United States and Europe, which remove some 360,000 tonnes of carbon annually and generate enough clean electricity to power 118,000 homes.

The dedicated RE Royalties team ensures that its loans are flexible and tailored to allow renewable energy companies to “unlock” and “recycle” the capital in their installations, Mr. Tan explains. This helps many of them pursue business objectives and achieve their next phase of growth, including global ventures.

Mr. Tan hopes to raise awareness of the company and expand to institutional investors. RE Royalties is also planning to launch its own green bonds and diversify its royalty business model beyond traditional renewables to areas such as energy efficiency, clean transportation and energy storage.

Produced by Randall Anthony Communications. The Globe’s Editorial Department was not involved in its creation.