RE Royalties: The Electricity Boom

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

The demand for electricity is growing, and RE Royalties is profiting from it without having to build a single power plant itself. The Canadian company applies the royalty model, familiar from the commodities sector, to renewable energy. Project developers receive capital, while RE Royalties receives long-term, revenue-based royalty payments in return. The model is supplemented by secured bridge financing. This generates recurring cash flows, while the construction and operation of the plants remain with the project partners.

The timing could hardly be better, as US electricity consumption is rising again after years of stagnation, while solar and battery storage are dominating capacity expansion. For 2026, the US Energy Information Administration (EIA) expects a record expansion of 86 GW. Solar alone is expected to contribute 43.4 GW, and battery storage 24 GW.

The partnership with Solaris Energy demonstrates just how much RE Royalties could benefit from this. In August, the company invested another USD 1 million, increasing its commitment to USD 4.8 million. Even more exciting is the non-binding letter of intent for up to USD 67.5 million in royalty financing. In addition to 16 solar projects already financed, the outlook includes another 96 projects totaling approximately 190 MWDC. The Solaris royalties are structured to provide an agreed-upon minimum return for an initial period of 25 years and will continue for the remainder of the projects' operational lifespans.

The track record to date demonstrates this model's potential. Since its founding, RE Royalties has invested more than CAD 83 million in a portfolio of approximately 135 projects spanning solar, wind, battery storage, hydropower, biogas, and energy efficiency. According to the company, the weighted internal rate of return on these investments is approximately 19%.

This places RE Royalties in a strategically advantageous position within the energy transition. The more capital developers need for new projects, the larger the addressable market becomes. If the company succeeds in converting the Solaris pipeline and other projects into long-term royalty income, this currently small company could grow to an entirely new scale.

Read the full article here.