$25.8 Million Royal Bank of Canada Facility is being used to finance construction of the 4.99 MW BESS Project
SolarBank Corporation (NASDAQ: SUUN) (Cboe CA: SUNN) (FSE: GY2) (“SolarBank” or the “Company”) is pleased to announce that its first Battery Energy Storage System (“BESS“) project located in Ontario is expected to commence construction during the week of February 10, 2025. The project is known as SFF-06 (the “Project“) and is located in Cramahe, Ontario. The SFF-06 project is being financed through a combined loan for two projects (SFF-06 and 903) (“Loan“) in a principal amount of $25.8 million from Royal Bank of Canada as Lender, Administrative and Collateral Agent and Green Loan Structuring Agent (the “Lender” or “RBC“).
SolarBank has selected Anvil Crawler Development Corp. (“Anvil Crawler“) to perform the civil and electrical work on the project and awarded Anvil Crawler a contract with an expected value of $1.85 million to complete such work. Anvil Crawler is part of Skyline Group of Companies (Skyline), a fully integrated asset acquisitions, management, development, and investment firm. With $5.4+ billion (as of December 31, 2020) in assets under management, Skyline has been building strong, supportive, and sustainable Canadian communities for 20+ years.
The Project is owned by 1000234763 Ontario Inc. (“ProjectCo“) and ProjectCo is the borrower under the terms of the Loan. The Project represent SolarBank’s initial foray into battery energy storage, a market forecast by Fortune Business Insights to grow at a 16.3% compound annual growth rate from 2022 to reach US$31.2 billion by 20291. SolarBank’s interest in ProjectCo was acquired as part of the $45 million valued acquisition of Solar Flow-Through Funds Ltd. that closed in July 2024.
In July 2023, the Project was awarded a contract by the Independent Electricity System Operator (“IESO“) under the Expedited Long-Term RFP (E-LT1 RFP). The contract, which has a term of 22 years, includes a fixed contract capacity payment of $1,221/MW per business day, significantly above the weighted average price of $876/MW for all storage category projects under the E-LT1 RFP. This underscores the competitive positioning of these projects in the Ontario energy storage market. The Company expects that once operational the Project will have 4.74 MW of daily contract capacity available (at a capacity payment to ProjectCo of $1,221/MW per business day) for 251 business days in a year.
Furthermore, the Project is eligible for the Clean Technology Investment Tax Credit introduced in 2024. This refundable tax credit provides up to 30% reimbursement of eligible capital costs for new clean technology, significantly enhancing the economic returns of the projects. This aligns with SolarBank’s commitment to leveraging government incentives to accelerate the transition to renewable energy while optimizing financial performance.
The Company has an indirect 50% interest in ProjectCo, with the remaining 50% held by a partnership formed by First Nations communities in Ontario.
There are several risks associated with the development of the Project. The development of any project is subject to required permits, the continued availability of third-party financing arrangements for the Company, the risks associated with the construction of a battery energy storage project and the degredation of battery storage capacity over time based on the number of discharge cycles. In addition, governments may revise, reduce or eliminate incentives and policy support schemes for battery energy storage, which could result in future projects no longer being economic. Please refer to “Forward-Looking Statements” for additional discussion of the assumptions and risk factors associated with the projects and statements made in this press release.
