Calgary- and Houston-based Kanin Energy has raised $138 million to accelerate the development and construction of waste heat-to-power projects in Canada and the U.S., marking the company’s largest fundraise to date as demand grows for reliable, emissions-free electricity.

Kanin deploys technologies which capture the heat from heavy industry sites such as natural gas power plants, and generates electricity which can be directed back to the host facility or a local client. The process provides a baseload source of power.

From its operating project that services the University of Dayton in Ohio, Kanin plans to expand its portfolio, which includes four in-construction projects in the U.S.

Combined with the installation that powers the university's campus, the capacity of the five U.S. projects is expected to be approximately 50 megawatts (MW) of electricity.

“It just speaks to the advancement of our project pipeline and the advancement of our company itself,” Kanin's CEO Janice Tran said about the investment, which is led by Chicago-based S2G Investments, with the Canada Growth Fund (CGF) participating.

Kanin’s pipeline

A key goal of the funding is to bring Kanin’s projects from concept and design to construction, Tran said. That includes paying for engineering and design services, procuring equipment and materials, and covering transaction fees.

Kanin is prioritizing construction of four U.S. projects in particular:

• the seven MW Mewbourn Power Project in Colorado;
• the 9.8 MW Muskingum Community Power Project in Ohio;
• the 12.9 MW Columbus Community Power Project also in Ohio; and
• the 9.8 MW Hoosier Community Power Project in Indiana.

Lack of Canadian projects

While based in Calgary, Kanin does not yet have late-stage development projects in Canada. The company has heard from Canadian companies interested in being partners, Tran said, with over $1 billion in projects that could be commercially viable.

The main impediment, Tran said, is that waste heat-to-energy projects are not eligible for investment tax credits in Canada, unlike other sustainable energy assets. Without that support, Kanin is “uncompetitive in what would normally be a competitive environment” in Canada, she said.

In the U.S., Kanin’s developments qualify for investment tax credits, making Kanin “very competitive” and its assets affordable in the country’s market, Tran said.

Tran hopes the gap in investment tax credits can be remedied in the next Canadian budget bill.

Fundraising in ‘a good environment for power’

The investment into Kanin indicates “folks like us who are developing power in a unique and different way are getting the attention of our industrial customers.”

It has been a tough funding environment for climate tech as of late, Tran said. However, it has also been “a good environment for power.” There is great need for baseload clean electricity, she continued, particularly from the buildout of data centres to satisfy high demand for artificial intelligence.

Powering data centres has put pressure on electricity costs, which are passed on to the industrial clients that Kanin serves. Some of the company’s clients have seen power bills rise by 20 to 50 per cent year-over-year, Tran said, a problem that will only continue to increase with more hyperscale data centres coming online.

Additional pressures are from inflation, electrification of the economy and an aging grid in need of upgrades, Tran explained. Other clients are interested in boosting their sustainability credentials or the energy reliability.

"Waste heat has largely been an underused solution, but as these constraints persist, there's a clear and growing incentive to capture it and put it to productive use," Marisa Sweeney, principal at S2G, said in the release announcing the fundraise.

The CGF is “pleased to back a Canadian company with a proven, commercially operating track record across North America,” Yannick Beaudoin, president and CEO of Canada Growth Fund Investment Management, said.

The two organizations are each contributing up to approximately half of the $138 million and have taken equity ownership in Kanin, Tran said.