RE Royalties: Financing the Energy Transition

An opinion piece by Armin Schulz (Apaton Finance GmbH).

The Canadian company RE Royalties has established itself in the renewable energy market with an unconventional approach. Instead of traditional loans, the financier provides project developers with capital in exchange for a share of future revenues. Since 2016, over CAD 80 million has been invested in more than 135 projects. The spectrum ranges from solar and wind power to energy storage and renewable gas. Between January and February 2026, USD 3.8 million was provided for the first of two planned solar portfolios by Solaris Energy. The total commitment for both stands at up to USD 9 million. At the end of March 2026, a strategic review was initiated to explore options such as a sale of the company or new capital partnerships. PricewaterhouseCoopers is assisting with this process. With approximately CAD 20 million in concrete letters of intent and an additional CAD 200 million in the pipeline, the growth potential remains intact.

The business model targets a gap in the market. Mid-sized developers with project volumes between CAD 10 million and CAD 30 million are often overlooked by banks. This is where RE Royalties steps in. The unleveraged internal rate of return has been over 19% since the company's founding, and revenue growth over the past five years has averaged around 60% annually. Over 80% of the portfolio is located in North America, which limits geographic risks. 41% of the pipeline comes from existing customers. This is a sign of trust and recurring business. The high level of insider ownership also signals that management and shareholders are aligned. The combination of long-term royalty agreements and short-term loans provides the company with flexibility.

For income investors, RE Royalties remains an exciting opportunity. The company most recently paid CAD 0.01 per share per quarter. That amounts to an annualized CAD 0.04. At a current share price of CAD 0.39, this results in a potential dividend yield of around 10.3%. Management has deliberately made the dividend policy more flexible. Future dividends will be decided annually by the board, based on liquidity, cash flow, and capital allocation. This change gives the company more leeway for growth investments without compromising its attractive dividend policy. The combination of high returns, strategic realignment, and a growing market for revenue-based financing makes this investment attractive to long-term investors.

Read the full article here.