Key factors support SolarBank Corp. (SUNN:CSE) as an attractive investment, reported Canaccord Genuity associate Yuri Zoreda in an April 24 informational note.
SolarBank's primary business is developing and installing photovoltaic power general projects, including behind-the-meter (BTM), community and utility scale, for customers in the U.S. and Canada.
The firm "deliver[s] competitively priced, turnkey solar projects, securing the returns required by investors," wrote Zoreda.
However, the Toronto, Canada-headquartered company is "transitioning from its historical build-and-manage revenue model to develop-own-operate while gaining expertise in battery storage, co-generation and other clean energy technologies," Zoreda added.
Zoreda presented the highlights of this investment opportunity.
Good track record
To date, SolarBank has built more than 100 BTM and community projects, together capable of generating 60 megawatts (60 MW) of solar power, Zoreda relayed.
Last year, it completed six engineering, procurement and construction contracts in the U.S. totaling 12 MW in capacity. This work yielded $10 million ($10M) in revenue, representing 40% year-over-year growth.
Strategy for growth
Zoreda highlighted that SolarBank's growth strategy is two pronged. On one hand, the company aims to evolve into an independent power producer of larger projects, like solar farms of 100-plus MW, community solar plants and BTM solar portfolios for big corporations. The two paths to get there are growing organically and making acquisitions. Already the company has a potential development pipeline of 700-plus MW and $10M in net cash to use to further its goal.
"Management believes this liquidity will provide sufficient funds to support ongoing operations and achieve its development milestones for at least 12 months," wrote Zoreda.
On the other hand, SolarBank wants, at the same time, to retain ownership of select solar projects.
By following these strategies, the company believes it should generate recurrent and one-time revenue streams over varying, six-month to five-year time frames, ultimately driving long-term, sustainable and profitable growth, wrote Zoreda.
Steeped in knowledge, expertise
The company has a strong management team boasting a combined 100-plus years of experience in developing, financing and building commercial and industrial renewable and clean energy projects, Zoreda wrote. Chief executive officer Dr. Richard Lu has one-quarter-century worth of energy sector experience.
Insider ownership
Zoreda reported that management and directors own about 4% of SolarBank's 27 million outstanding shares, and other insiders, including founders and advisers, hold about 66%.
Favorable market trends
SolarBank's management believes the company will benefit from the current and ongoing North American transition to clean energy, reported Zoreda.
Certainly, the number of solar power generation projects being installed today is rising at a staggering rate, Zoreda pointed out, and the trend is expected to continue, at least for the next four years. In the U.S. alone, installations are expected to increase at a compound annual growth rate of 20% between 2022 and 2027, according to the Solar Energy Industries Association and the energy research firm, Wood Mackenzie.
This growth is attributed to lower costs of solar systems, down more than 50% in the last 10 years, and supportive governmental programs, such as the Renewable Portfolio Standards and the recently extended federal Solar Investment Tax Credit, indicated Zoreda.
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