November News Update - What the RE Royalties Team is Reading
Updated: Dec 19, 2019
November has been another busy month for renewable energy. Companies continue to see even greater success in their search for capital, and consumers become increasingly comfortable with the sector. However, despite these tailwinds, a political divide in Canada combined with opaque funds accused of greenwashing may prove to be an obstacle as 2019 comes to an end.
Solar Breakthrough Achieved by Energy Startup That’s Backed by Bill Gates
With the help of AI, a clean energy company called Heliogen announced their discovery of a method allowing focused sunlight to generate extreme heat above 1,000 degrees Celsius.
Having recently emerged from “stealth mode”, Heliogen has developed a technology that allows AI to control mirrors and concentrate solar energy to a single point. While the heat generated is not yet enough for the production of cement and steel, Heliogen believes that goal will eventually be achieved. With the market’s non-insatiable appetite for materials like cement and steel, the upside potential of this technology is self-evident.
Further down the line, the possibility of creating green hydrogen is also a major long-term goal that has attracted large investors such as Bill Gates.
Pattern Energy Enters Agreement to be Acquired by Canada Pension Plan Investment Board
Earlier this month, CPPIB and Pattern Energy entered into a definitive agreement to which CPPIB will acquire Pattern Energy in an all-cash transaction for $26.75 per share, implying an enterprise value of approximately $6.1 billion, including net debt.
Furthermore, Riverstone will combine Pattern Energy and Pattern Energy Troup Holdings 2 LP (“Pattern Development”) under common ownership, bringing together the operating assets of Pattern Energy with the developmental expertise of Pattern Development.
Large Canadian Institutional Investor Finances Chilean Solar Portfolio
Connor, Clark & Lunn Infrastructure has recently announced the closing of a USD $173 million debt financing for its portfolio of utility-scale solar projects located in Chile.
The portfolio is comprised of 43 megawatts of operating projects, 40 MW of projects in construction, and the rights to another 120 MW of projects to be acquired and constructed in 2020.
This large acquisition, while partly fueled by attractive market conditions in Chile, also demonstrates the growing confidence that investors are placing in renewable energies. And although CC&L has invested in foreign debt, plenty of debt financing opportunities exist in Canada as well.
Brookfield Markets Green Bond in Canada
The green bonds will be used to refinance existing debt on a pool of four hydroelectric facilities located in Ontario. The securities are being sold via a private placement, according to S&P Global Ratings.
However, Canada is not the only country that Brookfield has set its sights on: Brazil and India have become potential investment targets as well. Brazil is currently home to US$3.5 billion of Brookfield’s renewable power assets. In India, Brookfield is also in talks to invest US$800 million in India’s largest green energy company, ReNew Power Ltd.
With so many institutional investors seeking foreign opportunities, perhaps this is a sign of a lack of opportunity in Canada.
The Gap Between Energy and Climate
Having just “suffered through a nasty and divisive election campaign”, the issue of Canada’s natural resources is a topic that invites two opposite crowds: those that believe in climate change, and those that support the development of fossil fuels despite so.
While both sides have their reasons, The Globe and Mail authors Annette Verschuren and Derek Evans believe neither reason can be a solution.
Accounting for almost 10% of the national economy, throwing away Canada’s identity as a petroleum superpower is simply infeasible. However, instead of a conclusion, this instead should be the start to another alternative: renewable energy.
Only by focusing on renewable energy can Canada secure a leadership position to address the fight against climate change. Not only would this offset the negatives of our petroleum industry, but it would also help capital stay within Canada by providing investors like RE Royalties and CC&L with additional domestic opportunities.