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Cleantech Market Predictions and Trends

What key trends did you see in the cleantech market last year?

The cleantech market continues to see remarkable growth trends year-over-year as all sectors of the economy become more mindful of the impacts of climate change.

Technology wise, we continue to see vast advances in technological improvements. For instance, established renewable energy technologies like solar or wind continue to see dramatic decreases in the levelized cost of energy production, to the point where in certain jurisdictions like Texas or California, the cost of electricity is cheaper than traditional fossil fuel based generation, and without any subsidies.

A second wave of clean technologies like battery storage, electric transportation and sustainable infrastructure continue to make exciting strides in terms of deployment and commercialization.

Policy makers have started or continue to embrace the idea that a clean economy is a good economy. While different governments have different approaches of how to achieve that, having strong policies to fight climate change and support a strong economy at the same time is one that is supported by all political stripes.

On the financial front, the S&P/TSX Renewable Energy and Clean Technology Index is one of the best performers, with a return of 32% year-to-date.

Were your predictions for 2019 correct? How did your firm impact the cleantech industry in 2019?

We expected to see continued decreases in the cost of energy from renewables. However, some of the actual installations even surpassed our lofty expectations. For example, the Los Angeles Department of Water and Power installed a 400-megawatt solar and 300-megawatt battery for under $0.02/kwh, which is far more competitive than any fossil fuel energy source.

Capital flows have increased greatly into the responsible investing category with this category now encompassing $12.3 trillion or 50% of all professionally managed assets in Canada. However, one disappointment in 2019 is that most of these capital flows still have not made it to where it is needed most, which are the small-to-mid size entrepreneurial firms that are on the forefront of coming up with climate change solutions.

At RE Royalties, our focus is to help these small-to-mid size firms realize their potential by providing a non-dilutive financing solution.

In 2019, we invested in 133 megawatts of operational and construction-ready projects.

In addition to a strong risk-adjusted return, these projects offset 70 million tonnes of GHG equivalent annually.

Our royalty financing solution has also allowed our clients to recycle their invested capital into other highly needed development projects that bring significant environmental, health and cost benefits to those less fortunate in other nations.

For instance, one of our royalty transactions in Ontario has allowed our client to utilize that capital to invest in personal portable solar units in Kenya. This has brought clean, affordable electricity to 100,000 families+ in Kenya, while reducing the negative health impacts and high costs of kerosene lamps and diesel generators to those families.

Were there any surprises that took place over the year that impacted sustainable initiatives?

We are seeing a greater acceleration towards the decentralization and democratization of the energy markets, which in turn, is helping businesses, governments and communities adopt their sustainable initiatives target.

For instance, in British Columbia, the creation of a federal electric vehicle credit, to accompany a provincial one, has created an unprecedented demand for new electric vehicles. This “direct to the people” incentive has helped the province to meet its 10% zero-emission vehicle sales targets well in advance of its 2025 deadline.

We also saw the Canadian Expert Panel on Sustainable Finance deliver its final report and recommendations to the federal government on a road map for mobilizing finance for sustainable growth and utilizing capital to address climate change.

The report was very comprehensive, detailed and practical. It included recommendations such as providing a super RRSP deduction for investing in climate-conscious investments and making the interest income tax free for investors of green bonds. These recommendations of allowing individuals to participate will greatly help drive the growth of sustainable initiatives in the future.

RE Royalties is a publicly traded company on the TSX Venture Exchange under the symbol "RE", and the first to pioneer the royalty-financing model for renewable energy projects.


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