RE Royalties: Clean Energy

An opinion piece by Stefan Feulner (Apaton Finance GmbH).

The expansion of renewable energy is becoming a multi-billion-dollar financing issue in North America. In the US alone, around 90% of newly installed power capacity in 2025 came from clean sources such as solar, wind, or battery storage. This momentum is also expected to continue in Canada. According to a market outlook, at least 59 GW of new projects are set to come online by 2035. This is driven by structural factors such as rising electricity demand from AI data centers, electrification, and the desire for greater energy security.

The Canadian company RE Royalties has recognized the signs of the times and is applying the royalty model, familiar from the commodities sector, to renewable energy. Instead of building wind or solar farms itself, RE Royalties provides capital to project developers and receives long-term, revenue-based royalties in return. This model is supplemented by secured bridge financing with short terms, the proceeds of which can be reinvested directly into new projects. This creates a capital cycle consisting of short-term interest income and long-term, recurring cash flows.

It is precisely this combination that makes the business model so compelling. Many small and medium-sized developers are too small for banks or large private-equity firms, even though their projects are economically attractive. RE Royalties closes exactly this financing gap. The company thus benefits from a market in which the demand for non-dilutive growth capital is rising, while traditional financiers often remain cautious.

The numbers show that the model works. Since its founding in 2016, over CAD 83 million has been invested in around 29 transactions, resulting in a portfolio of around 135 projects in the fields of solar, wind, storage, hydropower, energy efficiency, and biogas. The weighted return since inception stands at 19%. In addition, there is an order pipeline worth more than CAD 50 million, with 41% coming from existing or recurring customer relationships.

RE Royalties is also experiencing dynamic operational growth. From 2019 to 2023, annualized revenue growth stood at 63%; for 2025, the company reports revenue of CAD 6.2 million. At the same time, the market capitalization of approximately CAD 16 million remains modest relative to the company's portfolio, cash flow profile, and growth prospects. The fact that insiders hold approximately 24% of the shares further underscores the alignment of interests with shareholders.

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